Invest
Can term investments beat the banks?
An investment manager has argued that term investments can offer an alternative for sophisticated investors "fed up" with banks favouring retail investors.

Can term investments beat the banks?
An investment manager has argued that term investments can offer an alternative for sophisticated investors "fed up" with banks favouring retail investors.

Speaking to Nest Egg recently, IPO Wealth's director, James Mawhinney said IPO Wealth had last year seen an opportunity to cater to investors dissatisfied with the service they were getting from the banks and the rate of return they are getting.
Continuing, he said high-net-worth Australians are “fed up” with banks.
“Banks inherently are set up to focus on retail investors, which is typically those that have smaller amounts of money to park. [At IPO Wealth] We're talking generally in the thousands or tens of thousands.
“So we saw an opportunity to set up IPO Wealth and the IPO Wealth Fund, which is targeted towards high-net-worth individuals.
“Most investors with us typically will park hundreds of thousands of dollars, in some instances millions of dollars, with us.”
In fact, with a minimum investment of $100,000, he says the appeal for the client base is a tailored approach.
“Because we're generally dealing with larger investors, it means we're able to provide a much more tailored service, and importantly, pay a higher rate of return. Now, we do fully disclose to our investors, we are not a bank, we're not an Australian deposit-taking institution. This is an alternative to a banking product.”
Mr Mawhinney’s comments arrive at a tricky period for Australia’s banks. On Wednesday, the Australian Bankers’ Association released a new code of practice that means customers will be informed about transaction services immediately prior to incurring them and will be able to receive a list of their direct debits and recurring payments upon request.
However, the announcement comes just weeks after the federal government announced it would launch an inquiry into the banking sector.
The IPO Wealth director also took issue with the government guarantee, arguing that the structure of it puts high-net-worth individuals' wealth at risk.
He explained: “The government guarantee was established largely off the financial crisis, and it was put in place by the government to really shore up the banking sector in Australia.
“The government guarantee is limited to $250,000 per account per financial institution. What it actually means if you read the fine print, which most investors aren't aware, is that there is actually a cap on that per financial institution of $20 billion.”
Noting that there’s around $500 billion in Australian savings accounts and term deposits, Mr Mawhinney said the top four banks are “sitting on easily a couple of hundred billion dollars of that, which means again if, worst-case scenario, there was a financial crisis in Australia where the banks, or even one of the banks for that matter, went through what some of the banks certainly went through in the US in recent years, the reality is that the investors would only get X cents in the dollar.”
Continuing, he said this information isn’t disclosed by the banks.
“To add to that, given that our clients that we work with… are typically high-net-worth individuals, that often have hundreds of thousands, if not millions of dollars, parked in typically traditional banking institutions, the reality is there's only X per cent of their money protected anyway.
“So in some ways the larger the bank you're with, because they've got more term deposits, the less protected your money is ironically.”
“[This] should be something that gets factored into an investor's decision as to where they park their money.”

Property
Poor wage growth could impede home price growth
With wages growth at record-low levels, a property expert has warned that continuing low and flat wages could impede home price growth. ...Read more

Property
Negotiating a lower interest rate on your property loan
The banks are customer hungry, meaning they’re willing to offer increased discounts to new customers and apply these discounts to existing customer loans, a mortgage broker has said. ...Read more

Property
How to determine the real value of a property
With various factors affecting market value and pricing, can one truly predict what buyers will pay for properties? ...Read more

Property
House prices tipped to soar 20% in 2 years: Westpac
House prices in Sydney are tipped to grow by 20 per cent over the next two years, and by 18 per cent in Melbourne, as a leading economist predicts strong economic growth following the rollout of the C...Read more

Property
5 tips to unearth the next property hotspots
A property expert has bullishly claimed that property hotspots are a “complete myth” that almost guarantees buyers will pay top dollar, and has instead urged buyers to seek out the “warm spots...Read more

Property
Top 10 inland rural towns to invest in
While it’s become apparent that regional housing markets have stolen the spotlight, having outpaced their capital city counterparts in 2020, new research has shown that inland rural towns have also ...Read more

Property
Where to buy under $300k
A positively geared property with high capital growth potential does not necessarily need to carry an astronomical price tag, an expert has said, with new market entrants able to land a home for under...Read more

Property
‘Great Australian dream’ of owning a home lives on amid COVID
Most Australian investors and home buyers were largely undeterred by the events of 2020, remaining eager to push through with their investment plans, a new survey has found. ...Read more

Property
Poor wage growth could impede home price growth
With wages growth at record-low levels, a property expert has warned that continuing low and flat wages could impede home price growth. ...Read more

Property
Negotiating a lower interest rate on your property loan
The banks are customer hungry, meaning they’re willing to offer increased discounts to new customers and apply these discounts to existing customer loans, a mortgage broker has said. ...Read more

Property
How to determine the real value of a property
With various factors affecting market value and pricing, can one truly predict what buyers will pay for properties? ...Read more

Property
House prices tipped to soar 20% in 2 years: Westpac
House prices in Sydney are tipped to grow by 20 per cent over the next two years, and by 18 per cent in Melbourne, as a leading economist predicts strong economic growth following the rollout of the C...Read more

Property
5 tips to unearth the next property hotspots
A property expert has bullishly claimed that property hotspots are a “complete myth” that almost guarantees buyers will pay top dollar, and has instead urged buyers to seek out the “warm spots...Read more

Property
Top 10 inland rural towns to invest in
While it’s become apparent that regional housing markets have stolen the spotlight, having outpaced their capital city counterparts in 2020, new research has shown that inland rural towns have also ...Read more

Property
Where to buy under $300k
A positively geared property with high capital growth potential does not necessarily need to carry an astronomical price tag, an expert has said, with new market entrants able to land a home for under...Read more

Property
‘Great Australian dream’ of owning a home lives on amid COVID
Most Australian investors and home buyers were largely undeterred by the events of 2020, remaining eager to push through with their investment plans, a new survey has found. ...Read more