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EasyEquities introduces R25 monthly fee

EasyEquities

EasyEquities has surprised users by making its Thrive loyalty program mandatory and charging users under level 3 a R25 per month fee.

EasyEquities said it had built Thrive to drive good investment behaviour. It rewards Thrive subscribers with the ability to earn zero brokerage fees.

“Thrive is built on the pillars of education, financial health, and giving back – to you and our community,” the company said.

What was once a voluntary rewards program is now mandatory for all EasyEquities users from the end of November.

“We are launching an enhanced Thrive programme and implementing a new cost, the Thrive R25 monthly fee,” it explained.

“The Thrive Fee will be deducted from your EasyEquities account, which has a Free Cash balance greater than R25 on the first of the next calendar month,” EasyEquities said.

If a user has multiple EasyEquities accounts with a free cash balance greater than R25, the fee will be deducted from the account with the highest cash balance.

If a user’s account does not have free cash greater than R25 to pay for the Thrive Fee, EasyEquities ‘may sell some or all your investments to pay the fee’.

EasyEquities explained that the fee will be charged to clients who do not reach Thrive level 3 or above.

Users younger than 21 and older than 65 will also be exempt from the R25 per month Thrive fee.

Many EasyEquities clients slated the mandatory subscription and R25 charge, saying it is nothing more than an additional cost to investors.

EasyEquities has always promoted the platform as an affordable way to invest, with no minimums and no monthly account fees. This has now changed.

“This is not an enhancement. This is blatantly just additional charges for using the platform. You will be losing customers as a result,” one user said.

“If R25 is taken from my account, I will move my whole portfolio as well as the TFSA of my children to another platform out of pure principle,” said another.

Daily Investor asked EasyEquities about the new monthly fee, but the company did not respond by the time of publication.

Purple Group finances

Charles Savage
Purple Group CEO Charles Savage

The introduction of a monthly fee for EasyEquities users is unsurprising considering its parent company Purple Group’s recent financial results.

Its results for the six months ended 28 February 2023 revealed that its operating expenses increased significantly faster than its revenue.

The standout figure was a net loss of R10.6 million over the reporting period, a negative swing from the previous net profit of R17.7 million.

It signalled a 158% deterioration in Purple Group earnings compared to the previous half-year period’s net profit of 1.63 cents per share.

Purple Group’s operating costs, including depreciation and amortization, increased by R64 million, while company revenue only increased by R9 million.

Therefore, the company’s incremental revenue increases were met by seven times higher operating expenses.

The Purple Group share price has also been under pressure, losing 80% in value since its peak in January 2022.

Despite the decline, Purple Group still trades at a price-to-earnings (P/E) ratio of 58, much higher than other fintech and financial companies.

Its price-to-sales (P/S) and price-to-book (P/B) values are also much higher than most of its peers.

The R25 monthly fee will help the company to increase revenue and earnings, considering EasyEquities has 850,000 active account holders.

With customer equity of R42 billion, many people speculated that it would have been easier to introduce a 0.5% platform fee.

Such a platform fee, which is charged by many other investment platforms, would have generated an additional R210 million for the company.

However, it is not clear what regulatory and consumer protection requirements are associated with introducing a platform fee when users did not initially agree to it.

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