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Motley Fool Announces Business Transformation

***** PRESS RELEASE *****

Embargoed until 7.00am Sunday

The Motley Fool Launches New Products / Services

Investment advisory company, The Motley Fool, has today announced it will be launching a range of new products and services, designed to deliver increased shareholder value and transform the company into a more traditional financial services firm.

It will also invest more than $14 million in a new marketing campaign, designed to engender trust in the company’s evolving objectives.

Importantly, we’re taking on new outside investors to help fund this incredibly profitable new venture. We will first invite our current members to participate — but they’re used to us having a more principles-based approach — so additional investors who are less particular will like what they see, below. Details on how to invest are at the end of this press release. [Editors please note: Motley Fool staff are available for interview by request. Details also below]

The Motley Fool’s general manager, Scott Phillips, said “We have been in Australia now for almost eight years, but we haven’t yet made significant inroads into the traditional banking and financial services space, due to gaps in our product portfolio and service suite. We had previously been unprepared to make certain compromises, but that was holding us back and we’re closing those gaps with this announcement.”

The company will launch a new Banking Solutions business, as well as an Offer Management Group which will handle equity raising, crowdfunding and ‘alternative investments’.

“Australia’s banks and financial services companies have made significant profits for years with these high fee, transaction-based services that we haven’t yet tapped” Phillips said. “While our brand hasn’t traditionally been extended to less consumer- and investor-friendly products, it’s worth making a compromise, given the potential, very large, returns. In time, we hope that The Motley Fool is spoken of in the same breath as the big banks and financial services companies, particularly in terms of profit per customer”.

Among the new products and services will be:

Fool ‘Alternative Investments’: The Motley Fool is in advanced talks with various industry bodies, brands and forex providers to bring a range of new blockchain-based investments to the Australian market. You can’t advertise these anywhere any more, since social networks and email companies put the kybosh on promoting them, but we’re pretty sure we can get around that. Consumer brands, particularly supermarket brands and those aimed at older Australians have not yet capitalised on the move toward alternative currencies, and this is an opportunity to help them raise their profile — and much needed cash — through branded Coin offerings. “I wouldn’t be surprised to see some of your favourite food brands and even menswear chains with their own Coins in the coming years” Phillips added.

Fool Forex: To date, the foreign exchange market has been dominated by the big banks and large foreign exchange businesses. Fool Forex is a natural extension of Fool ‘Alternative Investments’, giving customers the opportunity to exchange one currency for another, or to convert their Coins to Australian Dollars or the proprietary MotleyCoin™.  According to Phillips: “The fee structures for doing so are often opaque, and consumers tend not to actually check the exchange rate, so there’s a significant profit potential for The Motley Fool’s new foreign exchange business”.

Fool Insurance Broking: With commissions being reduced or eliminated in traditional financial advice, the best place for a financial advisor to earn more revenue and profit is through commissions on insurance products. With the federal government resisting efforts to clamp down on insurance commissions, The Motley Fool has decided to withdraw our campaign for change, and will instead set up a new insurance brokerage business. By cherry-picking certain policies and providers (with the best trailing commissions), the insurance business should be quickly profitable. The company is still keen to do what it can to help people, but it’s hard to compete with the incentives being offered, so we will strike a ‘balance’ between fees and what’s in consumers’ best interests. “That compromise seems to be industry standard, so we’re happy to simply follow along and rake in the cash” he added.

Motley Fool Vertical Integration Platform™ (VIP) : A recent ASIC study found that in the majority of cases, financial planners who worked for bank-owned firms recommended that bank’s financial products over competitors’ products. With that in mind, The Motley Fool will be launching a vertical integration platform, with the express intent of monetising customers to the fullest extent possible. With the concurrent launch of Fool Insurance, Fool ‘Alternative Investments’, Fool Forex and investigations into FoolBank and FoolCredit underway, we believe it’s possible to have a Motley Fool financial advisor recommend, in keeping with industry practice, Motley Fool credit cards, savings accounts, forex services, insurance — everything, really — and tell clients that it’s in their best interest..

“Given the results from the large banks, we’ve realised that we’ve taken too narrow a view of the ‘best interests’ test” said Scott Phillips. “If the banks can have their products recommended a majority of the time by their own planners, we think there’s a good opportunity to push the envelope there, and capture more of the customer ‘value chain’ without disadvantaging the client more than is absolutely necessary (given our profit needs). Thanks to further research, we’ve realised that ‘best interests’ can be (and is) treated as a malleable, aspirational idea, rather than something that can be defined. What is ‘best’, anyway, but a wishy-washy feel-good slogan?”

FoolSuper: The Australian superannuation pool continues to grow quickly, and the market is dominated by high-fee retail funds that underperfom their industry peers. The Motley Fool believes it can make a fortune by simply embracing — rather than fighting — mediocrity. Given most Australians don’t bother changing their Super fund, we’ll incentivise large and small Australian companies to make us their default fund. As long as people don’t realise there are better options, or are motivated enough to change, the fee flows should be enormous, and fund members will be no worse off than if they stayed with other high-fee funds. If it’s good enough for the rest of the industry, The Motley Fool won’t fight it. There’s too much money at stake to stand on principle.

Fool Salary Dip : Given the need to capture as much of our clients’ financial lives as possible (as well as helping them, if we profitably can), The Motley Fool will be launching Fool Salary Dip. Clients will be encouraged to deposit their whole salary with us, and with each subsequent transaction incurring fees, the stream of cash should be sufficient to propel the company to a Top 10 financial services firm inside 3 years, with an aspirational goal of Top 6 inside 5 years, especially when paired with the VIP program, above. And closing the account will be almost impossible, meaning we’ll have a captive audience. Once we wear them down and crush their spirits, they’ll just give up and keep paying us.

The Motley Fool continues to investigate FoolFunerals (prepaid funeral insurance that is insanely profitable), FoolEducation) and FoolPaydayLoans, but the business case isn’t yet ready, especially with ASIC and the federal government investigating the latter. FoolEducation is likely only a short-term business, given how others in the industry have struggled, but we’ll set up the company as a separate legal entity, and have it headquartered in Bermuda where ASIC and the ATO can’t touch the cash and it won’t impact the parent company, even if the division is placed into administration.

Additionally, investigations are well advanced for FoolIPO, where, for a very large fee, we’ll help even the most unprofitable and unlikely companies list on the ASX. We’ll have to change our editorial policies at Fool.com.au, of course, to ensure we focus on only those companies that pay us fat kickbacks, but again, our formerly independent editorial policy — which we were proud of — just doesn’t make the cash register ring as loudly as ‘sponsored’ content.

“This is an ambitious plan, which will lead to significant growth in staff numbers, but a much larger growth in revenue and profit” said Phillips. “And it wouldn’t have been profitable without the federal government’s commitment to cutting the company tax rate to 25%. It’s amazing how changing the tax rate can turn a loss into a profit” he said “We’d be mad not to do it now”.

The company is also very pleased to announce that as part of the marketing effort, the SS Ship of Fools, a $50 million superyacht, has been commissioned, and will soon motor aspirationally around Sydney Harbour, with a yearly visit to the French Riviera. The plans above should see a positive ROI on Ship of Fools within six months.

INVESTMENT OPPORTUNITY (and important details):

As mentioned, The Motley Fool is seeking new ‘junior partner’ investors for this venture. Expressions of interest are sought from investors who have at least $142,018 to invest.

The full terms and conditions will be sent on receipt of your email, but we’re obliged by regulation (it’s not our choice, trust us) to outline our fees and conditions:

  1. The minimum investment is $142,018 per person. There is no maximum, and we’d encourage all interested investors to invest as much as they can. Yachts don’t come cheap.
  2. The Motley Fool will receive a 5% ‘broker fee’, a 4% yearly management fee, and 80% of any return above the benchmark (see below).
  3. The benchmark will be the lower of the ASX200’s worst three month period during the GFC, or the worst performance of any company taken to market by FoolIPO in the past, present or future
  4. In the event the return is still positive, The Motley Fool reserves the right to apply a Management Expense Ratio of 14.18%, and to calculate performance net of that fee.
  5. In the likely event that investors’ funds shrink by virtue of fees and poor performance, ‘averaging down’ is recommended. Yacht fuel doesn’t come cheap.
  6. Motley Fool staff will be paid bonuses based on how much money is raised. Those bonuses will range between 86.3% and 94.1% of the proceeds. It’s entirely likely that there won’t be enough money left to do any of the above, so further capital raisings are likely at this time each year, causing massive dilution, unless you participate in them. Which we’ll strongly encourage you to do, of course. Because, fees.
  7. The investment will be structured as a hedge fund arrangement, with redemptions solely at The Motley Fool’s discretion. You shouldn’t assume that’ll ever happen. We’ve gone to this much effort to raise the money… why would we give it back?

You can reserve your copy of the new prospectus by clicking here .

Media Contact

Olaf Prilo

info@fool.com.au

 

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