First of all I’m probably the world biggest fan of Class the...

First of all I’m probably the world biggest fan of Class the software and the company itself.they have literally changed my life. Keeping that in mind I will try to be objective as I can.

Our firm services genuine high net worth clients and has approx 220 SMSF. We have been on Class for about 4 years and have been using Class portfolio since pretty much day one (although it wasn’t officially a product until much more recently).

The software is outstanding. It might seem strange after saying that that there are literally thousands of things they could do to make both products better. The good thing about Class unlike all other accounting software companies I have dealt with they are continuously improving the products and do actually care about product quality. Although they have spent millions on R&D since we have been a customer they have never attempted to increase our fees.

BGL is inferior but cheaper. To be honest though that suits a lot of firms. My expectation is that Class Super and BGL will share in the non AMP SMSF market 50/50 at the end of the day. Right now there are 600000 ish SMSF so you can do the maths. A personal and probably controversial opinion I hold is that SMSF has peaked and the total number of funds will decline materially over the coming decades as compliance costs rise, concessions are wound back and the baby boomers start falling over.

Class Portfolio is a much more complicated beast. The challenges of dealing with non SMSF wealth clients are much less than for SMSF clients and Class Portfolio is probably a weaker product overall. I agree with the benefits that Leveraged put forward and that is how we sell and use the product in our firm. The reality though is that many firms are still terrified of providing those kinds of services. If they keep executing I could see 1 Portfolio for every 1-2 SMSF on the software in 5-7 years.

I had the option of participating in a priority allocation in the IPO and turned it down and have never been a shareholder. My concern has always been at the end of the day this is niche product and the maximum addressable market is reasonably small. I note there is possible blue sky beyond my numbers above if they develop the product enough that it takes on Praemium Etc in the financial planner space or they manage to on sell the software internationally.

I am shareholder of Xero as one day they literally may have 10s of millions possibly 100 million subscribers i.e. become of the biggest companies on the ASX. You will never be able to say that about Class.

All the best.