The Barefoot Investor blueprint was a subscription stock tipping and general financial advice newsletter run by The Barefoot Investor Scott Pape and his team of accountants and marketers up until mid 2020.
Among the talented Blueprint staff was the accomplished investor, accountant and financial author Mike Kemp; author of the Ulyses contract, Uncommon sense and Creating Real Wealth – three of the best financial independence books around.
The Barefoot Blueprint was distributed weekly, along with ad-hoc email letters and monthly focus areas to work on. The Blueprint became a thriving community with a packed online forum and large repository of archived financial information and advice.
“Right from the get-go we set out to create the best investment newsletter in the world. We focused on empowering our members with our fiercely independent take on share investments, health insurance, setting up a will, investing for your kids, refinancing your mortgage, starting a side business, saving on tax and far more.”The Barefoot Investor
I personally thought the Barefoot Investor Blueprint was awesome as it was packed full of great advice and actionable content which saved (and made) me lots of money. I subscribed to it for $500 per year, alongside a number of other stock tipping and financial advice newsletters such as the Motley Fool.
Unfortunately, I under performed a basic broad market index over a couple of years with this strategy.
Eventually due to conflicts of interests, growing legal concerns and to pursue other hobbies, Scott Pape decided shut down The Blueprint in July 2020.
Introduction to the Barefoot Investor Blueprint
The Barefoot Investor Blueprint was a subscription stock tipping and general financial advise newsletter you could subscribe to for $500 per year. Subscription also gave you access to the Blueprint website member login, where you could access archived information (old newsletters) as well as read and post in an online forum. There was also a thriving Barefoot Investor Blueprint Facebook group, however this was shut down with the Barefoot citing privacy concerns (read: it just got too difficult and expensive to manage).
The Blueprint also featured a number of theoretical investment portfolios such as the ‘Breakfree Portfolio’ of barefoot index funds, as well as a live example of an investing portfolio called the ‘$100K Portfolio’. In the $100K Portfolio Scott Pape showed you how he decided to invest $100K through the Blueprint company trust, with a detailed analysis on companies and stocks he would either buy to add to the portfolio, or sell to take profits or cut his losses. This formed the main basis of the stock tipping newsletter, although the blueprint also featured ongoing analysis of many different companies, investments and shares.
His educational serious was outstanding, and quite frankly featured some of the best, independent, fact checked and actionable general advice I have ever read. Each month there was a different focus area for you to work on – such as getting a better interest rate on your mortgage, how to choose appropriate insurance, and even getting a raise at work. These focus areas and educational content was, in my opinion, worth every cent of the subscription and personally saved me tens of thousands of dollars.
I also got a lot of value out of the online community on the Blueprint forums, where there was a wealth of great information as well as a great way to ask questions to Scott Pape and Mike Kemp because they would lurk the forums and answer questions.
Good things about the Barefoot Investor Blueprint
- Amazing educational content and actionable general advice in his newsletters and blog articles
- If you read between the lines, you see he advocates an index investing strategy
- Example Portfolios for you to follow, or for inspiration
- Detailed company and share analysis and breakdowns
- Great online forum and community for community support and encouragement
- Barefoot Investor would actually answer your questions
Bad things about the Barefoot Investor Blueprint
- Subscription service was fairly expensive ongoing expense.
- Once you ‘bought’ into his stock recommendations, you needed to remain a member for updates to know when to ‘sell’ them.
- His stock tips had a lot of duds, I personally under-performed a basic stock market index.
- The ‘Barefoot Effect’ would cause the price of his stock recommendations to temporarily surge, inflating prices as thousands blindly rushed in to buy.
- Creative accounting on the $100K portfolio made its performance sound better than it was.
- $100K portfolio was made to sound like the Barefoot Investors nest egg – in reality it would have made up a negligible percentage of his net worth and thus the risk to him was much lower than the risk to any mum and dad investors out there.
- The Blueprint exessively reminded everyone how it was ‘Fiercely Independent’ to try and address concerns of any conflicts of interest.
Barefoot Investor Blueprint legal concerns
The Barefoot Investor would typically release his stock tipping article on a Friday afternoon after the ASX trading had closed, giving subscribers the weekend to mull over the articles before trading resumed the following Monday. This lead to what many financial analysts dubbed as ‘The Barefoot Effect’ where The Barefoot Investors stock recommendations would temporarily spike the share trading price as his followers rushed in to buy their shares when trading opened. Some even went so far as to call ‘The Barefoot Effect’ a form of price manipulation.
To address these legal concerns, The Barefoot Investor declared he would wait a period of time before buying the share to form a part of his $100K portfolio (which usually meant the price settled back down when he bought in). However, given Scott Pape’s significant Net Worth, the risk to him from this was negligible and the $100K portfolio was really only a business expense that made far more in profit from subscriptions than it ever would have from investment returns itself.
Further, there was no disclosure or real way to know about Scott Pape’s (or his staff’s) personal investing outside of the $100K portfolio – leading some to speculate that they may have benefited from these pricing manipulations or even shorted competing companies. I’ll just put it out there and say I think that Scott Pape is a pretty smart guy, and there is no way he would jeopardize his reputation or business by doing something this stupid or illegal. His reputation alone would be worth way more than any criminal gains. Nevertheless, Scott Pape found himself increasingly under the spotlight for various reasons, and even testified in the Royal Commission into Financial Misconduct.
Conflict of interest with Barefoot Investor Blueprint
One long standing conflict of interest that is often raised is the Barefoot’s association and previous employment with the HostPlus superannuation fund. Scott Pape was questioned during the Royal Commission into Financial Misconduct into potential conflicts of interest with his Barefoot Investor book and the Barefoot Investor Blueprint, about his previous employment with the HostPlus.
In the book, and the Blueprint subscription, The Barefoot investor explains the benefits of an indexing approach when it comes to investing. Whilst he never uses the words ‘I recommend you use the HostPlus Superannuation fund’ (because that would be specific financial advice and he could only give out general general financial advice under his AFSL), he talked about it a lot and explained that he used it personally. It can be then probably be considered reasonably practicable to assume that the average person reading his content would assume he endorses HostPlus super and their index investing products.
“Hostplus board documents tendered to the banking royal commission headed by Kenneth Hayne refer to the “unprompted endorsement” of the investment option sparking a “Scott Pape roll-in” of 20,000 new members to the fund, worth $2.5 billion in funds under management. In his book, Pape noted the “ultra-cheap” fund had “beaten the pants off most stock pickers”, outperforming the average fund over five and seven years.”Australian Financial Review
It turns out Scott Pape was actually employed by HostPlus superannuation to produce content for their blog for SEO and marketing purposes, and they incubated the Barefoot Investor brand.
“From late 2007 until 2012, Hostplus contracted Pape for a financial literacy program known as Ka-Ching Ka-Ching. He gave seminars for Gen-Y hospitality workers in Sydney, Launceston, Darwin and even Hamilton Island, among numerous other destinations.”Australian Financial Review
So where is the conflict of interest? Well, it was suggested that by endorsing the HostPlus ChoicePlus superannuation investing option – which The Barefoot Investor called the ‘Self Managed Super Fund – Lite’, he was encouraging many (particularly older) Australian’s into using the Barefoot Investor Blueprint stock picking subscription service.
Once they had invested their superannuation (through ChoicePlus) into the stocks he had recommended, they had to follow his recommendations about whether to keep or sell the stocks or else risk their super porfolio tanking. This really started to blur the lines between personal and general financial advice, and also raised doubt about a potential conflict of interest with HostPlus since it resulted in billions of dollars flowing into their accounts under management.
Why Did Scott Pape Close the Barefoot Investor Blueprint?
Ultimately it just all got too hard. Scott Pape cited that due to regulatory requirements, he needed to surrender his Australian Financial Services Licence and stop providing general financial advice (for profit) on the Blueprint, in order to become a not-for-profit financial counsellor.
However, my personal guesses as to other contributing reaosns why he may have closed the Blueprint are;
- It got too big, and took too much time to manage
- Regulatory compliance became difficult to toe the line between General vs Personal financial advice
- Risk of legal concerns regarding share price influencing and conflict of interest became too high (especially regarding HostPlus super)
- Damage to his reputation with a subscription stock picking newsletter was not worth damaging his branding – far more profitable to be ‘independent’
- Active stock picking was literally against the main philosophy and core values of his book and personal investing strategy – which was index investing
- He had already made his millions and no longer needed to work the business for any financial gain
- Having already achieved what he needed to in business and finance, he wanted to turn to Barefoot Step 9 – Leave a legacy. This meant surrendering his AFSL
Can you still access the Barefoot Investor blueprint?
It depends. I personally saved as much of his newsletters and content as I possibly could because they are absolutely brilliant, and when the Barefoot Investor announced that he was closing the Blueprint down, he gave members an opportunity to save everything as one giant downloadable.
This information is not readily available anymore, however, I have heard if you very politely email him or get in contact through the Barefoot website, they may give you a link to where you can download it. And this treasure trove is gigabytes worth of juicy PDFs. Heck, I would personally pay the $500 subscription for access to it all again.
Before anyone asks, unfortunately no I cannot personally distribute any of this as it is not my intellectual property and the Barefoot Investor has rights to all of his content. If you do manage to track it down and get your hands on it though, it is packed full of awesome content and actionable advice and tips.
Mr Barefoot or your team – if you are reading – would you ever consider freely publishing this information as an act of charity to the working class?
I am a big fan of the Barefoot Investor and Mr Scott Pape. I got an incredible amount of value out of the Barefoot Investor Blueprint subscription, and while I might called him out for the bullshit stock tipping component of his newsletter, the Blueprint overall was a fantastic source of information. I personally saved tens of thousands of dollars from his general financial advice, and was able to also apply this to my family and friends who would listen. I mean gee, it was probably quite influential in me even starting blogging about financial Independence as Captain FI!
I don’t really think there are any legal issues or conflicts of interest with the Barefoot Investor – he comes across as a genuine, down to earth Aussie thats just trying to do the right thing. Sure, he has made his millions – but finance was his expertise and this was his job. You wouldn’t have a go at me for flying planes ‘Just because I wanted to make a buck!’ would you?!
Shutting down the Barefoot Blueprint, ultimately, was probably the right thing to do for The Barefoot Investor brand, and Scott Papes personal financial journey. Whilst I am sad I no longer get access to such a great concentrated source of financial information, I am happy and proud of Scott Pape for entering his Barefoot Investor Step 9 – Leave a Legacy.