(Pictured above, Michelle Pearce-Burke, left and David Semmens, right)
In a DFM market dominated by traditional firms with deep histories and banks of clients, the power of fintech has allowed new firms to break the mould, something which online investment manager Wealthify has taken advantage of, writes Alex Foster. I went to visit CIO and co-founder Michelle Pearce-Burke and head of investment strategy David Semmens at Pier 64 in Penarth, to see how they are tackling this challenge head on.
Sitting down to risotto and steak, Pearce-Burke tells me how she entered the industry.
On finishing school she studied medicine at university, but left after three years with a medical science degree and went back home to Guernsey. Here she worked as a stockbroker for a boutique firm, training as a wealth manager. It was here she had the idea for Wealthify.
Semmens’ industry path was more traditional, but saw him move all over the world. After studying economics at both BSc and MSc level, he moved to the US through the Standard Chartered Scheme in 2007. He spent four years in the US, before moving to Euler Hermes in Paris and then HSBC in London, finally joining Wealthify in May of this year.
As we nibble away at our lunch, conversation moves onto the gap in the market which Wealthify and Pearce-Burke had to fill.
‘I had plenty of friends who had average amounts of money to invest, but not the lofty sums required to make them eligible for discretionary management services,’ she begins. ‘All too often, they were left scrabbling around trying to “DIY” invest.
‘At the time I conceived the idea for Wealthify, “robo-investing” was gathering pace in the US, while in the UK there was only one provider in the space.’
She adds: ‘Passives were selected as our building blocks. We were conscious that our customer base would be extremely cost conscious, which again backed up the passive investment approach.’
(Pictured above, Alex Foster, left, David Semmens, right)
Wealthify’s charges sit at only 0.7% per year which includes all management costs, excluding fund charges and spread costs. Costs can even go as low as 0.4% if a client invests £100,000 or more. ‘Our original models were passive only, but we have recently added an ethical offering combining both active and passive funds, as ethical funds require a much greater level of due diligence,’ Semmens continues. ‘We want to make a positive impact in what we choose to invest in but our model also attracts a younger demographic than the average DFM. Our own audience research clearly showed that an ethical option was desirable to many, so it was a no-brainer for us.’
Additionally, Wealthify does not charge withdrawal fees, giving extra freedom to its clients. The firm now has a client base of nearly 10,000.
As we finish our meals, I’m keen to know what they see as their biggest threats and challenges when trying to break into a market dominated by traditional DFMs?
‘Our main challenge is how we go about building our client base. Traditional DFMs have an existing client base and can bring people in from relationships elsewhere,’ Pearce-Burke says. ‘But we know that tech is taking over all of our lives and at some point a major digital player in the market is going to be a norm.’
Semmens gives a tip of the cap to the presence of the tech giants too.
‘Naturally our worry is that the big tech companies invade our space – think of the Bank of Amazon – but we have some security, as we feel that they’ll move into the insurance space first, as Alibaba has done in China.’
GLASS HALF FULL:
'Emerging markets remain cheap on an absolute and relative basis. For long term investors, this has to be attractive, if you can weather the volatility.'
GLASS HALF EMPTY:
'While QE served its purpose, it has distorted so many markets. Where is the support for the next crisis going to come from?'
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