Firing Line: Karan Shanmugarajah

The automated service solely offers investment advice, taking active, passive, ETFs, but not alternative solutions into consideration. The system is not suitable for individuals with complex circumstances, and such people would be guided to seek traditional advice.

The ultimate goal is to limit the cost of advice and execution to a maximum of 1.25 per cent – although it is likely to be priced between 1.25 per cent and 1.75 per cent in the interim while the system is being augmented, Mr Shanmugarajah said.

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Algorithms are at the core of the service, using responses provided by the user to collate an appropriate investment strategy, but what happens if they becomes faulty and offer the consumer an unsuitable solution?

Mr Shanmugarajah admits that no system is perfect, but claimed the algorithms will be regularly reviewed to ensure they are fit for purpose.

He was, however, coy in revealing who owns the liability for the advice generated by the service, claiming it is an area that is yet to be fully ironed out, but will be the company’s equivalent of a “secret sauce”.

The digitised service operates under a restricted model to keep costs at a minimum according to Mr Shanmugarajah, adding: “I really struggle with the term restricted because its meaning here is different from MiFID’s definition. We do not take any commission trails or anything that would lead us to recommend a certain provider. We always put the client’s interest first.

“It is like going to Lidl. Some people might just need a choice of two brands of cereal, which is fine, whereas other people would want to go to Waitrose for greater choice."

The firm is currently going through the FCA’s authorisation process. Aspects of the automated service are currently being used by a listed insurance company and a start-up with two co-founders. The company is currently in talks with potential partners, including financial advisers.

However, it would appear that intermediaries are a difficult group to win over. Mr Shanmugarajah said: “It is not easy selling to financial advisers. Three out of 10 IFAs like us. The vast majority are cynical.”

KARAN SHANMUGARAJAH'S CAREER HIGHLIGHTS

2015-present: Chief executive, WealthKernel

2012-2015:  Portfolio manager, Barclays

2010-2012:  Analyst, Barclays

2010: MSc international accounting and finance, Cass Business School 

2009: BCom finance, Concordia University