A business model based on human interaction coupled with technology could reverse a trend of consolidation in the robo-advice sector, says the European chief executive of Wealthsimple.
Toby Triebel says: “The hybrid model works extremely well in the UK and [in all places] as every one of our clients have access to a human adviser.”
He adds: “Technology will find it very hard to replace that human interaction. Ultimately, you are dealing with people’s finances and money, which is a very sensitive topic.
He acknowledges that “[artificial intelligence] has made many headwinds”, but still stresses that technology can never replace human advice.
Mr Triebel explains how Wealthsimple launched in the UK in late 2017 to address a gap in the British advice market. The company originally launched in Canada in 2014.
The human advice element of Wealthsimple’s UK business consists of three advisers, all qualified to chartered level, and a ‘client success’ team.
The client success team based in Toronto and London cannot provide any advice, but can speak to clients to answer simple questions, such as the type of accounts Wealthsimple offers – but they then speak to an adviser if they want a portfolio view or to change their level of risk.
“Millions of British people do not have access to advice, predominantly because they think they may not have enough money to invest or they think [getting advice] is too risky,” says Mr Triebel.
Wealthsimple was set up to help solve that issue; to help people achieve their financial goals, he says, adding that what really attracted him to the company was the technology to solve this problem.
He says Wealthsimple tries to differentiate itself in a crowded robo-advice marketplace through building a lifestyle brand for financial services.
“We want to help them to invest in something more personal and relatable, as we understand that investing can be scary, overwhelming.”
This is why the company has a blog – essentially a magazine profiling interesting people’s relationship with money, he notes.
Mr Triebel left Spotcap in 2016, a Berlin-based fintech company that he co-founded to join Wealthsimple. Spotcap provides unsecured credit lines to small businesses.
He began his career at Goldman Sachs in London and then moved into the hedge fund industry. He was an investment professional in emerging market hedge funds before moving into the entrepreneurial fintech space.
“I left Goldman Sachs to progress my career and do something that really interested me at that time, which was investing,” Mr Triebel says.
Mr Triebel says socially responsible investing is a core theme for Wealthsimple as the company says that one-in-five of its global clientele has SRI portfolios.
“My outlook for the environmental, social and governance sector is positive – especially for younger clients. If you look at the asset class as a whole, it has grown significantly over the last few years and I would expect that growth to continue,” he says.
Wealthsimple launched a self-invested personal pension in October 2018 and a service to help savers switch from their existing provider.
This comes as Mr Triebel says there is about £20bn of lost pensions – unclaimed pensions or pensions that savers are unaware of – in the UK.
“They say our generation will have 11 jobs by the time we retire compared to previous generations,” Mr Triebel says, highlighting the importance of being able to trace pensions from all the various number of jobs that, particularly millennials, will hold during the course of their working lives.
He was able to trace one of his own personal pensions that he was unaware of through this tool. He says he was shocked to see the pension that was located through the tracing tool was still paying three per cent a year out of his pocket.
“Technology is great because we can lessen the cost burden by automating a lot of things. The average UK investor still pays about 2.5 per cent in fees compared to our 0.5-0.7 per cent,” Mr Triebel says.
The robo-adviser posted a loss of £2.3m during 2017. The company launched in September 2017, meaning the loss only covered four months.
Mr Triebel admits he does not expect Wealthsimple to become profitable anytime soon, given that the robo-adviser is still expanding in the UK.
“We expect to see growth, but we aredefinitely a pre-profit company right now globally,” he says.
Power Financial, a Canadian conglomerate, has invested C$165m into Wealthsimple.
Mr Triebel explains how a similar model to one of the robo-adviser’s Canadian products – the Adviser Product – can be implemented in the UK.
The Adviser Product provides advisers with a platform that helps them manage clients and provide a great user-experience for their clients, he notes.
It helps them work on their relationship with the client, and automate all the paperwork and the back-end that comes with onboarding a new client, adds Mr Triebel, suggesting that such a product could work in the UK.
Saloni Sardana is a features writer at Financial Adviser and FTAdviser.com
