Fintech

As UBS scraps its UK robo-advisory project, one fintech firm are attempting to lure those wealthy investors who still want online wealth management. Mishelle Thurai speaks to Tiller Invest about surviving in a market where attitudes towards fintech are rapidly changing.

Founded amid the British summer heat wave, Tiller Invest is one of the UK’s newest fintech firms, described by its founders as, “the lovechild of Bloomberg meets Apple, a platform that was to be premium, sexy and different”.

Founders Jonathon Wauton and Ian Cadby launched the platform in July 2018, in order to help wealthy individuals eliminate the costs of using wealth managers by having everything made readily available for the “tech savvy” generation. Its technology is provided to both individuals and institutions with around 70 per cent of its revenue derived from the latter.

“You can see certain private banks around the world that maybe are saying to themselves ‘okay we have a $50m portfolio that we are managing for a customer but actually some of their grandchildren want portfolios as well. That’s going to be economically costly for us – but if we had our own private banking platform then this would cut the costs,’” Cadby tells PBI.

This is where Tiller aims to step in, providing clients with multiple portfolio s from as little as 0.75 per cent a year (not including fund fees) and with a minimum investment of £10,000. Tiller provides both passive and active funds as well as thematic investing to their clients.

Recently UBS decided to close it robo advisory arm SmartWealth, little more than a year after launching it to UK customers.

In a statement, UBS said: “Having conducted a thorough assessment, however, at this time we believe the near-term potential is limited and have therefore decided to close our digital-only offering in the UK.”

Many put Smartwealth’s closure down to its mass-market appeal from a private bank that specialises in wealth management services.

Tiller Invest has responded UBS’s withdrawal from the market by offering SmartWealth clients a 20 per cent discount to clients opting out of UBS Smartwealth and transferring their assets to Tiller.

“It is arguably opportunistic but this is a dog-eat-dog world, we thought it would be rude not too,” says Cadby. This offer is said to last till the end of October 2018.

Cadby Continues: “There were some parallels on one level anyway. One parallel was that individuals that were investing with UBS were invested in a combination of both active and passive managers. Not many robo-advisers have active in their makeup. We do.

Coined in a 2003 Fortune Magazine article, High Earners Not Rich Yet (HENRYs) is a term applied to individuals with high discretionary income and a strong chance of becoming a HNWI in the future.

The wealth bracket for these individuals lies in the $250,000 to $500,000 range and they are often classed as the ‘working rich.’ It’s this demographic that Tiller target rather than the HNWIs and UHNWIs that are most often associated with investing and wealth management.

“We are age agnostic we don’t mind if you are 23 or 123. It’s normally professional services people that have got a good income. They are aspiring to be rich, they have a lot of savings and a good new disposable income, and what do they do with their money when interest rates are virtually negligible?” Cadby says.

The closure of Smartwealth has led many to believe that robo-advisory platforms cannot exist within traditional private banks.

However, this is not the view of Wauton, who believes that financial technology can free up individuals in wealth management to do “more value added stuff to their clients.

In the same way that traditional travel agents still exist alongside online booking tools, Wauton says the same can be applied to wealth management. “Maybe you don’t go to your travel agent now to book an Easyjet flight – but what that has done is allow them to spend the time to go, ‘well what can we do as a travel agent? Now it’s time to do the more different kind of stuff, so we are going to become a specialist in multi-trip or adventure trekking’ – those firms are doing really well”.

According to GlobalData’s Technology in Wealth Management: Drivers for Adoption 2017 report there is an increase of wealth manager concerns about the growing digital competition.

The report suggests that, “the majority of providers globally agree that wealth managers should invest in robo-advice to complement their existing offerings”.

Wealth managers surveyed recognised the benefits of including such platforms in their suite of services. The technology and algorithms can assist produces asset allocation, rebalancing of portfolios and personalised financial solutions.

Though Smartwealth’s closure might yet be a boon to Tiller Invest, both Wauton and Cadby agree that their services will also compliment traditional wealth management practices.