WealthSmart Feedback - a different way to invest (in alpha stage)


(Yannick Brunner) #1

Hey everyone! We’re a bunch of enthusiasts who just launched an investment proposition that sits close to our hearts. It’s still in alpha stage, so feedback on the proposition would be very helpful to mold this into something helpful. Also feel free to give me feedback on the marketing site, I’m not a designer but tried my best to create something clear. Please don’t hold back anything negative! Any other questions welcome.

www.wealthsmart.co.uk

At a glance here’s the proposition:

  • We offer only one portfolio, this one is specific to each user and when they invest. The portfolio starts off invested in low-risk investments (high-grade bonds) and gradually invests the profits into higher-risk investments (stocks and shares). Our goal is 1st to preserve the initial amount invested and 2nd to grow it using the profits.
  • You can start with a tiny amount (£100): we believe the key to building good investing habits is first to get started (this helps people cope with risk better over the long run).
  • We only collect our fee from customers if they’re profitable: we believe our industry is crippled by a misalignment of incentives.
  • We’re tilting our portfolios towards companies who invest in a no-carbon future: we believe the transition to 100% sustainable is a must, but are tackling it progressively to keep costs low and leave returns unaffected.

In case you want to find out more details:
A better description of our proposition
Our take on fees


(Michael) #2

I’m interested to see how this progresses over time.

After registering my interest, the box has a kickofflabs URL in it (but the copy works fine):

Edit: share link is a dud?


(Yannick Brunner) #3

I’m on it! I’ll get this fixed asap, thanks for flagging.


(Tony) #4

Yeah, for some of us who aren’t millionaires, this isn’t that tiny, tbh. I appreciate that in terms of investing it’s not huge, but that did annoy me. Sorry.

Anyway, this topic says you’re in alpha stage, but your website states beta, so… can you choose one and stick with it? Other than that, it all looks fairly clear.


(Yannick Brunner) #5

Good point. I will watch my wording in the future. We tried experimenting with less than £100, unfortunately, the whole strategy wasn’t feasible. That being said as our user base grows, this could change. I think alpha is a more accurate reflection of our stage, as we’re currently onboarding a handful of users a week and still holding one-to-one interviews. I’ll update the website. Thanks for flagging the inconsistency.


(Michael) #6

I figured the £100 would be an initial limit until you gain more traction. It seems to be fairly common to have a £50-£100 initial limit on these due to the costs involved with trading and fund providers.

In time I imagine(hope) you’d be able to reduce that to maybe £10, but on the flip side of that, if someone can only manage £10 for investment, is it really the best idea for them to put that into investment? Building an emergency fund / larger one would make more sense first, then when the emergency fund (Monzo Pot) has grown enough, placing the money into an ISA/Investments makes more sense.


(Yannick Brunner) #7

There are two ways to look at this. From a regulation point of view, you need to ensure users save towards their safety net first or at the very least pay off any high-interest debt they might have. From my personal experience, getting started is incredibly valuable from an educational standpoint alone. Having money invested (even the smallest amount) is the best way to feel the ups and downs of financial markets. Experiencing this helps people improve their composure. When they’re prepared to invest a significant portion of their savings down the line, they will perform better. Investing virtual money could be another way to achieve this (something worth considering for us). My team and I also explore having a learn and earn system, to reward users for learning about topics that could help their performance in the long run.


(Peter Roberts) #8

Registered my understanding, thanks for sharing here :slightly_smiling_face:


(Change Works) #9

“Imagine your money is a seed,” it says.

You’ve not seen my garden, have you? Seeds don’t survive long near me. :wilted_flower:

I like the concept, though. I’ve registered my interest, and I look forward to seeing what develops.


(Yannick Brunner) #10

I’ve started another room for discussing investing more broadly (dos and don’ts): General investing dos and don’ts

Feel free to drop any questions you have there, I will do my best to answer or check with people I know in my network.


(knows someone who knows Tom quite well) #11

1% fees? For a bot?


(Yannick Brunner) #13

Hey Tom, sorry not sure I follow.


(Yannick Brunner) #14

Hi Dave, good of you to bring this up. Fees are one of the most contentious parts of the industry. Let me explain how we set this amount and my views on the subject as a whole.

Our biggest priority when designing the service was for the compensation model to maintain alignment of interests between WealthSmart and its customers. Our win-win charging alongside feedback from our target market led us to design the smart portfolio concept (an automatic portfolio that firsts seeks to preserve capital, then to grow it). The combination of both, win-win fees and risk-adaptive portfolios, had a significant downward pressure on the profitability of the business model as a whole. We set the fees at a level that made the whole service viable. We’ve also modeled the effect of our fee on our customers’ short/medium/long-term performances. This has led us to set a threshold above just being profitable before charging, to make sure it doesn’t penalise early stage portfolios weighted towards lower-risk/return products (ie. we let give customers a running head start in profitability before charging). The specifics of how we do this are still being fine-tuned. Once we settle on the parameters, I will write a blog post on the subject as a whole

Another trend we question is the rise of passive funds and a race to the bottom for investment fees (vanguard’s robot proposition in the US charges a meer 30bp). I think there’s a concern here of the commodification of services that benefit greatly from experience and reflection. During my days as a market-maker in fixed income ETFs, I witnessed first hands the wild swings in liquidity of high-yield bonds. On some occasions, the ETF would trade 2% under its nominal value (the total value of the underlying constituents). Despite this, people were still selling it unaware of the 2% surcharge they were incurring indirectly. The passive high-yield ETFs funds were designed to be cheap and simple replication strategies, and the side effect was a failure to address the major liquidity issues of certain bond issues during volatile times. Meanwhile, some (not all…) actively managed funds were far better at mitigating this effect by changing the makeup of their funds inline with volatility. Those active funds charged nearly double what the passives charged, but too me the value for money was justified as the difference in fees was much lower than the 2% in this scenario. They leveraged their experience of a niche market to protect their investors from these temporary liquidity holes. We carry this ethos with us at WealthSmart. Our whole purpose is to deliver value for money to our end customers, by leveraging our experience and a flexible investment mandate.


(Yannick Brunner) #16

Thanks! Fixing it now.


#17

Pro tip for the future:

  1. Someone tells you something seems odd on your site?
  2. Open your site
  3. Hit CTR+F and insert (part of) the odd phrase

:stuck_out_tongue:


(Yannick Brunner) #19

ha ha, sound advice


(Yannick Brunner) #20

An interesting read regarding the performance of sustainable companies: http://www.hbs.edu/faculty/Publication%20Files/SSRN-id1964011_6791edac-7daa-4603-a220-4a0c6c7a3f7a.pdf


#21

Just got my invitation through - Anyone else made progress with this yet?


(Change Works) #22

My invite just arrived.


(Yannick Brunner) #23

Congrats on the invites! If you’re curious about the backstory, we posted this today: