Thoughts Flashcards
ETF
- exchange-traded fund
- investment fund traded on stock exchanges
- holds assets such as stocks, commodities, and bonds
- operates with arbitrage mechanism designed to keep it trading close to its net asset value
API
- Application Programme Interface
- “The Building Blocks of the App Economy”
- allows different pieces of software to communicate and share information in real time
open API
- allows owner of specific software to give developers (and by extension their customers) universal access to that software and the ability to use it how they please (i.e. build their own interfaces on top)
- goal: interconnectivity
API-driven model
- customers able to set up financial adviser in minutes
- adviser able to easily offer new client various other useful services from third parties integrated on technology platform (e.g. make a will or set up a Junior ISA)
API-first
- two-way integrations facilitated with complementary systems (including CRM, back office systems, risk and cashflow tools, Mobile App)
- potential to develop into full wealth management technology stack that any fintech or advice firm can access, build onto, or integrate with
AIM of WealthTech
to provide digital solutions to enhance personal and professional wealth management and investing
WealthTech and robo-adviser platform
- uses algorithms and machine learning to offer investment advice and management to their users
- considers investment opportunities alongside individual goals, income, marital status, and risk aversion of users
- AI replaces human intervention almost entirely dramatically reducing costs
example of robo-advisers
Wealthfront
Wealthsimple
WealthTech and digital brokerage platform
- allows retail investors and business to gain easy access to stock market information and investment opportunities
example of digital brokerage
eToro
Robinhood
WealthTech general investment instruments
gaining access to expert investor networks and centralising portfolio management tools
future of WealthTech
(1) data security: number one priority
(2) predictive analytics technology: win insights into client behaviour and their needs, improve services and products accordingly
(3) cloud computing: provides for sustainable growth
(4) blockchain technology: created new asset classes
(4) quantum computing: help wealth managers deal with information overload and improve investment decisions in long-term
impact of WealthTech on wealth management and financial advisory industry
- use of technologies like Big Data and AI provides cost-effective alternative to services of traditional wealth management firms
- automated toolkits allow for efficient packaging of financial services
- importance of personalisation
key focus of WealthTech firms
consider what sets us apart as human beings from technology? important to develop these particular skills
Martin Chavez, “Technology and Finance”
- paradigm shifts in software (big computer, personal computer, cloud computer)
- amount of money required to bring software company from beginning to profitability decreased from $50m to $5m
What are Seccl/Octopus Group looking for in new recruits?
- someone eager to learn a variety of new skills
- someone willing to figure out what they need to do or what skills they need to acquire in order to perform exceptionally
St James’s Place Wealth Management
- FTSE 100 wealth management business
- places long-term relationships and advice first, offer personalised advice
- largest company in sectors in UK
- over £112.8bn of client funds under management
- “In a world of call centres and robo-advice, St James’s Place believe in the face-to-face approach…”
AUM
Assets Under Management
Examples of UK Wealth Management Firms
- St James’s Place Wealth Management
- Mazars
- HFMC Wealth
- Group IFA
- Lowes Financial Management
retail investor
- non-professional individual investor
- buys and sells securities, mutual funds, or ETFs through traditional or online brokerage firms or other types investment accounts
- individuals invest through retirement accounts, brokerage firms, online trading accounts, and robo-advisers
Seccl Technology tagline
“Rebuilding the infrastructure of investment and advice”
Sandbox
- software development
- testing environment that isolates untested code changes and outright experimentation from production environment or repository
Python
- interpreted, high-level, general-purpose
- emphasises code readability
Slack
- cloud-based proprietary instant messaging platform
- offers persistent chat rooms (channels) organised by private groups and direct messaging
- provides API for users to create applications and automate processes; noted for compatibility with many types of applications, frameworks, and services
“freemium”
pricing strategy by which product or service is provided free of charge, by money is charged for additional features, services, or virtual or physical goods that expand the functionality of the free version of the software
discretionary investment
- form of investment management
- buy and sell decisions are made by a portfolio manager or investment counsellor for the client’s account
Kraken
- cloud-based energy platform for interacting with both customers (via the web, mobiles, smart-metres) and the industry (e.g. data flows, consumption forecasting, trading on wholesale market)
- tech-led, different to competitors
- aim: use first-class software engineering and creative technology to innovate and provide industry-beating customer service
Good Energy and Kraken
- Oct 2019 Good Energy (clean energy suppliers) announced agreement with Kraken Technologies
- impact of decision to integrate with Kraken’s platform: reduce operating costs, encourages growth as savings reinvested, allow for “digital and clean technology innovation” to provide benefits to consumers
significance of digital platforms
- companies grown rapidly by building digital platforms that build communities and marketplaces that instantly connect businesses and customers across the world
- e.g. Amazon, Google, Alibaba (Chinese multinational conglomerate), Facebook
digital platform
- self-contained ecosystem, greater than the sum of its parts, designed with specific needs of inhabitants
- used to exchange and share goods, information, knowledge, services, etc.
commercial benefits of using digital platforms
- reduce running costs and improve revenues
- collaborate more efficiently (internally and with new partners)
- better follow innovation and market trends
- create better user experience and build uniquely strong connections with customers
target clients for Seccl
(1) fintechs
… want to offer investment services or tools
… looking for open API-based custody offering with developer sandbox and slack channels to chat with team
(2) financial advice firms. wealth managers, discretionary fund managers
… looking for five to ten firms with/want to gain their discretionary permissions
… explore development of their own platform using Seccl technology
… allows taking control of full client experience
CONTEXT: wealth management and financial industry
- many adviser and wealth management firms struggling with rising costs and limitations of legacy systems (old method of outdated computer system yet still in use)
- growing pressure to provide customers with smoother and more intuitive user experience
- only fraction of UK population currently receives financial advice, traditional firms indicate servicing more customers is not cost-effective
- current inefficiencies mean financial advice platforms overprices; using newer and better built services will lower costs for both firms and clients
Octopus AIM
become indispensable in process of offering good and efficient financial advice and investment services
“hybrid advice”
- technology extends reach and insight of human adviser
- good tech: about scale and prioritising human interaction where needed most
- strips out manual and cumbersome processes while maintaining human connection with client
role of account executive
- responsible for client servicing and client acquisition
- direct link between company and existing client
- manages daily affairs and ensures customer satisfaction
