The future of asset and wealth management?
A thoroughly excellent event was organised by Level39 in London on 25 May 2015, featuring speakers from all the key players and analysts in the fairly nascent European roboadvisor scene and around 250 delegates.
My five top takeaways are below, or you can read my storify story here.
1. Mind the 2016 inflection point
Rohit Krishnan of Mckinsey made this point, but it was echoed by others. The growth rates of the two longest stablished US roboadvisors (Betterment and Wealthfront) have stalled somewhat, possibly co-inciding with the robo launches of two large incumbents Vangard and Charles Schwab. With significantly lower AUM than is probably needed to justify costs and valuations, 2016 could be an inflection point, which way will things tip?
2. Customer acquisition cost is key
It’s a closely guarded secret when it comes to individal firms, but surveys and other data in the public domain suggest that customer acquistion costs can be in the region of $300 or higher, but lifetime value of an average client may only be $250. If that’s true, then it would seem to pose a challenge to the business model.
3. But Europe is a bit different
Several of the European robos made the point that the European market is a bit different to the US. With less competition on fees in the traditional advised space, European robos charge in the region of 40-70bps rather than 20bps in the US. This means the breakeven point in AUM might be somewhat lower, 0.5-1bn was suggested.
4. It’s all about the api
There was a fascinating panel covering the tech aspects. The main takeaway being that we have entered a new era of openness, and what’s important is opennes with regard to architecture & api , to enable other components “plug in” to create an ecosystem.
5. Scale & brand are hard
These two comments stood out to me from all the points made by the startups. Firstly, building the right scale to reach 1m+ customers is difficult (more difficult than we thought said Shaun Port of Nutmeg). Secondly, several panellists commented that building the wider brand and customer awareness was key, no-one had really done it yet, and many firms were in a race to try and do so.
that’s it! plenty more I could say (and check out the storify for more).