You’ve just announced your intention to launch eVestor. Tell us a bit about the company?
eVestor is a new online investment business aimed at providing the next generation of savers with affordable access to professional financial advice and guidance.
Why are you launching the service?
The idea for the business came from the belief that the cost of investing and buying financial products is too expensive and too complicated for consumers, both of which can put off those who may not have lots of money or complex needs but still require some financial advice. We wanted to create an affordable proposition that engages with its customers and provides a service that suits their actual needs.
Our aim is to make things easier for people to understand and more affordable to action.
Who is behind it?
The business is backed by Duncan Cameron, the founder of MoneySupermarket.com and myself.
When do you hope to launch?
We are expecting to launch the business in the first half of 2016 and go live – take our first client money – later that year. The priority is making sure the platform and proposition we are developing is the very best it can be and that we are able to provide a service which meets our customers’ needs and expectations.
Will you actually be offering advice to customers?
Yes, unlike much of the competition we will be offering access to highly qualified financial advisers from day one. It just won’t be face-to-face. Customers will have access to support and advice all delivered in a digital form. As long as people are comfortable with engaging through mediums other than face-to-face and not receiving reams of paper, then we will pass the savings onto them in the form of lower costs.
How will this advice be delivered?
Customers will be able to ask any questions throughout the process via webchat and email. We expect almost all customers to make contact at least on the first time of using us, if only to gain greater comfort on what is a pretty big decision for them. Our hope is that over time our proposition and the educational approach we will take will help them become increasingly confident making decisions, but the advice option will always be there.
Who else will be involved in the business?
I will be joined by three new directors in their early 30s who will start in January. When looking at people I wanted to have working with me I had three key criteria: young, bright and ambitious. I am a firm believer in surrounding yourself with people who cannot only challenge your own thinking but can add value through their own views.
I have appointed a technology officer from outside financial services who therefore brings a totally fresh outlook on engagement and build. A computer science graduate from Manchester University, he has a strong background in large-scale development and management and will be bringing a hand-picked team with him.
When looking for someone to manage the advisory team, again I wanted to find someone who understood not only what we are trying to create but also the expectations of the next generation of investors. I’m delighted to have been able to appoint a chartered planner who will not only ensure that our processes work but will also build up the chartered advisory team as we grow.
The final appointment is in operations which will be a crucial role and will ensure that the interaction between development and advisory is smooth and effective. Again I have found someone who has fantastic experience in the retail platform market and the underpinning technologies.
What is the total cost of the service and how is that broken down?
The entire service will cost on average 0.44 per cent, or 44 basis points in financial speak. This is made up of 35 basis points for product, advice and investment, with an average of 9 basis points for fund charges. Our portfolios are fully diversified from cash through to property and include all equity markets. It is important to clarify that we are not an online discretionary fund manager adding value through their market timing or subjective selections. We are an advisory business that will use our own portfolios, run on a discretionary basis, to help achieve our clients objectives.
What is your target market in terms of customers?
Our prime target is the next generation of savers and investors, rather than the already wealthy and well-advised, but anyone who is comfortable receiving financial advice online and engaging through digital channels – as opposed to face-to-face – will be welcomed with open arms. Crucially the service will be open to anyone, whether they have £10 or £1 million to invest.
Do you expect competitors to be able to challenge you on cost given how low the charges are?
Service and cost are the two areas that we will focus on constantly – trying to always enhance the former and drive down the latter. We have made the deliberate decision to build and deliver our own platform and product range which, while obviously increasing the short-term capital requirements for building, means we are not having to pay third-party profit margins and costs, giving us greater control of cost management. This, along with realistic expectations on long-term profit margins, is what enables us to drive costs down without compromising on quality. It is impossible to deliver a low-cost solution with high variable costs, especially if these are someone else’s.
How others respond is up to them and their shareholders.
One of the benefits of eVestor being funded by myself and Duncan is that we can take a truly long-term view on what we believe is the model of the future. It is a tame environment with no external investors seeking a return or, worse still, losing interest altogether.