quite some people on here work in the financial sector and/or have an entrepreneurial background. a thought that crossed my mind regularly in the past couple years:
someone should really disrupt VZ [vermögenszentrum] and the likes (and make some nice money in the process).
vanguard-like, bezos style “your margin is my opportunity”, right?
tough challenge, i know. but hey, there’s a tiny chance we could connect the right people, so why not ask?
so, in case there’s any interest, step forward!
thanks,
your [non-executive] board member & venture capitalist
There are some attempts, such as finpact.ch.
But I guess problem is that people that are willing to pay (relatively) high fees of VZ are in general less confident in their financial knowledge, hence they prefer to go with the big one.
If you actually start thinking about saving costs, it’s not that far to DIY and skip those cheaper alternatives in the middle.
I was involved in due diligence for a German Fintech who was looking for a banking license and wanted to disrupt the likes of Revolut and Robinhood with trading, credit cards, payments and later move into wealth management. They never made it, but due to other reasons.
Size matters and I believe the Swiss market is too small. Also, regulations might be the reason for higher TER in Europe than in the USA (Vanguard products).
What AUM? I thought the point was to provide financial consultations/planning without any assets management.
White coat investor writes a lot about this problem: there are hardcore DIY in investing, there are delegators, but there are also validators - people who would like to check from time to time if they are on the right way. They also write how difficult it is to get a fair advice for a fair price, and that many calling themselves financial advisors are selling financial products “designed to be sold, not to be bought”.
And this is in US. In Switzerland, I feel that it is even more difficult for an average person to get a fair financial advice without being scammed. Catch 22: if you need an advice because you don’t have enough financial literacy, you are going to have difficulties recognizing that you are given a bad advice.
I’d also be interested. Although I do have concerns about the business model. There are the “sheep” who buy what their house bank tells them to, the Rappen pinchers like us who agonize about 0.01% p.a., and those between who would be potential clients. And I don’t know how big that middle group is.
I think that VZ do a fairly decent job. They are cheaper than traditional banks, are relatively independent, offer fee-based advice. Also they are positioned more towards people 50+, with a lucrative pension market in mind, people with some assets (so worthwile financially for VZ).
Although I still think there is potential for other providers. Maybe for younger people? I often feel they are lost with what they should do with their money, how to invest. Probably also open to a more digital experience.
What about an investment platform that focuses solely on ETFs (just found InvestEngine in UK, maybe something similar). But then there are already Neon, Yuh, VIAC finpension with a large customer base, but still open to have a better product maybe.
I think the big challenge is the acquisition of customers. This will cost a lot for marketing.
If it’s just advice, I wonder what people would consider a fair price (I didn’t think VZ were very expensive for that, good financial advisors aren’t cheap, I even thought the advice part of their business might not be making much money already).
(Tailored financial advice runs in the 10k+ range when I was looking into it)
actually independent advice: leads to a better product/service overall // e.g. totally fine if customer with gained knowledge prefers an “expensive” provider or DIY, provided it’s a good fit
asset management available: should close some gaps (e.g. you can’t visit robos/neos) // based on actual work (vs. flat fees no matter if it’s 200k or 2m, tailored portfolio or two etf’s, customer calling twice a month or never)
There are independent financial advisors who work on an hourly basis. Also companies that offer this. How is this different from your idea? For example:
Just a side note on FinFinder: In the beginning, they only accepted independent advisors (no idea how you can control that). Hence the good reputation. However, this rule has been abolished, which is why you will mainly find insurance advisors there (AXA, SwissLife etc.).
But of course it still shows how many offers there are, you just have to be careful.
simply said, build the solution you’d want your family/friends to choose if they seek advice and/or asset management. make it so good that it ideally scales to VZ/top robos kinda levels. no excess salaries, no excess prices - the big winners are: customers on a constant level, early shareholders (some of them employees).
The most value services like VZ add is not portfolio management.
It‘s the personal relationship with an advisor, that is there for you to talk to during bad times and makes you stay the course and execute your set strategy.
The appropriate portfolio setup is the smallest aspect of such a relationship.
The problem is that this will always be expensive. And advisor can only handle X amount of people.
They need these high aum fees to be able to operate.
A little cheaper than VZ is probably possible, but not by that much,
Ben Felix from PWL also said that a fee based system is not gonna be much cheaper. As they would need to charge pretty high fees to be profitable.
IIrc they charge a little less than VZ, but overall similar.
And I would say PWL is as good as it gets in that space (sadly only available in Canada)
sure, there are limits. otoh, a) what’s their margin? b) what’s his salary? c) how many of the “hold my hand” [and similar easier] tasks could be done by cheaper representatives? d) how much scale could be achieved by less “fat”, more efficiency, lower prices, winning trust & market share etc.? not saying i’ve got the answers.
I think will be hard to have cheap and good advisors, my feeling is that a good advisors can get fairly high rates. And a bad one can also get decent income selling life insurances. Not clear to me where the disruption would come from unless you automate everything (but then comparison is robo investors/neobanks)
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