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THE BIG INTERVIEW Startup stories
Entrepreneur and investor, Daniel Tammas-Hastings, tells IBS Journal about his latest venture, RiskSave, and gives his take on robo-advice, Brexit, FinTech and challenger banks
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BS Journal: Tell us about yourself.
Daniel Tammas-Hastings: I’m Founder and CEO of RiskSave Technologies. We’re a FinTech company and a specialised asset manager. The core team are fixed income traders and risk managers. I started as a hedge fund manager and was then a macro risk taker at Merrill Lynch. Our idea is that, without legacy systems and an expensive distribution network, we can compete with legacy asset managers in our space on cost as well as offering a significant quality proposition.
Since launch we’ve developed a B2B robo- advice (incorporating, investment, risk and compliance, so FinTech and RegTech) proposition, a risk management and a fixed
income proposition. Having started in London’s Level 39, we’re on the cusp of opening our second office in Edinburgh, which is a great location for tech and getting better.
IBS Journal: Is robo-advice the next step in the evolution of asset management?
DTH: It’s the next step but not the final step. Ideally from a social perspective, we’d like all segments of society to have all the benefits of tailored financial advice but at an affordable, preferably zero cost. Unfortunately, this is still a way away.
Robo-advice is a hotly debated topic, both with regard to the term itself and the future it represents. The term has been quite broadly used to describe any digital asset management firm whose main presence is online. In practice most are semi- automated services with some human interaction in either the onboarding or investment process. Confusingly, many
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robo-advisors do not meet the regulatory definition of advice. Understandably, however, the more accurate descriptor ‘semi- automated digital guiders’ has not been taken up by the industry. The somewhat unwieldy portmanteau ‘robo-advisor’ has gained favour instead.
The term was first used to describe the online, self-led investment propositions developed by several startups in the US, with the most notable being Wealthfront and Betterment. These have since been followed by numerous entrepreneurial startups and replicators around the world. Although it is interesting to note that, more than five years after the first robo-advisors emerged, nearly 100% of assets under management by robo-advisors consist solely of narrow portfolios of exchange-traded-funds (ETFs).
It is our belief that, in the near future, robos capable of investing in a wide array of funds, ETFs and individual securities will emerge. RiskSave in the UK and TrueLink in the States are examples of these. Portfolios generated from a wider array of assets would be considered an improvement on the current model as they will be more efficient with superior risk-return characteristics.
There has been real hope that robo-advice or digital asset management could finally enable the provision of advice to mass- market segments. Including segments that have previously been unreached by financial advice. The FCA estimates this could be as many as 16 million people in the UK alone. We believe that an advanced robo model is likely to have wide market appeal and certainly has regulatory support. What we’d like to see is an integration of Personal Finance Management (PFM) solutions and investment solutions to create an integrated product filling the ‘financial advice gap’.
IBS Journal: Will FinTechs stay loyal to London now that Brexit is moving forwards?
DTH: Absolutely, FinTech will stay focussed on London and we are currently seeing a constant migration of new European firms into our ecosystem. Brexit created uncertainty and this was
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