Speaking to International Adviser, co-founder Luis Rivera said the robo-adviser, which launched last May, is considering a potential tie up with financial advisers in the UK and rest of Europe.
“We are looking to partner up with financial advisers who can use the technology to develop and build business portfolios for their clients,” he said.
Rivera said ETFmatic is currently in talks with a small European ‘IFA’ firm to run their portfolios, adding that a ‘white label’ arrangement may be in the pipeline, but stopped short of disclosing any further details.
The direct-to-consumer robo-adviser has also launched ‘professional accounts’ consisting of custom portfolios for companies including advisers, family offices and those that manage money for others.
ETFmatic currently passports from the UK to all 32 countries in Europe which use the system. It provides clients with “unique” diversified portfolios made up of exchange-traded funds (ETFs) for 0.5% a year.
The service requires a minimum investment of £100 (€117, $124) or €100.
European growth
Figures published earlier this month were “surprising”, said Rivera, with the bulk of assets under management (AUM) coming from countries such as Belgium, Ireland and Hungary as opposed to Germany, France and the UK as expected.
“It’s countries like Hungary and Portugal that are really surprising us compared to Germany, France and the UK which have historically had a higher take up of ETFs.
“Our hypothesis is that these markets are more underserved, people are used to paying 2.5% or 3% all-in, so the savings potential of switching into passives is essentially half of the returns that the stock market can generate,” he said.
Rivera added that in the UK, the ETF market has “players with sophisticated offerings at reasonable prices”, which is a far cry from the “robbery happening in other European markets”.
He refers to the sizable fees charged over the years by the financial services industry, which has “failed to deliver good value”.
“The big Spanish banks that have conquered the world over, such as Santander and BBVA, they’ve become rich by ripping off Spanish customers,” he said.
Digital wealth management
Despite being named by the Financial Times as “the most downloaded robo-adviser app in Europe”, Rivera admits many investors in the UK and Europe are not prepared for digital wealth management.
“We are different because we are targeting those who are financially literate such as bankers, consultants, people with MBAs or CFAs, who know what they’re doing and value the characteristics of strategy and approach which are hard to convey to the public,” he said.
