Exo Investing is a new digital wealth management firm that lets investors build their own portfolios.
Unlike other robo-advice services, Exo Investing does not just assign a profile to clients based on a questionnaire.
Instead it works by helping consumers build an exchange traded fund portfolio based on their own preferences and views. Nikolai Hack, chief operating officer at Exo (pictured, left), calls it the co-pilot of your investment.
“We let you take the controls, you have the driver’s seat, but we make sure that both in the selection of the products and also when the portfolio is running, that nothing goes off the rails,” he said.
While investors can’t choose to invest in a particular ETF, they can choose to only invest in certain types of asset classes, such as the healthcare industry or a particular region, like the US. Clients can also star up to five areas that they want to invest in, which will be weighed more heavily in the final portfolio.
Once the client is happy with their choices, the algorithm will pick the best portfolio based on the individual profile and choices. It means that instead of a dozen portfolios, there are hundreds of millions of portfolio options, which are then monitored daily and changed as needed to meet the user's goals.
Exo Investing evolved out of the systems and technologies of ETS Asset Management in Spain– Lennart Asshoff’s employer (pictured, right) before he left to set up the new business. The digital wealth management firm will allow retail investors to get the same individualised portfolio management that was previously only available at ETS through private banking and advisory services.
Asshoff says many investors have various interests beyond what can be assigned to a dozen different portfolios. It's the technological advances of computing power and machine learning that make these individualised portfolio management possible.
“What we found is when we talked to clients, is they have other beliefs and risks, not just risk or volatility targets but it has to do with sectors, with regions, with asset classes,” he said. “Some people feel really uncomfortable with investing in [emerging markets], for example, even though they have a high risk appetite.”
His company allows people to avoid investing in defence or emerging markets, or any other market they don’t feel comfortable investing in.
Asshoff left ETS in 2016 to start Exo, although ETS does hold a stake in the company.
Hack and Asshoff met during university in the Netherlands and when Asshoff wanted to expand to the UK market, Hack joined the team in London. While the company also has offices in Madrid, it plans to only operate in the UK for now.
The product is geared towards wealthy individuals in the £100,000 to £2m range, who have an idea of investing, but don’t have the time or expertise to do it themselves. The service is still in beta mode but was recently approved by the Financial Conduct Authority. Asshoff plans to take the product live for its testers by Christmas 2017, with an official launch in early 2018. When it does go live, there will be a minimum investment of £10,000, with fees ranging from 0.75 per cent to 0.50 per cent.
The platform will initially only have ETFs, but its investment possibilities could expand to peer-to-peer lending, or even as a white label product if there is interest, Asshoff said.
This article was updated on 22 August 2017 to provide more details about how Asshoff came up with the idea while at ETS.