By Amelia Isaacs on Wednesday 26 October 2022
Wealthyhood’s co-founders spoke exclusively to AltFi about taking the best parts of both trading apps and robo advisors to create their new investment app.
With a masters in investment and wealth management and a year on the Morgan Stanley trading floor under his belt, Alexandros Christodoulakis thought everyone knew how to manage their money.
It wasn’t until he and Konstantinos Faliagkas attempted their first financial startup – democratising access to private assets reserved for ultra high net worth institutional investors – that he discovered this wasn’t the case.
After attempting to pitch to people how they should spend the last 20 per cent of their money, Wealthyhood co-founders Christodoulakis and Faliagkas found that their peers didn’t even know what to do with the majority of it in the first place.
“I thought ‘Well, it’s obvious. Everybody knows what they should do with the rest of the mainstream assets. We have stocks, bonds, real estate to build a diverse portfolio and all that,’” CEO Christodoulakis told AltFi.
“But no one had any idea about what to do. So we started discussions, helping people to structure the rest of their portfolio.”
At some point in their discussions, the co-founders realised it was time to make a pivot.
“We’re asking people to sprint in the financial markets and they cannot even crawl,” Christodoulakis said.
They decided then that they were going to sift through the markets and help beginner investors figure out what to do.
“We’re going to take them by the hand and show them how to create very well diversified portfolios for mainstream assets and all the rest.”
And that’s how Wealthyhood was born.
100 million millennials
It is currently estimated that there are more than 100 million millennials in Europe looking to invest their money.
In lieu of turning to traditional channels – whether that be mutual funds or their parents’ brokers – they’re turning to apps.
But, according to Wealthyhood, the issue there is that they are incentivising people to gamble.
“They don't care if you're investing, they want you to be active,” Christodoulakis said.
“You have to buy, you have to sell, you have to do everything to encourage a gambling mentality.”
Alongside the gambling, gamified side of it, it’s also very complex, Christodoulakis explained.
“If you're a beginner investor and you have no idea where to get started, you open the app, and you're left with 1000 different stocks, bonds, or even more complex instrument options and derivatives, and you have no idea which one to pick,” he said.
“So you typically end up buying stocks because you hear the name or you recognise that brand you were using. Which is not an investment strategy. It's random.”
At Wealthyhood, by contrast, they’re looking to help the millennial investor build long term wealth, CTO Faliagkas explained.
Targeting 18-25 year olds – students and professionals who are just getting started with investing – and 25-35 year olds who might be saving for retirement with a bit more of a systematic approach in mind, the app is meant to take them through the whole journey of ongoing investments.
With 10,000 users already, a large part of this is clearly the “hand holding” aspect of it, guiding beginner investors through the process, while also being personalised so that you have full control over the decisions you make with your money.
“Investment education is very fundamental in the whole offering that we have as Wealthyhood,” Faliagkas said.
“And that starts from the learning programme we have in partnership with Finimize.
“From the daily social media posts on different platforms as well as the portfolio creation process, we believe the way we have structured it is something that educates the user, in addition to all the insights and the tools that we provide.”
Robo advisors v trading platforms v Wealthyhood
The second player in the game, alongside trading platforms, is robo advisors.
While to robo advisors might replicate a more “traditional” approach in app form, it’s pretty boring for this generation, according to Christodoulakis.
This comes down to the lack of optionalisation and personalisation.
Where with trading platforms there are many options and it might become overwhelming, robo advisors reduce your options to just a few portfolios to choose from.
On top of that, you’re charged one per cent – an amount that could add up, especially for young investors not investing very much and looking to save for the long term.
Wealthyhood offers the option to invest from as little as £10, though there are users that invest hundreds of thousands as well.
There is currently a basic plan that costs £1 a month, but there are ISA and Pro levels at £3 and £7 a month respectively in the pipeline.
“We see the market split into two extremes: trading apps, which are complex and encouraging people to gamble instead of long term investing, and robo advisors which are a bit boring, have no control and no optionalisation,” Christodoulakis said.
“We want to position ourselves in the middle. So bring the best features of these two worlds into one experience that we consider to be the optimal.
“The way we see it is that we want to guide long term investors to build wealth over time by intelligently investing their money the way they want, and with fewer fees.
“Trading apps came to democratise access to investing, but this is giving a weapon to people without telling them how to use it. We want to take the success and rationalise it.”
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