How the CEO of ETFmatic wants to change wealth management

By Moriah Costa on Tuesday 25 July 2017

Savings and Investment

Traditional wealth managers are not leveraging technology to their advantage, says ETFmatic CEO Luis Rivera.

Traditional wealth managers are not leveraging technology to their advantage, says ETFmatic CEO Luis Rivera.

Luis Rivera, CEO of ETFmatic
Luis Rivera, CEO of ETFmatic.

As an investor, Luis Rivera (pictured) thought wealth managers were not using technology to their advantage and focused too much on active, rather than passive, investing.

“[Exchange traded funds] might be the most significant development in finance, but even decades later most Europeans don’t benefit from them because the financial industry has been driven by conflicts of interest,” he said.

In August 2013 Rivera, along with co-founders Tom Carnell and Johan Hellman, spent one week making a prototype for what would become ETFmatic. Four years later, the firm operates in 32 different countries and invests in three different currencies.

Rivera won’t reveal how many customers or assets under management the firm currently has, but he said the cost of the technology is low. They would only need £200m AUM to break even, he says.

The technology seems to have picked up some interest. The platform’s app has nearly 100,000 downloads. The app is free to download and offers a simulation model for investors to “try before they buy” so it’s not necessarily an indication of how many clients ETFmatic has.

Still, it has one advantage many other robo-advisors don’t have- it legally operates in 32 (mostly European) countries. That means someone living in Spain can invest in ETFmatic and continue to invest if they move to say, Belgium.

“It seemed obvious to develop our technological and regulatory stack to target early adopters across 32 countries instead of the more traditional majority in a 30 to 80 million customer market that wasn’t ready,” he said.

The firm uses automation to create a unique portfolio by buying and selling ETFs on each user’s behalf, based on three investment styles. The company is headquartered in London but Brexit uncertainty means the firm is looking to get a dual license model, where two separate companies would answer to different financial regulators.

The platform is not just for retail investors. The company has a B2B offering and partnerships with other fintech companies. The firm recently announced it was partnering with banking challenger app Revolut to offer its users an investment option. Rivera says there are other pending partnerships with pension planners and ETF issuers.

The future of investing is changing and wealth managers are just starting to realising that, he says.

“Very soon people will start referring to [robo-advice] as “investment in an app”. In 10 years, digital wealth management players might hold a similar market share to Google and Facebook’s in advertising,” he said. 

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