Adam French (Scalable Capital): The rise of the Robot Advisor
Adam French, CEO, exposes how Scalable Capital leverages vanguard technology to democratise robo-advisory services and explains how his product can assimilate complex regulatory framework and facilitate portfolio management across Europe.
Could you briefly tell us about Scalable Capital?
Scalable Capital is one of the leading online wealth managers in Europe. We currently operate in the UK, Germany and Austria and we are planning further international expansion. By operating online we can make investing cheaper, more accessible and more convenient for our clients. Using the best and most cost-efficient Exchange Traded Funds (ETFs), we create personalised, globally diversified portfolios based on each client’s individual risk preferences. We then use cutting-edge technology and the latest financial econometrics to continuously monitor the risk in our clients’ portfolios. Our risk management technology allows us to control downside risk, limiting unexpected portfolio fluctuations and improving risk-adjusted returns. Our team combines financial expertise with decades of academic research. It has the experience and technical know-how to build and grow digital businesses.
"We offer a low-cost, risk-managed alternative to traditional investment management."
What impact will robo-advice have on the fund industry?
Until recently, bespoke investment portfolios were only available to the very wealthy. Previously, the resource involved in their creation and ongoing monitoring made them unaffordable for the vast majority. Technological developments have reduced the cost of accessing vast amounts of data. These developments have enabled us to bring personalised, continually adjusted portfolios to the wider market. We believe that technology does not just allow a competitive advantage, but it is a requirement for wealth management businesses to be successful in the future. Individual investors and forward-thinking financial institutions – including banks, insurers, wealth managers and advisory firms – will benefit from technology-enabled investment solutions like ours. We offer a low-cost, risk-managed alternative to traditional investment management. For traditional fund managers, the success of Scalable Capital, and others like us, should be a wake-up call for others to review whether their solutions still meet their clients’ needs and offer them value for money.
Have you faced any product-development challenges?
The different regulatory environments across Europe meant that each market had its own challenges prior to launch. But the flexibility of our platform meansthat, once authorised, we can operate wherever we choose which offers immense opportunities for expansion. More broadly, traditional fund managers still dominate the industry, which means that digital wealth managers have to battle against the status quo and its enormous marketing machine. The good news is that the retail distribution landscape is evolving rapidly, as consumers start to engage with their financial investments through technology. The lower costs, increased transparency, accessibility and smoother returns that digital wealth managers can offer – have great appeal and ensure that the new wave of wealth managers are proving a disruptive force amongst the incumbents.