Digital Wealth Management / NeoBrokers
Discussion
Wondered if it was worth running a thread on this area as on paper these products offer excellent potential and can be a valuable resource for younger workers with a brain and ambition to progress but in reality an awful lot are what I would politely refer to as mug rinsing tools.
It's extremely difficult to impossible to reach profitability running one of these independently unless one heads down the path of saying the sort of abject b
ks that is catnip to the mug punter army. And as such you end up with most of these digital wealth platforms appearing to just punt in fractional shares and scalping on the forced fx trade and slipping on the closing fill or issuing their own funds on pseudo exchanges in strange parts of Europe where the end client can never see what's being held, what sort of leverage run or as I suspect in many cases that their money after going in came out the other side rather quickly and is actually long gone and sailing round the Med, hanging off wrists in Instagram photos or in the latest must have supercar.
Most people's initial experience of this sector was the non rise and unsurprising fall of Nutmeg in the U.K. A business model that just spent investor capital buying new clients at £2k a time but knowing that those clients were so small they could not only never generate the fee revenue to cover that cost but not even the ongoing annual cost of client maintenance.
I notice that BUX has now gone after years of the same and hoping to be snapped up by an institution at a huge tech multiple, not realising that most would wait until it was €1 when the RobinHood bubble burst.
Personally, I think DWM is of huge importance but that it has the terminal and almost unresolvable problem that in order to attract the exact sort of investor for whom DWM is ideal they cannot do so without going down the spanker route of promising glamour, fame, wild riches and social media gravitas.
I wonder if it's possible to have a normal set of products aimed at the completely normal people and be viable?
It's extremely difficult to impossible to reach profitability running one of these independently unless one heads down the path of saying the sort of abject b
ks that is catnip to the mug punter army. And as such you end up with most of these digital wealth platforms appearing to just punt in fractional shares and scalping on the forced fx trade and slipping on the closing fill or issuing their own funds on pseudo exchanges in strange parts of Europe where the end client can never see what's being held, what sort of leverage run or as I suspect in many cases that their money after going in came out the other side rather quickly and is actually long gone and sailing round the Med, hanging off wrists in Instagram photos or in the latest must have supercar. Most people's initial experience of this sector was the non rise and unsurprising fall of Nutmeg in the U.K. A business model that just spent investor capital buying new clients at £2k a time but knowing that those clients were so small they could not only never generate the fee revenue to cover that cost but not even the ongoing annual cost of client maintenance.
I notice that BUX has now gone after years of the same and hoping to be snapped up by an institution at a huge tech multiple, not realising that most would wait until it was €1 when the RobinHood bubble burst.
Personally, I think DWM is of huge importance but that it has the terminal and almost unresolvable problem that in order to attract the exact sort of investor for whom DWM is ideal they cannot do so without going down the spanker route of promising glamour, fame, wild riches and social media gravitas.
I wonder if it's possible to have a normal set of products aimed at the completely normal people and be viable?
Steve H said:
For those of us that have barely got past understanding the difference between an ISA and a SIPP, could you explain what DWM actually entails 
.
Downloading an app and sending a bloke in Albania your savings every month in exchange for the dream of tremendous wealth like he has on social media. .
Done correctly it is just a super cheap way for early and modest investors to invest monthly into a wrapper such as an ISA. Wealth management via an app and zero human interaction basically.
DonkeyApple said:
Wondered if it was worth running a thread on this area as on paper these products offer excellent potential and can be a valuable resource for younger workers with a brain and ambition to progress but in reality an awful lot are what I would politely refer to as mug rinsing tools.
It's extremely difficult to impossible to reach profitability running one of these independently unless one heads down the path of saying the sort of abject bks that is catnip to the mug punter army. And as such you end up with most of these digital wealth platforms appearing to just punt in fractional shares and scalping on the forced fx trade and slipping on the closing fill or issuing their own funds on pseudo exchanges in strange parts of Europe where the end client can never see what's being held, what sort of leverage run or as I suspect in many cases that their money after going in came out the other side rather quickly and is actually long gone and sailing round the Med, hanging off wrists in Instagram photos or in the latest must have supercar.
Most people's initial experience of this sector was the non rise and unsurprising fall of Nutmeg in the U.K. A business model that just spent investor capital buying new clients at £2k a time but knowing that those clients were so small they could not only never generate the fee revenue to cover that cost but not even the ongoing annual cost of client maintenance.
I notice that BUX has now gone after years of the same and hoping to be snapped up by an institution at a huge tech multiple, not realising that most would wait until it was €1 when the RobinHood bubble burst.
Personally, I think DWM is of huge importance but that it has the terminal and almost unresolvable problem that in order to attract the exact sort of investor for whom DWM is ideal they cannot do so without going down the spanker route of promising glamour, fame, wild riches and social media gravitas.
I wonder if it's possible to have a normal set of products aimed at the completely normal people and be viable?
We're in the roll out of something similar where we digitally on-board clients, run them through an e-kyc api (ComplyCube for example) and then once on-boarded we run them through a monte carlo simulator. At that point their risk appetite is defined and we suggest our own internal funds for investing in. We have automated the expect to receive (transfers) and investment split and everything runs through a blazor app. Point being, it's zero-touch and low admin overheads for us.It's extremely difficult to impossible to reach profitability running one of these independently unless one heads down the path of saying the sort of abject b
ks that is catnip to the mug punter army. And as such you end up with most of these digital wealth platforms appearing to just punt in fractional shares and scalping on the forced fx trade and slipping on the closing fill or issuing their own funds on pseudo exchanges in strange parts of Europe where the end client can never see what's being held, what sort of leverage run or as I suspect in many cases that their money after going in came out the other side rather quickly and is actually long gone and sailing round the Med, hanging off wrists in Instagram photos or in the latest must have supercar. Most people's initial experience of this sector was the non rise and unsurprising fall of Nutmeg in the U.K. A business model that just spent investor capital buying new clients at £2k a time but knowing that those clients were so small they could not only never generate the fee revenue to cover that cost but not even the ongoing annual cost of client maintenance.
I notice that BUX has now gone after years of the same and hoping to be snapped up by an institution at a huge tech multiple, not realising that most would wait until it was €1 when the RobinHood bubble burst.
Personally, I think DWM is of huge importance but that it has the terminal and almost unresolvable problem that in order to attract the exact sort of investor for whom DWM is ideal they cannot do so without going down the spanker route of promising glamour, fame, wild riches and social media gravitas.
I wonder if it's possible to have a normal set of products aimed at the completely normal people and be viable?
We'll see how it works out as the cost for developing this in-house has been fairly substantial however our market is aimed at young professionals in the off-shore jurisdictions we serve and the intent is for it to be an 'in' to manage their wealth as it grows and they transition from being an app only client to becoming a more sophisticated investor and having a wealth manager relationship.
DonkeyApple said:
Steve H said:
For those of us that have barely got past understanding the difference between an ISA and a SIPP, could you explain what DWM actually entails .
Downloading an app and sending a bloke in Albania your savings every month in exchange for the dream of tremendous wealth like he has on social media. .Done correctly it is just a super cheap way for early and modest investors to invest monthly into a wrapper such as an ISA. Wealth management via an app and zero human interaction basically.
.Nutmeg is the one where you had a risk slider wasn't it ? i thought it got bought out by JP Morgan.
How is this different to something like Fidelity Go ?
You've got a fair point, how do we rope in the next wave of investors, its either "too scary and i'll stick with 4% in a bank thanks" or "My mate down the pub's cousin punted crypto and bought a house, i want those type of gains (tax free of course)
How is this different to something like Fidelity Go ?
You've got a fair point, how do we rope in the next wave of investors, its either "too scary and i'll stick with 4% in a bank thanks" or "My mate down the pub's cousin punted crypto and bought a house, i want those type of gains (tax free of course)
juice said:
the intent is for it to be an 'in' to manage their wealth as it grows and they transition from being an app only client to becoming a more sophisticated investor and having a wealth manager relationship.
Apart from their apparently being off shore types, isn't this basically what everyone wants and aims to do?I ran through the Nutmeg set up with my daughter.
The onboarding experience was pretty impressive IMO but the whole thing wasn’t quite as well integrated with her Chase account as I had thought it might have been and then when ‘I’ realised that it wasn’t just a platform where you had free choice of low cost funds, ‘we’ lost interest and closed it (after collecting the £100, natch).
The onboarding experience was pretty impressive IMO but the whole thing wasn’t quite as well integrated with her Chase account as I had thought it might have been and then when ‘I’ realised that it wasn’t just a platform where you had free choice of low cost funds, ‘we’ lost interest and closed it (after collecting the £100, natch).
juice said:
Simpo Two said:
Sorry but if anybody 'digitally on-boards' me they'll get a punch on the nose.
Presume that will be digitally then ? So if, for example, I open an account with bank, am I digitally on-boarding myself, or are they digitally on-boarding me? It makes me feel like a mail sack hanging on a post, the kind where the train zooms past and catches the post. Which reminds me, I need some shopping so will have to go out tomorrow and on-board myself at the supermarket
Sorry, carry on.
juice said:
We're in the roll out of something similar where we digitally on-board clients, run them through an e-kyc api (ComplyCube for example) and then once on-boarded we run them through a monte carlo simulator. At that point their risk appetite is defined and we suggest our own internal funds for investing in. We have automated the expect to receive (transfers) and investment split and everything runs through a blazor app. Point being, it's zero-touch and low admin overheads for us.
We'll see how it works out as the cost for developing this in-house has been fairly substantial however our market is aimed at young professionals in the off-shore jurisdictions we serve and the intent is for it to be an 'in' to manage their wealth as it grows and they transition from being an app only client to becoming a more sophisticated investor and having a wealth manager relationship.
This is the exact area where it is an excellent solution. Young savers are loss making to onboard and DWM is brilliant for incubating HNW in-house. It can solve the problem of future high earners being locked out of the better investment products. We'll see how it works out as the cost for developing this in-house has been fairly substantial however our market is aimed at young professionals in the off-shore jurisdictions we serve and the intent is for it to be an 'in' to manage their wealth as it grows and they transition from being an app only client to becoming a more sophisticated investor and having a wealth manager relationship.
mikey_b said:
I do hope that my savings in app-only outfits Chip and Moneybox aren't strapped around the wrist of a bloke in Albania. Although they are covered by the FSCS, so hopefully not...
The FSCS is one of those double edged swords. On paper it is a great thing but as can be seen with the Trading212 5.2% money market product, and others such as Revolut, I suspect very few clients firstly notice that their savings are migrated out of that protection but they also don't appreciate that a money market fund can be pretty much anything, including a leveraged play on junk bonds which could go bang in an instant via a margin call that can't be met. Simpo Two said:
juice said:
We're in the roll out of something similar where we digitally on-board clients
Sorry but if anybody 'digitally on-boards' me they'll get a punch on the nose.bhstewie said:
hstewie said: I'd never even heard the term "neobroker" until today.
Do people really use these rather than the established and (hopefully) rock solid names?
Or showing my age is this less of a due diligence thing and more of a "they have an app" thing?
They sure do. In terms of client acquisition it's the fastest growing investment segment. Do people really use these rather than the established and (hopefully) rock solid names?
Or showing my age is this less of a due diligence thing and more of a "they have an app" thing?
And as we transìtion from the asset and cash rich Boomer generation to the hand to mouth younger generations it is arguably the most important investment sector.
A couple of years ago I did some consulting for a start-up where the plan was to have a worker pay their salary direct to a neo broker who would then manage all their expenditure for them, pay their bills, rent, invest, arrange all lending and then hand them a cash allocation for monthly pissing away. It even included a concierge service to then take a clip from all that discretionary spending. Basically be a parent to an adult baby. You'd have total control of the only thing of value they had, their income and take a clip on all of it, not just the once but again and again and again.
DonkeyApple said:
They sure do. In terms of client acquisition it's the fastest growing investment segment.
And as we transìtion from the asset and cash rich Boomer generation to the hand to mouth younger generations it is arguably the most important investment sector.
A couple of years ago I did some consulting for a start-up where the plan was to have a worker pay their salary direct to a neo broker who would then manage all their expenditure for them, pay their bills, rent, invest, arrange all lending and then hand them a cash allocation for monthly pissing away. It even included a concierge service to then take a clip from all that discretionary spending. Basically be a parent to an adult baby. You'd have total control of the only thing of value they had, their income and take a clip on all of it, not just the once but again and again and again.
Ohhh that's my misunderstanding.And as we transìtion from the asset and cash rich Boomer generation to the hand to mouth younger generations it is arguably the most important investment sector.
A couple of years ago I did some consulting for a start-up where the plan was to have a worker pay their salary direct to a neo broker who would then manage all their expenditure for them, pay their bills, rent, invest, arrange all lending and then hand them a cash allocation for monthly pissing away. It even included a concierge service to then take a clip from all that discretionary spending. Basically be a parent to an adult baby. You'd have total control of the only thing of value they had, their income and take a clip on all of it, not just the once but again and again and again.
Got a few more examples so I can look on their websites?
I thought you meant the likes of RobinHood and from a quick glance I didn't think BUX were more than a broker?
You couldn't pay me to have my salary paid anywhere other than a 100% rock solid bank
Genuinely why would anyone do that?
markiii said:
Is the current generation really that useless and lazy they need this done for them?
I don't think so. I think that it is more a function of more of the younger generations having enough income to warrant saving. A Boomer born to a basic 2up2down household typically went into low paid local jobs that took decades before there was any free capital and for very many not until they retired and gained access to an abnormally large pension pot. They also could generally save what modest excess they had using cash accounts (look at how many Boomers left all their savings as zero interest cash during the greatest era of blue chip equity growth). A Millenial born into the same household wasn't beholden to low paid, local labour but had in front of them a vast array of employment opportunities never before available to them so you end up with a situation where there are many more young people today with higher salaries working in say IT etc.
I would actually posit that they are smarter then their parents in that they are aware that they need to save, aware that they'll need to work up to 20 years longer and almost certainly won't get the pensions that have gone before but like all young people they're naive and susceptible to what used to be a pub grift but now online and ubiquitous. They're as easy to sell a turd to as the Boomers were but with the Boomers the turd in the shape of penny shares, minibonds, P2P lending was exchanged for big slugs of hard cash whereas with the Millenials they don't have slugs of hard cash but income and debt so the grift evolves to target what they do have.
For example, they don't have the money to buy a Tesla share so you develop fractional shares and rinse them on the FX and closing slippage. They don't have slugs for minibonds so you change that to work via monthly investment instalments.
It's the same grifting just rebranded (change the naming style from London streets or Landed gentry to made up words with vowels missing) and restructured away from working on lump sums to working on monthly payments. And the pyramid systems works even better as they'll grift the product to others for a worthless airdrop which is the rebranded version of a gold pen or a set of wine glasses.
Are the youth more dumb, naive and greedy than their parents? No. The percentages are probably remarkably similar but there are a bucketload of dumbass pensioners so there is a bucketload of dumbass younger people.
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