The Internet has democratized almost everything, from no longer buying compilation music CDs to creating your favorite playlist on your preferred music streaming service. This democratization of things, or as Marc Andreessen once put it, "Software Is Eating The World", has touched almost every industry.
One industry that has for some time escaped the far-reaching tentacles of software and the Internet is the financial advisory industry where you typically have to meet with someone, a financial advisor, who will then ask you some questions and then recommend how you must invest or save your money. One of the problems with financial advisors is they typically, not always, only recommend financial products on which they are incentivized and not necessarily the best for your needs.
Igor Rodionov, Managing Director at Advicement.
"After multiple conversations, we realised that people were looking for a way to invest but did not trust their financial advisor due to the lack of transparency and the high fees in the industry." said Igor Rodionov to iAfrikan as he explained why he started Advicement, an independent robo-advisor platform that provides independent financial advice to clients and recommends how they should save or invest their money.
Rodionov, the Managing Director at Advicement, also added that they observed that people wanted to be in control of and understand their investments. "With this in mind, we built Advicement which provides an automated investing service while being unbiased, transparent, optimal and cost-effective,".
Rodionov is not a stranger to the financial industry in South Africa, he was previously a quantitative analyst at one of South Africa's investment banks before quitting the job and starting his FinTech startup in 2015. Not only was Rodionov working at an investment bank but he was rated among the best in South Africa when in 2015 he was ranked among the top 5 analysts in Quantitative Analysis and Risk Measurement categories according to the Financial Mail Ranking the Analysts survey.
Advicement isn't the only financial robo-advisor out at the moment, apart from one we have covered at iAfrikan, there have been several being launched so how is it different?
As Rodionov explained, their key differentiator is that Advicemnet offers independent advice.
"This means we are not part of a product provider which only recommends our own investment products. We are one of few which offer passive investment products. Finally, we differentiate ourselves further by focusing on a quantitative approach to constructing and monitoring our investment portfolios. We believe these strengths differentiate us greatly from the current and future competition in the market," Rodionov added.
Essentially how Advicement works is that it has automated the functions of a human financial advisor, this is done through a set of specific and carefully selected questions which the robo-advisor will ask the user. From those answers, a portfolio of investments and/or savings is suggested which is "best suited for your financial needs" explains Rodionov.
"Once you have completed your questionnaire, you can review your financial goal with your investment dashboard. It is important that you understand your investment and that you are comfortable with the suggested risk level. For this purpose, we have created the investment dashboard where we perform analysis using sophisticated financial techniques. You will be able to review your chances of reaching your financial goal, portfolio composition, historical analysis, projected analysis, cost analysis and more. Once you are satisfied with your investment, you may complete the process by signing up with Advicement." added Rodionov.
Once done, you receive an email from Advicement with your investment report for you to review. Once you are happy with everything, you can then proceed to open an account with their administration partner, Easy Equities, which will facilitate all the transactions for you to invest in your portfolio.
The partnership with Easy Equities is one that Rodionov highlights as being key to the success of Advicement given the complexity of the financial system in South Africa. More importantly, he said, they needed an agile and cost-effective partner in the financial industry "The investment administrator had to be very cost effective as we wanted to pass on these benefits to our clients and needed to offer passive products. Most importantly they had to be an agile fintech company which understood technology and with whom we would be comfortable working. It has been challenging to identify the right partner, but we are happy to report that Easy Equities platform ticked all the boxes and went far beyond of what was required," explained Rodionov.
Software is definetly eating the world of financial advisors.