Fintech pair aim to disrupt industry with investments for millennials
New funds from Revolut and Plum will appeal to smartphone generation
Europe’s asset management industry is likely to have an abrupt wake-up call as two of the fastest-growing fintech companies, which aim their products at millennials, roll out new investment propositions.
Revolut and Plum have attracted close to 3m users in the past two years. They have their sights set on disrupting the industry with cheap and easy-to-use investments that suit customers traditional managers find hard to attract.
“The goal is not to be just another medium-size bank — we want to become the Amazon of finance,” said Chad West, head of marketing at Revolut, which is in the process of offering exchange traded funds to its 2.6m users across Europe.
Plum, a robo-adviser tool used via Facebook’s Messenger service, has focused on helping its 200,000 users save money and reduce spending. Now, though, it has turned its attention to investments and is rolling out six funds to all its customers on Monday.
The start-up has partnered with Vanguard, Standard Life Aberdeen and Legal & General Investment Management.
A beta version of the offering, which was open to 2,000 customers, has been running over the summer and £500,000 has been invested so far.
Plum will offer three Vanguard funds designed for different risk profiles: conservative, balanced and growth. It will also provide access to three themed funds: an LGIM tech fund, an SLA ethical fund and a Vanguard emerging markets fund.
Victor Trokoudes, Plum chief executive, said the themes were chosen to appeal to the interests of millennials and that the company would consider rolling out funds focused on the environment, healthy eating and artificial intelligence.
“We are trying to open up investments to millennials,” said Mr Trokoudes, a former Morgan Stanley trader who launched Plum two years ago. “I think we will see this massive wave where people get more comfortable investing money and grow their funds over time.”
Plum will charge investors £1 a month as well as an annual fee of 0.15 per cent of their assets. Additional fund charges range from 0.22 per cent to 0.9 per cent.
Revolut, a challenger bank that adds up to 7,000 customers a day, is in the process of applying for an ETF broker licence. It has agreed a deal with an unnamed ETF provider to sell its funds and provide custodial services.
The ETF proposition will be part of a commission-free trading service for stocks and other securities that the bank plans to unveil in coming months.
Mr West said Revolut was following the lead of Robinhood, a commission-free investing app that sells ETFs in the US, but would do so globally. He said it planned to launch in the US, Canada, Hong Kong, Singapore and Japan this year.
Mr West added that, though Revolut’s customers were typically aged 25 to 35, it was not a service just for younger investors. “A lot of 40-plus customers invest in stocks and ETFs,” he said. “We see this as a real opportunity to make this a service for all and not just for millennials.”
Bob Steers, chief executive of the $60bn US investment company Cohen & Steers, said traditional managers that did not provide strong returns and value for money were in for a rude awakening.
“With data becoming ubiquitous and younger generations doing everything on mobile devices, it’s not hard to imagine in the not-too-distant future someone just turning on their phone and saying, ‘I want a manager with top quartile performance, bottom quartile fees and an environmental, social and governance overlay.’ Those managers will be identified instantly,” he said.
“Having armies of salespeople and hundreds of products that mostly don’t beat their benchmarks is not going to be worth anything.”