Hot off the press has been the news that Revolut, a digital only challenger bank, with close to 29 million user accounts, will offer fractionalised ETF trading via its mobile app. This comes on the back of the news storm earlier in the week when Nik Storonsky, the companies’ CEO, accused the UK as being far from the best place to launch a FinTech business due to its love of high taxes and excessive red tape.
At the heart of Storonsky’s discontent lies the view the government talks the talk about the UK becoming the next Silicon Valley but doesn’t walk the walk.
He may well be right, but when I hear the words ‘Fractionalized ETF Trading’, as the Co-Founder of Algo-Chain (itself a FinTech company) I think he might be confusing the Financial Services industry with the Government. The limited adoption of fractionalized ETF dealing in the UK to date, if anything, reflects the view that the investment establishment is only too happy to maintain the status quo.
That status quo, for starters, doesn’t involve removing unnecessary fees, but does require propagating the view ETFs are a ‘nice to have’ product rather than an essential piece of the investment furniture. Presumably as more time is spent in the UK on all aspects of investment education, the situation will gradually improve.
Only recently the news broke that eToro (who do offer fractional ETFs) would be providing the capabilities for Twitter users to trade stocks and ETFs via their mobile, and before long any digital banking app that doesn’t offer the same ability will be consigned to history.
While all this direct-to-consumer investing might be seen as taking business away from the Wealth Management industry, my own view is that the opposite will be the case. As more and more individuals take control of their own pensions, so will the interest in ETF Savings Plans, a boom industry in the making if there ever was one. For every person that wants to manage their own ETF selections and portfolio constructions, there will be many more that will seek financial advice from those in the know.
Until next time.
Allan Lane