Lennart Asshoff is the CEO of Exo Investing, a new AI-powered wealth manager that aims to democratise the world of private investments. NS Tech spoke to him about the psychology of investing, the future of “robo-advice” and his ambitions for the company.
What’s the Exo Investing elevator pitch?
Exo is building an online investment management platform that brings individualised asset management to the masses.
Traditionally, finance companies have created specific products and then sold them to as many clients as possible. We are turning this upside down by creating a product for each client. We don’t have ten model portfolios that we sell to a million customers; instead we create a unique portfolio for every single customer that is tailored to not just the risk level but a myriad of different parameters such as investment focus areas, time horizon and market conditions.
How do you distinguish Exo from the other “robo-advisers” out there?
There are two main differences. First is the risk management and ETF algorithms that power Exo. These have been developed over the last 30 years and applied to billions of assets in the institutional space and now we are bringing this expertise and track record direct to the retail market. Secondly we are actually letting people take control of their investments for less effort. Our customers can select specific focus areas and change them whenever they want, whether that be investing in tech, healthcare, emerging markets to name a few.
Why do you ask customers to invest at least £10,000?
Having accounts that are too small has a negative impact on performance, because it’s difficult to provide a well diversified and optimised portfolio at this level. We get to a good approximation at around £5,000, but £10,000 is the minimum to ensure Exo can deliver your optimal portfolio. If we have fractional shares at some point in the future then we would look to reduce this.
Where do you see the future of “robo-trading”?
This robo-advice movement is at a very early stage, it’s currently less than 1 per cent of the market share. There is this immense room to grow and it will grow over the next few years, especially in the retail space. People will get better services through apps than they do now in a normal brick and mortar store. In terms of products, I really think the investment solutions on offer, thanks to artificial intelligence and digital distribution, will be tailored to what you actually need. Selling everyone the same product is now actually a bit backwards.
Will the big tech firms get involved in personal investing?
Apple is rumoured to be launching a credit card with Goldman Sachs this year. Google has a banking licence. Revolut is getting into stock trading. All of these tech players will get into the finance sector and investing is just one of the many areas that can be transformed. I’m more afraid of the other tech entrants than the banks themselves to be honest.
Will the rise of robo-advisers inspire more people to get into investing?
I hope so. It’s necessary, particularly if you look at the demographic change and the rate public pensions will go in the next few years. If people of the younger generation don’t start saving, they are going to have a very tough time in the future. I think that people, bit by bit, will realise that especially with interest rates being so low.
How do behavioural biases affect traditional investing?
As a personal investor it’s easy to make mistakes. There’s also a huge amount of research that proves you will most probably underperform the market if you trade yourself. Loss aversion is a huge issue. People don’t want to sell assets that have lost money before. They are more afraid of losses, and they can also become afraid to enter the market because they are still very aware of the financial crisis. These biases play a huge role, especially if you are not a professional investor.
Exo Investing has just turned two years old. What are your long-term ambitions?
We would like to get to the point where we are the leading wealth management platform in Europe for pensions or digital wealth management. We started in the UK because it’s by far the most advanced market in terms of online investing and people thinking about their pensions and investments themselves. But the idea is to expand across Europe.