Interview with Erik Podzuweit, Founder and CEO of Scalable Capital

Robo Advisors to replace commission-driven banking advice

In the current times of low interest rates and high bank charges, many savers are worried. What is the best way to invest my money, and where? Erik Podzuweit provides answers to these questions with his Munich- and London-based fintech company Scalable Capital. His claim? Being Europe’s best digital investment manager. With its proprietary risk management technology, the company gives retail investors access to a risk-based investment strategy for the first time. The CEO explains to European Business how Scalable Capital wants to revolutionise financial investment and, at the same time, bring an end to commission-driven financial advice.

EUROPEAN BUSINESS: Mr. Podzuweit, why should I trust my money with Scalable’s Robo Advisor?

Erik Podzuweit: We offer a fully managed, stress-free investment portfolio. For you, that means more transparency and an effective way to build your wealth over the long term. As a regulated financial services provider, we are able to make investment decisions that benefit you.

Firstly, we ensure that you always have the best ETFs in your portfolio. We constantly analyse the entire ETF universe available to retail investors and if we find an ETF which is better value, more liquid, or more advantageous from a tax perspective than the ETF in your portfolio, then we exchange it.

Secondly, we make sure that you always know the level of risk in your portfolio. We do not offer portfolios with vague risk labels such as ‘balanced’ or ‘conservative’. With us, the risks are spelled out in concrete percentages that describe your actual loss risk. Thanks to our risk management technology, we aim to maintain the level of risk in your portfolio constant so as to optimise your risk-adjusted returns.

Thirdly, we offer full transparency at all times. Our clients can access all of their account information such as performance, fees and transactions via our online platform or mobile app.

Last but not least, we are significantly cheaper than actively managed funds. This is because we invest exclusively in cost-efficient ETFs and have automated all the relevant processes. That’s why we are able to offer our service for only 0.75% per annum – without hidden costs or commission.

 

“Most investors have a low risk tolerance but no upper limit on returns.”

Erik Podzuweit
Founder and CEO of Scalable Capital

EUROPEAN BUSINESS: Investmentment management affects both private individuals and companies; who is your product aimed at?

Erik Podzuweit: Until now, our focus has been on the B2C business. It was important for us to build a sustainable client base of private investors which we have now achieved. Just 18 months after launch, we now manage 300 million EUR for 8,000 private investors. Our next step will be to actively expand into the B2B sector. We recently collaborated with Siemens Private Finance who now recommend us to any of their employees who are trying to build their wealth.

We recently announced a 30 million EUR funding round, and we now have BlackRock on board as a partner. This opens many doors for us in the B2B sector. Increasing numbers of financial institutions as well as larger corporations are seeking technology-based investment solutions to improve outcomes for their clients.

 

“I am convinced that robo-advisors will, in the medium term, replace a large proportion of today’s commission-driven financial advice.”

Erik Podzuweit
Founder and CEO of Scalable Capital

EUROPEAN BUSINESS: A good return on investments is one thing but a lot of people are are concerned about security. How do you view this challenge?

Erik Podzuweit: They are absolutely right. Most investors have a low risk tolerance but no upper tolerance limit on returns. That’s why we follow a risk-based investment strategy which controls the risk in the portfolio whilst the risk in the market fluctuates. This means that the customer is protected from making emotional, irrational decisions such as panic selling.

EUROPEAN BUSINESS: Looking to the future, where do you see fintech in ten years?

Erik Podzuweit: Fintech businesses are already a well-established part of the finance sector. Many services, which used to only be available to the very wealthy have been made widely available, more transparent and cheaper thanks to digital platforms. I am convinced that robo-advisors will replace a large proportion of today’s commission-driven financial services, certainly in the medium term.

On the one hand, low interest rates increase sensitivity to costs. On the other hand, there’s a growing understanding of the advantages technology can provide, particularly when it comes to analysing large volumes of data. This is very valuable when it comes to capital markets investing.

 

“You should never make the mistake of wanting to please everyone.”

Erik Podzuweit
Founder and CEO of Scalable Capital

EUROPEAN BUSINESS: What is the most important attribute when founding a start-up?

Erik Podzuweit: A combination of the ability to accept criticism, and assertiveness. As a founder, you should take criticism seriously and take advice on many issues. At the same time, you must never allow yourself to be diverted from your original goal. You should never make the mistake of wanting to please everyone. Every product must be developed to a razor-sharp level for a very specific target group. Only broaden the audience when you have convinced the early adopters; they are always the best ambassadors for an innovative offer.

 

Interview: Sarah Urquhart


Scalable Capital Vermögensverwaltung GmbH
Prinzregentenstrasse 48
80538 Munich
Germany

Tel: +49 89 38038067
https://de.scalable.capital

 

Company of the month

Kleiderkreisel GmbH

Second-hand fashion is first choice

Sustainability is much more than just keeping our environment clean. Sustainability is a holistic lifestyle concept embracing values, attitude towards people and nature, and is relevant to all kinds of goods which are subject to a life cycle process. Sustainability is at the core of Kleiderkreisel GmbH based in Berlin. Its online marketplace for second-hand fashion has become a must not only for environmentally aware fashionistas, but also five million young women in Germany. CEO Justas Janauskas is convinced he can transfer this concept to new markets in the coming years.

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European Business

Health & Medical Special 1/2017

In this issue: Omnicell, Inc. - Automation for better care / Accuray Europe SAS - Improving life for cancer patients / Bomi Italia S.p.A. - Handling health around the world / Getinge Group - The human face of healthcare

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