L’Atelier : How did you get the idea for Nalo?
- 1 min
Guillaume Piard: I worked in the financial sector in London and Paris for ten years. During this first career I became very frustrated with the financial services available. I was working extremely long hours and I didn’t have time to do anything about my savings, which were beginning to mount up. I wasn’t impressed by the traditional products on offer. Ten years on, when I was doing an MBA in the United States at the University of Chicago Booth School of Business I discovered the whole world of FinTech, which was then just starting to take off, especially as regards automated advice. It was a revelation! I came back to France at the end of 2015 to find a business partner and get a venture going. When I was searching through my network in Paris I came across Hugo Bompard. We created a platform and then went looking for a commercial partner to develop our first product – life insurance. We’re now recreating the whole Advisory and Wealth Management ecosystem using state-of-the-art technology so that we can automate everything that has no human added value.
How does your service differ from existing solutions?
Investment Advisory services have been around for a very long time. What’s new is to make it accessible, easy to understand, ultra-personalised and fully automated. We’re not actually re-inventing finance, we’re making it accessible via an iPad on your sofa. Of course, a client can call us and arrange a meeting with one of our Wealth Management specialists if, say, it’s a matter of investing a large fortune. But in fact everything can be done on our website. Any prospective client will find our questionnaire displayed on the screen and once they’ve answered it, they’ll receive a summary of the information together with an investment proposal. If a person decides to invest, it takes less than ten minutes online and Nalo does everything from drawing down the funds or paying in a cheque to setting up and managing the investment portfolio. The added value of a Wealth Management advisor is listening to the client, reassuring him or her, understanding difficult individual situations – such as inheritances in ‘stepfamilies’, large inheritances where succession plans have been drawn up, and so on – but when it comes to drawing up a strategy, risk management…anything operational, a human being adds no value and may even be counter-productive because we tend to make mistakes and have cognitive biases. With our technology, the human factor becomes even more useful whenever the human factor is really necessary.
“We’re not re-inventing finance, we’re making it accessible via an iPad on your sofa”
Our service is also ultra-personalised. The questionnaire a prospective client answers on our platform helps us to understand his/her wealth and family situation from all points of view – age, revenue, married or single, children, outstanding loans, and so on – plus any financial plans, such as a pension supplement, the purchase of an apartment, investing in order to pay for the children’s education, and so on. What we do is goal-based investing and we’re also keen to change people’s approach to life insurance. Usually advice is highly generic but, based on our summary of personal wealth, each investment plan will have its own management strategy, its allocation of specific assets, and we manage all this in a highly tailored way, which doesn’t exist anywhere else in France today.
Basically, we’re the only company in France offering what is commonly known as ‘multi-projects’, i.e. we have different management strategies for each financial project and we manage them dynamically over time in a single life insurance contract. This means that we don’t set up a real estate plan to supplement a client’s retirement pension. For a real estate investment plan lasting three years, the idea is to take all the returns made at the end of three years and go and look for a loan. Creating a pension supplement takes a lot longer; you need to keep some risk in the portfolio so as to be able to take out some money every month while still ensuring that the capital you’ve invested generates some returns.
“We aim to be the benchmark for smart investment”
As this is all done under a single life insurance policy. This makes for flexibility and brings a tax advantage because you can create new projects, abandon or reallocate them without triggering taxation on capital gains. Today Nalo’s product is life insurance, but tomorrow we aim to be the benchmark for smart investment. We could think about adapting the artificial intelligence to all kinds of financial products whether that might be a share purchase plan, a custody account or a simple savings account. We’re focusing first on financial wealth and trying to revolutionise the user experience and the way these financial products are used.
Who’s your target audience? As a startup are you aiming at younger clients?
No, that’s an error of judgement in terms of marketing that others before us have committed. Quite the contrary. Our product has been designed to be used by everybody. We have clients aged 20 who invest €1,000 and others who are 75 and invest hundreds of thousands. Our service is designed to be accessible to everyone; there are no wealth restrictions. Then our positioning is to have the premium offering in France.
maximising your investment
Ethical investing is really taking off. Is this why you, like Betterment, have launched an offering in this area?
This is funny because in my former career when we talked about socially responsible investment, it was a marketing ploy. Companies did it to differentiate themselves from the competition. I have the feeling that this is now less often the case. Young people are especially aware that we ought to be investing in a sustainable manner. You’re right, we have recently launched an offering of that type, but in response to client demand rather than as a marketing strategy. I find it really interesting how things have changed there.
How would you describe the French market compared to its US counterpart?
of assets under mana-gement
are in the US
The market in France is very different from the United States. It’s a lot less mature, less competitive. It’s smaller than that in the US, but I think the opportunities are greater. In the US everyone is responsible for his/her own retirement pension, so people’s natural reflex is to go to a Wealth Management advisor to obtain help with their investments and work on a long-term strategy. In France it’s the State that takes care of our pensions, ordinary people are used to guaranteed capital products and so are less well informed on financial matters. The US market is much more mature. Clients there are already relatively well looked-after because the Wealth Management advice and fund management sector is huge. Whereas in France, there are enormous opportunities for FinTech companies because everything still remains to be done here.
Could US FinTechs become potential competitors?
We’ve been led to believe that they would set up in Spain and invade Europe. I don’t believe that. Some 50% of all assets under management around the world are in the United States. The market there is gigantic. Collectively these companies are just a drop in the ocean in their market, so they have amazing opportunities there. Moreover, setting up in another country is a colossal investment from a cultural and regulatory point of view… it doesn’t really make sense. It’s very much in their interests to become masters in their own house before going to look elsewhere. At the moment, the regulatory and cultural aspects are a sufficient argument for everyone to concentrate on their own home ground. In the longer term we’ll see whether to set up partnerships between ourselves or whether the FinTechs will take each other over, but this isn’t something for the immediate future.
How do you acquire clients if basically they’re just not interested in investing?
Well, instead of talking to our clients in financial jargon, which they might find incomprehensible, we focus on their lives, their situation, their goals. Today French clients are still not used to thinking about their financial future. They know they ought to do something, they’re aware that their finances aren’t generating any returns and are languishing but they don’t quite know what to do about it. They may not speak the financial jargon but they certainly know their own situation and they have things they want to do in life. People will tell you pretty quickly what they’re going to need money for later on. When we suggest allocating assets plan by plan, people start to trust us, because then they understand why they are investing.
We gain people’s trust by demonstrating our expertise: we have competent people who understand the business well. There’s also our blog, which has lots of long articles underpinned by financial research. Our aim is to have a platform that can help anyone and everyone – which answers both very basic questions and very advanced ones on financial theory, etc. At the end of the day, our goal is to help people understand and to win them over by being able to adapt to different client profiles. Our advice is free of charge and anonymous because it’s not our only added value. We’re looking to maximise the potential for our clients to fulfil their life projects. There is a technical element to this, to be able to manage the risks on all the different portfolios over time. If you’re talking about a plan involving real estate, for example, it’s out of the question for a client to lose 30% of the value of his/her portfolio three weeks before maturity because the markets have taken a dive. As the day when the client will need the funds draws near, each portfolio will be switched into ‘safe’ mode so that on D-Day there’ll no longer be any risk. My job is to help our clients see their plans and projects come to fruition.
What about you? What are your plans?
Well, we’ve started out with very small resources, and with a fair amount of independence. We’re the only startup of this type that’s 100%-owned by its founders. Right now we’re busy raising several million euros in funding, so that we can move on to the next stage, i.e. continue to build out the services we offer on the platform and prepare the next steps.