Market opportunity
“We identified a gap in the market,” he says. “We bring institutional-type investment styles, which are algorithmic in nature, to the retail market. The model makes the decisions,” he says. “We call it active/passive as opposed to passive/active. We run active asset allocation, with passively run assets as opposed to the usual DFM offering, which is much more passive asset allocation.”
With £52.4m under management to date, is the market as receptive as he had hoped?
“It has gone better than we had thought but not as well as we would have liked,” he admits, recognising most intermediaries require a three-year track record before they will consider switching provider.
“We are into our third year now and it looks very good. We are happy with the way it has gone and we are now looking to grow assets faster.”
An easy switch
With plans to list on other platforms and extend into the offshore community, he is confident of Copia’s growth prospects.
“We are not trying to capture it all, we had just a share of the market. It will give us more margin and we believe we have got quite a unique offering as far as DFM goes.”
With fierce competition among DFMs in terms of pricing, and bulk switching becoming easier and easier, he says IFAs running their own models might be keen on switching to Copia, or those with clients currently held in more traditional offerings.
“Also the price of a DFM on our platform is now a fraction of what it was when we started. It used to be 100-125bps plus VAT. It is now probably averaging somewhere between 30-35bps. The reason being we take away all the administration and make it much more efficient, allowing the DFM to do what they do best, which is fixing assets.”
Other attempts at ‘product extension’ have seen others try – and fail – to add protection offerings to their platforms in a bid to offer advisers a one-stop shop for their clients’ financial services needs.
“No one has managed it yet. We looked at it about three or four years ago but didn’t think it would make us any money.
“It is bizarre because you would think coming through the platform it would end up being cheaper, but it was actually going to be more expensive. You are getting into underwriting and all that sort of stuff.”
