Through their existing wealth and portfolio management company Galileo Capital, Warren Ingram and his business partner Theo Vorster are well known in South Africa.
The idea to set up SmartRand came after the duo received numerous requests from novice investors looking for basic advice that was unavailable elsewhere.
“The idea was to try and find a way for those novice investors to get the most appropriate advice and go into the right investment at the right price,” said Ingram.
Clear demographic
When they started to build SmartRand four years ago, Ingram and Vorster had a clear idea of their demographic.
“The idea was to try and find a way for those novice investors to get the most appropriate advice and go into the right investment at the right price.”
“We had pictured a younger, more tech-savvy investor who would never have gone into the branch. They would have done all of their banking and shopped online,” Ingram said.
“That was the individual we pictured becoming a client but we have also found that we’ve captured significant numbers of larger investors with lump sums, who are more sophisticated.
“The market has shown us is that it’s certainly a much broader appeal than we thought,” he said.
No upfront fees
Cost effectiveness is another draw for clients. “In the past, the only way people with a smaller lump sum would could obtain advice was by dealing with an insurance agent who would charge them an upfront commission.”
SmartRand clients pay a fee of 0.75% per year; which gets split between SmartRand (0.29%) with the balance paid to the investment company or transaction platform. There are no extra transaction costs or upfront fees.
Full responsibility
SmartRand holds the Financial Services Board licence, meaning the company is ultimately responsible for the advice given. “We stand by the advice given and take responsibility for it,” Ingram said.
Therefore they have built a number of safeguards into the system to ensure that appropriate advice is given. “It is possible that someone can go through the entire process and have no human interface at all.”
SmartRand is one of a handful of companies in South Africa offering robo-advice. The first to market, the company is still creating awareness of robo-advice for the end consumer.
