Chances are that if you’re reading an article inviting you to invest in a business in a magazine or platform called ENVESTORS, it’s probably fair to say that you have a relatively extensive knowledge about the world of investing. However, you are in the minority. Despite the great Thatcherite dream that ‘owning shares should be as common as owning a car’, individual share ownership has nearly halved in the last 30 years to just 11 per cent of the total value of UK traded shares. It would seem that we are a nation too wary to take the metaphorical plunge and a recent report points to a woeful lack of knowledge and education in all things financial, a fact not lost on The ITI Group (ITIG).
Founder and CEO Simon Glover spent 25 years in the US, where he managed a £1bn hedge fund in partnership with AIG. Upon his return to the UK in 2012, he was shocked at the state of financial services provisions for retail investors and realised that the UK, along with most of the other OECD countries, is suffering from a savings and investment crisis. ‘I founded ITIG with a mission to help anyone invest successfully’, he explains. ‘A lot of people are put off using their money this way for a number of reasons: it can be complicated, their financial knowledge might be limited and the fees can be high. We want to provide a solution and encourage individuals to save more money through investing, particularly those who are looking to expand their pension and retirement funds.
In 2015 we built a database to calculate daily information on over 1,400 Exchange Traded Funds (which now provide low-cost and liquid access to all work markets and asset classes) and 26,000 mutual funds. Then in December 2017 we launched the Whole Money Lifetime Portfolio (WMLP), a single, geographically diverse portfolio in which investors will automatically be owning the total world market derived from all ETFs listed on the London Stock Exchange (LSE). This provides exposure to over 7,000 bonds, equities, properties and commodities and is made up of around 20 ETFs. WMLP also, crucially and uniquely, ensures that investors’ capital is protected though an automatic downside protection policy, ensuring that if markets undergo a downturn, their investment is converted into cash. This will have real appeal to the individual who is wary of investing because they are worried that their money isn’t ‘safe’.
‘We aim to target those who are looking to reinvest their defined benefit pension. Currently, it is estimated that these schemes are worth about £1.7 trillion; between 2015 and 2017 £50bn was cashed in, as final salary pension schemes do not pass to a spouse or family on the death of the beneficiary creating a pipeline of customers looking for an effective investment option’.
ITIG’s objective is to keep the costs as low as possible. ‘We are pure technology (the WMLP is already available on Hubwise, one of the UK’s fastest growing and lowest cost financial advisor platforms), there is no expensive committee allocation as it is all done algorithmically – directly from the LSE – which enables us to keep the fee at 0.45%, thus maximising the investment outcome and return. We are the only group to offer the downside protection and if you look at the fees charged by our competitors offering other ready-made, multi-asset class portfolios, such as Hargreaves Landsdown (1.85%) and Charles Stanley Direct (1.53%), it is easy to appreciate the huge benefits to what we have on offer. In addition, we will be easily accessible to even the most wary of savers, offering low minimum investments from only £50’.
Another area they will focus on is the young. ITIG have partnered with Young Money and the LSE to provide all secondary school teachers with an app and materials to teach the basic principles of investing. There will be an ETF investment competition but ultimately the objective is to educate and, in doing so, build a culture of saving and investing across the UK, through children and young adults. The timing is also crucial: Child Trust Funds set up by Gordon Brown in 2002 (tax-free children’s saving accounts to help make sure that every child arrives at adulthood with a savings account) are due to start expiring in 2020 when these children turn 18.