Episode 51: Future of Investment Management, Simon O’Donoghue, Spring
In Episode 51, Caroline Garnham talks to Simon O'Donoghue Chief Executive Officer of Spring Investment Management, which Simon launched in 2022. It is the first digital platform in the offshore world. It is based in Jersey, where Simon lives with his family and claims to be the 'future of investment management'.
Episode Transcript
00:00.00
carolinesclub
This is episode 51 of how to keep your money I am Caroline Garnham a private client lawyer specializing in international trusts and succession planning a pioneer of family governance and a psychologist I set up Caroline's car club and an interdisciplinary club of private client professionals. Where networking works for which I have been awarded. Great company's international woman entrepreneurs award 2024 for my training and my coaching we use podcasts videos and stories to communicate what we do for our clients. And our training program tells us why it did works so effectively and efficiently Caroline's club is a space to learn and listen from our network with like-minded professionals recognized by their cpcp accreditation the gold communication and collaboration standard. I'm joined remotely by Simon O'donohue Chief executive officer of spring investment management which simon launched in 22 it is the first digital investment platform in the offshore world. It is based in Jersey where Simon lives with his family and claims to be the future. Of investment management simon welcome great to have you? um you set up spring investment management in 2022 and in 2023 you won 4 prestigious awards at the second annual channel island's wealth briefing ceremony.
01:17.64
simon_spring_im_com
Thank you.
01:32.35
carolinesclub
Winner of the portfolio management Awardd the judges were impressed with how the data-driven and digitally built computer models collate analyze and optimize data from a variety of sources the trust company technology award. The judges were impressed with springs innovation team. Client reporting award because spring was second to none and the pension services award because the technology-driven offering impressed the board also shortlisted for 2 other awards currently. This social proof-proofing from such prestigious organization must have been a massive kickstart for your new business. How did you create such an impact in such a short time simon.
02:19.41
simon_spring_im_com
Yes, now it's been quite a journey. Um, initially this whole thing when we started we had the headwind of covid right in the midst of the start of this but at the same time actually covid became an assistance to us because it changed the handbook. So the handbook as written by the Jersey Financial Services made it so you had to meet your clients because of covid they had to to rewrite the code and the code was changed that you didn't have to meet the client but also that you could digitally in ah enable you to onboard a client. So the timing was right on when we launched and actually within the month of us launching the new legislation came into place so that put us off to a flying start. Um, and of course you know, but this is something which has been done in the yeah uk with various other institutions like nutmeg and wealthify and. Whatever there's there's a few of them but in the offshore world. It's not been done at all quite very unusually not at all so having this suddenly this concept which not only was it similar to the nutmegs but we were doing pensions. We're doing cash accounts. We're doing joint accounts doing accounts for your children. It was doing everything that hadd never been there before so it was quite an easy one in a way for anyone who's looking at the business and saying well look. Actually you probably argue you would award because nobody's ever done this before in the offshore world. Um, the problem is with the offshore world is a bit more complex.
03:51.61
simon_spring_im_com
Then the standard you came up because of course our marketplace is global and there were a few more complications to that. But we've managed to put the whole thing together and it's working and you know it's going and it's getting busier and busier and busier and so the thing is I suppose the big problem we have is that it takes people time to. Engage um to feel comfortable to to to want to to do the journey if you like because investment management in lots of ways is not exciting. It's a bit boring. It takes you months to onboard with the client. You have to supply your aml by the time you get the aml to them. It's out of date by the time they're ready to implement it. It really is quite a laborious journey and so we're really trying one of our key things that we want to do is actually make investments and investment management. Fun. Why not be.
04:42.40
carolinesclub
So.
04:44.52
simon_spring_im_com
Funny should it shouldn't be that bad. A negative to look after your money you should better be at bragged to your friends that you're making money why not and God sorry.
04:54.80
carolinesclub
Well I must my my my son is very keen on investment and he finds it fun so we need to harness the the youth on this as well. Which is course you can do by having smaller amounts but you you have an impressive track record. Ah Simon. You were the executive director of jupiter international which was followed with a pivotal role in establishing the international business presence of Smith and Williamson Williams and previous to that the investco's reach across Nordic countries to the Middle East and far east tell me a little bit about these roles and the lessons you learned from these impressive organizations.
05:33.40
simon_spring_im_com
Yeah I mean I've been in the industry all life of fidelity gar. We done all the big house. He's been there done that and it's great, fun and you learn lots of things and but actually some of the things I've learned is actually how uninclusive it is an industry which. If you think I live in an offshore finance center which predominantly work people are employed in trust companies law firms and whenever they can't have investment accounts because they don't have a half a million pos to put in a portfolio. How? um uneng engagingaging is that it really is quite poor and it. And the more I went into the industry I mean I I was thinking about retiring and just thinking well look this go and go and sit on a beach somewhere but actually I felt I've made you know I've made a career out of investment management which I've enjoyed and it's been great fun and you know we do to produce some really good results for people. But why not make it more concluding. And embracing for everybody and that if anything has taught me um, that's what I wanted to do.
06:34.67
carolinesclub
Brilliant brilliant. So so you can so spring can deal with the smaller clients as well as the much larger significant clients and you presumably do that shouldn't mention the word but you can do that at a profit because you're all digitally.
06:40.92
simon_spring_im_com
Absolutely we end.
06:52.25
carolinesclub
Wired up is that correct.
06:53.69
simon_spring_im_com
Absolutely So The big the thing is that the cost effectiveness of um, sitting down with a client going through his process going through his questionnaire which probably has mistakes in it and going back to the client to go for the mistakes If you're doing that digitally.. It's so much more efficient to actually get the information you need from a client to then put them into the relevant portfolio that would be suitable for them. It is It is a um, a difficult one because some people do want to have that journey and they want to have us that sit down. So we can try and do the sit Down. We can try and do the teams call we can try and do that as well and actually put loads of stuff on our website to make it so that it's educational that as you go through the journey. But yeah, you're right it it is ah a difficult one? Um and it's about gaining people's confidence in a lot of ways in this in this thing and.
07:34.76
carolinesclub
And.
07:46.64
simon_spring_im_com
If if you can produce as much information and transparency and accountability in everything you're doing I think that that really goes some ways into them thinking well hold on it and this actually is quite a good idea.
07:56.12
carolinesclub
But you're not just limited to retail. You do institutional work as well.
08:01.76
simon_spring_im_com
No yes, yeah, no, they all they're coming in and it's what we do I mean we're doing um institutions we won an award actually for trust interface. Um, because the thing is because we control the Api is.
08:16.97
carolinesclub
Thank you guys? yeah.
08:18.54
simon_spring_im_com
When we report that this is the the data on all the clients we can feed that back to any management system anybody wants so we can actually really integrate into a trust company or a bank that we're dealing with to really give them first in service. Performance and reporting for their clients. So it's like about controlling that data and making it really deliverable and presentable and that makes us available to everybody. Um and to be honest, you know what? what does the majority of people want when they come and sit in front of a client I mean you can have a. And all that client a portfolio you know, global portfolios and wily use lots of ets and whatever how much of a personable portfolio does a client want how much of does he does he really care if you're in buying htbc or lloyds I think you know I think.
09:10.75
carolinesclub
And doubt.
09:14.86
simon_spring_im_com
How much I think people have got other things to do really to be honest with you to go into that find a detail of portfolio management if they want to fine but that's probably not a spring journey. Yeah yeah.
09:23.90
carolinesclub
They probably want a safe pair of hands to know that they don't have to worry about their money. He set up spring investment management in 2022 as the first offshore digital investment management platform for which there are no setup or transfer fees. It is not the first in the world as you mentioned earlier and there was not. There's nutmeg in the u k he does something similar but you were the first in offshore tell me about the benefits of being the first offshore rather than in the u k.
09:56.20
simon_spring_im_com
What is always good to be a first isn't it I suppose but the thing is the beauty of what we've done offshore. There's a different regulatory aspect between offshore and in the uk now the fca have allowed the suitability the questions on the risk metrics of the client to be passed back. To the client offshore you've got to take full responsibility for any advice you give to a client so in a way compliance really has worked in our favor because none of the nutmegs or any of the Uk players can work in the international markets because they're processing. Doesn't take engage them in taking responsibility for suitability so because we take that that gives us a real front run in in taking on these these structures I mean it's also very much more um difficult when you're dealing in an offshore world because of course you've got different. Jurisdictional aml requirements around the world. Um, but that's what Jersey is built on. It's built on. Ah, it's not built on business in Jersey. It's built on the world business and that's it's a really good stepping platform to go internationally we can do junior accounts. We can do joint accounts but we can do. Complex pensions. You could do cunups we could do cureops we could do ebts you could do all these structures but you could do that online takes you 20 minutes I mean it really is that efficient and I think obviously we're the first ones to do it so it does take time in the realization that that accessibility and that ability.
11:29.10
simon_spring_im_com
And Tech has been built if you like but it's definitely happening and we're you know we're seeing it on a daily basis of you know people getting engaged and identifying the a hold on them and this is a different way of doing things.
11:42.72
carolinesclub
So unlike most people not only is Covid worked in your favor but also changes in compliance as well. Yeah, there very few people I think that could say that So but um.
11:47.18
simon_spring_im_com
Yeah, know great I Love how about that Compliance is our favor there. We go.
11:58.87
carolinesclub
Investment management relies heavily on technology. We've already we've already gone into that enabling it to open accounts with relatively small amounts of money and as you've just said very quickly. So it's the sort sort of thing that counts for children and Grandchildren would be very attractive.
12:01.31
simon_spring_im_com
Um, what.
12:17.70
carolinesclub
Although it's not just the small amounts that you're attracting Tell me a little bit about the automation built into spring investment management enabling you to offer a broad range of services for small as well as significant investors.
12:31.78
simon_spring_im_com
Yeah, no, this is a real key bit actually. Um, obviously there's a mother tech that's been built around it. But it's really driven on the platform technology now we've seen a massive platform developments in the Uk. Um, and really it's been a much slower journey offshore. Basically what we do we we have custody we hold custody for all our clients with pershing's bank of New York so it's one of the biggest custonians in the world but we use a bit of technology a platform technology that sits above and redirects all the portfolios to make sure that they fit into our. Set presets um parameters that we put together and that little bit of technology makes it so that I can push 1 button to realign all my portfolios in the same way. So we've built so far at twenty Portfolios dollars sterling euro and so forth and. If someone goes into a portfolio when we do realignments I push 1 button 1 button and all the portfolios are realigned now how efficient that makes me as an ah as ah, an investment manager and how costfective does that make me as an investment manager I've got 1 person 1 button to make realignments. Obviously we've got loads of tech under like we're not just built on tech on the platform. We actually have a systematic um process in how we manage money and that on its own is ah is ah a very different concept to what established investment managers use so we don't use an eighty twenty rule for.
14:06.47
simon_spring_im_com
Ah, high-risk portfolio a sixty forty for a balanceance portfolio. We tag underlying investments to evaluate what risk metric they bring to the portfolio and then we you look at Ai to identify the make the macro as to how the portfolio should be exposed to Japan or emerging markets or the Us. Um. Very much we call it that like have a bionic youth them humor to interface onto these Ais that we can use and how we manage money and that is a product called collider which we use our research house and does a fantastic job in helping us to evaluate how we should be in the portfolios. So not only are we doing it. On the front end with platforms. But we're actually doing all the way through the business and how we manage portfolios as well and actually if you look at our numbers. It says it for itself to be honest with them because they're all right up there.
14:43.89
carolinesclub
Last but.
14:53.16
carolinesclub
But tell me a bit more about what is right up there. What what are your track records that you've so far.
15:02.54
simon_spring_im_com
Oh I mean if you I mean we put it against arc and mpi which are the major sort of benchmark indexes if you like um, um, the performances go back 5 years and well we've got real life performances 3 years that we've been managing as ah as a house and then before that. We've got historical numbers that we use from collider that they've done on the same prefect but have done with Uk citus assets. All our portfolios are built whether be dollar eu or sterling they're built with non- uk scientists no french citis and the us citis in the portfolio. So it combines. It's ready for the international marketplace.
15:37.20
carolinesclub
Wow, that's very impressive. The onboarding process is simple, 3 steps assess your risk choose your portfolio and decide how much you wish to invest you make it sound so easy. Why is it not done more often.
15:57.60
simon_spring_im_com
Yeah, oh it's such a bind that question and I didn't know whether you would put that in or not really, but I think the bottom line is as it stands. It's a lot of questions. Ah, it's a job for the boys I mean it's going to be a really transformational marketplace where. People don't have to sit in front of somebody to get a risk metric as to what have you told rent to a client and saying well. What's your risk metric. Are you high medium or low. Well they're not going to understand what that means means at all, you can put a few questions through them and say that that will tell you what your risk metric is how bit how better is that to do it. Rather than asking a client. Well what?? What's your evaluation to risk ask a few digital questions which will probably be all very opaque and and overriding but they'll give that a client a some feeling and us as an investor manager as to what risk metric he should be going into. And then of course you can look at a lot of it is timeline driven as to what how risky you should be and how much exposure should be a lot based on what your time horizons are but also you know we've got things on our portfoo on our website. We've got calculators so people can go in and they can they can evaluate. What expected return given on historical performances. They could expect to get over a certain amount of time if they want to put Lump sums. They want to put monthly savings. The calculator will ah calculate all that for them.
17:17.96
carolinesclub
Golly that sounds very advanced but also really quite obvious as as as as well. Um, but why don't more people do it. Um is is it because of this habit that they like to have face to face meetings.
17:23.00
simon_spring_im_com
Yeah, yeah.
17:32.84
simon_spring_im_com
Well then the gens Ed they they don't want to have meetings they want to do they want to do it all on on their mobiles as it were. They don't use Mobiles for as telephones anymore they use them for gadgets to look at things and.
17:34.26
carolinesclub
Which presumably will will erode over time.
17:48.83
simon_spring_im_com
Evaluate risk and evaluate what they used to be in a portfolio. What a portfolio is well. That's what we think will start happening. But I think it's it is a um, it's a bit conundrum and's and I think as I said at the beginning and we discussed at the beginning. It's it's about making investment management fun and and. A bit of a journey that you enjoy that you can turn and to switch on your phone. Oh look. We're up or whatever. Yeah I mean you shouldn't really be looking investments on a daily basis Anyway, but if you want to it's there. You can see what you're invested in it's there. Why can't people see that they should be able to see that and have that information to hand.
18:08.36
carolinesclub
The.
18:27.30
simon_spring_im_com
And I think that that we everyone I speak to would will turn around to me is oh yeah, fantastic idea I'll have to do it but it takes time and it takes time for them to get used to it to get used to the name. The brand. There's obviously ah also ah, a um. People have got to get comfortable with it with a brand name as well that takes time especially when it was your money although the money is held in 1 of the biggest custodians in the world anyway, so that shouldn't really be a consideration. Um.
18:45.70
carolinesclub
Yeah, yeah.
18:57.14
carolinesclub
From from my psychology. Um, which is all in the program of excellence which we put behind Caroline's club it says quite clearly that it takes between 5 and 12 touches before the innate fear of the influence. Strangers begins to subside. So even if you're standing on a street corner giving out £10 notes. People will be suspicious. Um, it just takes time. There are of course ways to get round that which we'll discuss in due course but things do if if you don't use those.
19:17.75
simon_spring_im_com
Yeah.
19:30.87
carolinesclub
You know things like podcasts and and and case studies If you don't use things like this it will take time but we have a way to try and promote spring Beyond that um, which we can do but it is frustrating especially for someone like you wants to get on with things um look.
19:38.20
simon_spring_im_com
Yes.
19:48.24
carolinesclub
Yeah, your website I noticed that you have more social proofing in satisfied customer quotes. Um I can read some of them out Nadine says smooth process easy to use and assess good service. Andrew the best option in the market hands down Laurie says. Fantastic platform information clear and concise I highly recommend spring to individuals across the financial spectrum and James I can even view my account on my phone this is where I think the fun element will come in.
20:18.49
simon_spring_im_com
For.
20:23.77
carolinesclub
Simon How where and for whom do you intend to grow the platform.
20:26.10
simon_spring_im_com
Okay, so there's various ways I mean obviously we've got our frontend spring that's us in the marketplace. We'll go out and distribute and bring bring the brand name and people don't understand and you'll see a lot more of spring I know we're going to go into the Uk. We're going to get Fca approval. Um, that is all with next process that we're just starting to do now. We've also we're talking to various banks and other incumbents in the industry who want to use our technology to embed some of our portfolios, the onboarding processes the ama processes into their businesses. So we've got those conversations. We've also got conversations with different sorts of iffas that want to identify and put this as part as an alternative to their clients. So we're talking to companies like that as well. Um, there's 3 conversations on that basis going on and we've also. Um, signed up a deal with a company called we shops I don't know if you've heard of them if you're a shopper and you use Amazon you definitely definitely definitely need to know about weeshop. We shop is a competitor to Amazon you go directly online you shop online major retailers aren't quite so happy with. The margins that Amazon are taking out the marketplace and what happens with we shop, you've got all the major retailers there you could book holidays you but flight you could book everything on it and then what they do is they'll give you a certain amount of shares in we shops now we shop is intending on floating on the Nasdaq in september.
21:47.26
carolinesclub
Are.
21:56.67
simon_spring_im_com
And they've got currently 350000 clients and every single one of them was going to have to have a spring account to shares so that's that's a nice little result for us. Um, but it shows that's ah that's a disruptive concept in its business.
22:00.34
carolinesclub
Wow.
22:11.89
simon_spring_im_com
And we're a little bit disruptive in what we're doing as well. So the 2 of us quite ah, really fit together. Well as as 2 businesses. So um, that will definitely bring us up is to being one of the top digital managers in the Uk and that is all launch starting to launch in the next few weeks so
22:26.46
carolinesclub
And is that where where is that based the the we it is based in the Uk excellent.
22:31.60
simon_spring_im_com
It's based in the Uk. Yeah up in Manchester. Um, so that's good. That's all really exciting. So we're we're busy building. New tech new. We got to reembed because there's different banking systems within the Uk and all that type of things we've got to embed all those processes and on boarding processes. Um. With that for that marketplace and that's been a brilliant journey so that's ready to go live. Yeah.
22:55.87
carolinesclub
You have been working hard Simon I must um, despite being busy with spring investment management. You still find time for other things such as setting up and sharing the channel islands wealth management association. And in your spare time you like endurance swimming none of this sitting on the beach that you were talking about earlier you you actually get in there and do the swimming you set up the Jersey round island challenge and the Jersey France challenge to raise money for local charities.
23:16.83
simon_spring_im_com
Um, yeah.
23:32.23
carolinesclub
And swim around and you've also srum around Lake Geneva tell me a little bit more about the association you've set up and also your passion for endurance swimming and the benefits for you and your family.
23:38.70
simon_spring_im_com
Things. Okay, yes, no, no great fun I mean I'll do the the work bit for the channel lineers wealth management thing. Brilliant I mean it's all about education diversity and this industry is filled is filled with quite of old men like me really. Um, and we want to make it broader and more encompassing and that is one of the principal beliefs of the wealth management association here that we've set up and it gives us an interface to government. It gives us an interface to the regulator on ideas perceptions and really helps those changes if you like so that's why. Put that together again that was same time as setting up spring probably a bit too much at the same time but there we go but that's going really well and we're we're having you know the great successes in identifying niche and opportunities there. But my real chat my real fun thing and I love it more than anything is is sea swimming. Um I was a swimmer in my youth and I never never um and I played water poll over years and I never really did any Ec-s Swimming But a few years ago ah a friend of mine and 1 a business partner in in in Smith and williamsson international he said to me said look we've got this charity. We want to bring a new awareness.
24:55.29
simon_spring_im_com
Charities and new ideas to raise money have you got any ideas and I thought and okay and I made the comment I may be fancy swimming around Jersey and um, which was I didn't realize it was their Christmas ball that night and he announced to everybody that I'm swimming around the island. Um, which were found out the next day and of course well if I'm swimming it. You can bloody run it and it became a competition and took me 10 hours forty and it took him and 10 hours so he beat me by 40 minutes in the end but what we then did is we then embraced into kayaks.
25:33.24
simon_spring_im_com
Surfboards everyone just going around the island on a day we got voted twice by red bull the top 10 event in the british isles and we did that we raised loads of money for that and then we did that for quite a few years and now then I and then I've started to really focus more on seasuming which is my passion and we did I've set up this thing called the Jersey. France challenge and we swim what we all we had 23 teams last year people people of 6 teams of 6 and we raise 25000 for dementia jersey um and we all went off to swam to france but 14 miles and had a big party. It's more.
26:06.28
carolinesclub
Wow wow.
26:09.34
simon_spring_im_com
And that's great, fun. Um, and the group of people. It's all it's all about and getting people involved in seesoing and understanding it and feeling it and and getting involved in Them. You may not to do the whole thing. You might want to do the relay you might just want to get just done a lot of we just have this sort of thing about. Ah, deep water I can't go into deep water or whatever it might be or cold water. But it's amazing that what you can overcome and seeing people and getting them in the water when they you know they suddenly embraceced this idea and got into it and suddenly achieve what we get to achieve is. Brilliant and then raising good money for charity in the same time I don't and I do tease all the people that do, but it doesn't matter if you wear a wetsuit or not because it's all about you achieving what you want as your goal.
26:43.50
carolinesclub
Do you wear a wetsuit.
26:57.75
carolinesclub
Love.
26:59.84
simon_spring_im_com
Doesn't matter you wear a wets you want know a wet suit you've made as much of achievement as I've made if you've done that swim in your mind. It doesn't matter and that's it. It's about getting people involved and doing it. Yeah true. Absolutely yeah.
27:08.49
carolinesclub
Well, that's obviously what you're doing with with spring that attitude attitude and your attitude in doing something novel and and and and great to raise money for charity as well. Thank you Simon for joining me today on how to keep your money your vision and the execution of your vision in spring investment management as well as your your um other activities for the association and your swimming are impressive. You've looked at the investment management industry with fresh eyes looking to provide a wide range of services to a broad spectrum of investors. Well done simon now all you need to do is to get your message out there as we've discussed and I'm delighted to say that our award-winning club is here to assist you in this. If our listeners would like to learn more about caroline's club where networking works please visit our website or get in touch by email or phone also ensure you are registered for our Caroline's Club Weekly newsletter to hear more professional podcasts from other leading private client professionals like Simon.
28:19.50
simon_spring_im_com
Thank you.
28:20.13
carolinesclub
Simon thank you so much.
