Descartes Finance: Robo Advisors Are Not Just a Hype

Dr. Adriano B. Lucatelli is a lecturer and author. He is also co-founder and CEO of Descartes Finance AG.

moneyland.ch: Descartes Finance is a digital wealth manager. What differentiates it from other robo advisors?

Adriano B. Lucatelli: We created an independent platform which matches our customers’ investment needs to portfolios created by leading asset managers. In that sense, we operate much like Uber or Airbnb.

Additionally, customers looking to invest CHF 500,000 or more can put together their own portfolio in real time, within the framework provided for by each portfolio.

Which scientific methods are employed by Descartes?

Only rules-based and evidence-based strategies which we have examined inside and out find their way onto our platform. Our curated offers include both active and passive strategies and smart beta models.

What kinds of asset classes are available?

Practically all asset classes which provide genuine added value are included in our investment models. Shares and bonds remain the most important investment vehicles.

What is the Descartes business model?

Descartes is financed entirely by management fees. Depending on the investment model, these range between 0.3% and 0.6%. Any sales commissions, retrocession fees and discounts are passed on directly to customers in full.

Descartes Finance is not a bank. Which custodian bank do you work with, and how high are their fees?

We work with UBS (CHF 50,000 or more) and with Bank Vontobel (CHF 250,000 or more). Depending on the investment model and strategy, all-in custodian fees (transaction fees included) come to between 0.20% and 0.45% per annum.

Why should an investor work with Descartes Finance rather than simply buying into a multi-asset ETF?

We offer investors peace of mind. Our comprehensive questionnaires help determine each client’s financial habits, allowing for a thorough analysis of risk tolerance and risk capacity. We then match the client’s inclination and risk tolerance with a relevant strategy from an asset manager.

Do you also provide personal advice to clients?

Yes, upon request. Advice can be provided over the telephone or in person.

Digitization is beginning to change the way that wealth management works. What effects, in your opinion, can we expect to see in the sector?

The digitization of the asset management sector is leading to greater transparency in the assessment of pricing and asset manager performance.

Digitization is also raising the level of discipline in the investment industry, and leaving less room for emotionally-driven transactions.

Finally, digitization will have a major impact on client advisors themselves. New competencies are required in order to meet the changing demand. In short, customers need more comprehensive consultation and fewer sales pitches.

How will digital wealth managers be positioned in five years from now?

In five years, robo advisors will continue to service a niche market. The hope shared by some conventional asset managers that the hype surrounding robo advisors will die down will not materialize. Digital asset managers will not go away. On the contrary, they will steadily gain in significance over time.

What are the biggest challenges facing robo advisors?

The biggest challenge is presented by the fact that robo advisors cannot rely on a well-known and established brand. Distribution networks are also limited. That is why it is crucial that we work with well-known financial services providers in order to consistently fulfill our promises to customers.

Where do you see Descartes Finance in five year’s time?

Our ambition is to be among the leading digital asset management services in Switzerland, both today and five years from now.

December 5, 2016

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