3 NOV, 2021
By Constanza Ramos
SageFund is an online Wealth Management platform founded by Sana Al-Badri and Marco Vega in 2019. Their aim is to make wealth management accesible to everyone, making sustainability the core of all the investment products they have available in their platform. Sana is a licensed financial advisor, with experience in the startup ecosystem, and NGO sector, and Marco quit his PhD in neuroscience to immerse himself in the startup industry, prior to start this adventure.
With these diverse and interesting backgrounds, we wanted to chat to them about how the wealth management industry is changing, what lays for the Millennial generation in terms of investment, and why sustainability is such an important asset in nowadays' investment culture.
The face of wealth management is changing. Millennials are about to become the wealthiest generational segment within the next few years. They are inheriting $57 trillion by 2030. Millennials have little trust for traditional banks, and are looking for modern services that understand them better. The wealth management industry is just not prepared for this transition and they largely don’t have relevant offerings for the changing needs of investors.
Broadly speaking our clients are millennial LOHAS, that is people between 25-40. This segment is environmentally aware, upscale and educated. So far we were successful at targeting them, and we are especially pleased by the high percentage of professional women who are investing into our solutions. Many of them have never invested before, and are excited that we offer basic introductions to investing. Many also have recently inherited money (or investment portfolios), or have big question marks about the insurances their parents opened for them years ago. They want to know about sustainability and very often they are not. Worse, they are being charged extortionate fees!
ETF’s have many advantages: They’re affordable, transparent, high-performing and flexible. Our goal was to give people a great experience when investing, and ETFs can reliably deliver that. Sustainability is important for many reasons: Climate change and the financial risks associated with that. And of course, the ethical arguments; no one wants to fund a dystopian future, and would rather be a positive force in the economic transformation.
Absolutely, as Millenials we really understand the frustrations and hopes from this generation. Millennials want to save and invest, especially because many of us have now started to climb the career ladder. Merrill Lynch is predicting that the millennial earning potential is increasing by 75% until 2030. At the same time, we have very different needs. We are much more digital native and demand better software tools, and beautiful user experience, but also demand more transparency and simplicity from the platforms we use. Many millennials are frustrated at the hidden or confusing fees they get from banking products, and also demand that sustainability be put front and center.
Overall, I’ve felt very supported as a woman in a male-dominated space. Especially now that women are earning more, I've had many people approach me wondering how I think we can capture the growing female market. But of course, it is a male-dominated sector, and I’ve also had my share of uncomfortable experiences. Many industry relationships are fostered after-hours over beers, where comradery and jokes prevail. This is an area where you can feel a bit unwelcome. But this has been a minority of cases. Overall I’m optimistic, but as always things could be better!
We believe greenwashing is an issue but so is a misunderstanding of ESG. There are many different approaches to ESG, and the ETFs are very transparent about the criteria. I believe people’s subjective view of sustainability sometimes doesn’t match the selection criteria the fund managers determine. There’s a big universe of choices out there, so for every investor there’s the right thing. As an example, many struggle to believe that Apple has really strong performance in terms of their environmental practices (see Greenpeace in their Greener Guide to electronics). It’s because people believe that all big corporations are evil and lobby against climate practices, when in fact many are investing billions in transforming their supply chains. For example, see Unilever with their Sustainable Living Plan, where they have made unbelievable strides. So greenwashing is often a too lax application of ESG and/or people’s prejudice about global corporations.
It’s an exciting time, especially software, sustainability and data will play a pivotal role in fundamentally changing wealth-tech. As digital natives, we see a lot of opportunities to create solutions here, because most financial services are still relatively analog and lack satisfying UX/UI design. And hopefully, we can create strategic relationships with some of the giants of wealth management to deliver new solutions to their existing customers.
By RankiaPro Europe