In this episode, our host Brandon speaks to Alexis Augier, Founder and CEO of Vega. We discuss the changing world of Private Wealth, as technological adaption and embracing alternative assets come to the forefront of the industry for a new generation of HNWIs and their advisors.
Episode Transcript:
Brandon (00:03.824)
Hello and welcome to the Guernsey Finance podcast, where we bring you interviews with leaders from the global finance industry, as well as news and developments from Guernsey's financial services sector. My name is Brandon Ashplant and I am Head of Technical here at Guernsey Finance. For those who aren't familiar with Guernsey, the island is a leading global finance centre. The success of the industry here is underpinned by economic substance, political stability and asset security.
And we are committed to the cause of sustainable finance to find out more about Guernsey's success in sustainable finance. Tune into our sister podcast, the Sustainable Finance Guernsey podcast. Today I'm delighted to be joined by Alexis Augier, founder and CEO at Vega, the operating system for private wealth. Prior to starting Vega, Alexis was an investment professional at Elliott and KKR and started his career at Goldman Sachs.
On this episode, we'll be discussing the changing world of private wealth and the evolution of offerings to private clients. So without further ado, welcome Alexis.
Alexis (01:10.227)
Thanks for having done. Great to be here.
Brandon (01:12.122)
Great to have you on the podcast today. So thanks for joining us. Firstly, just tell me a bit about yourself and your career to date, please.
Alexis (01:21.204)
I'm Alexis, I'm French. I moved to the UK about eight years ago for my first job out of university to work at Goldman Sachs. I then spent four years working across private equity and opportunity credit at KKR. And then I was on the hedge fund side of value and risk arbitrage. And I started my company about 18 months ago to try to change the way things are done in wealth management.
Brandon (01:44.784)
Brilliant. And sort of following on from your background, can you tell us a bit about Vega and obviously how you started up the firm and I guess some of the key aims of the firm itself as well?
Alexis (01:56.372)
So, as you see, my background is not standard technology, right? I was not planning to start a tech company at all. This is a bit of a pivot, which was really driven by my experience when I was working on those investment firms and really seeing the gap between what I was used to on my day -to -day job in terms of sophistication and what was available to me on a personal basis when it came to investment products and wealth management. That's really what triggered me a couple of years ago to start thinking about this space much more actively and thinking whether we could build something that
that would be really appealing to what we call this new generation of high -net -worth individuals, so people who look a bit more like you and I, who are quite sophisticated financially, and who are very demanding when it comes to the products they want to consume and the underlying user experience. That was really the starting point for us to think about the space. And really, the underlying premise for Vega is how do we bring to a broader audience the same sophistication that's common in the institutional world.
Alexis (02:57.013)
that obviously is by mixing our backgrounds and the finance side with very strong technical skills. So most of our team actually comes from Revolut and we're trying to bring a bit of that user experience framework to the web.
Alexis (03:14.005)
So you can think about us as effectively trying to build an operating system for private wealth. Our observation was that there had been a lot of innovation in the mass market segment, but that the higher network segment was really much left untouched. So there were a lot of point solutions which didn't talk to each other. And what we're really trying to do is rebundle all of that so that we can offer who the wealth managers we work with, their underlying clients, a much better experience and also more sophisticated financial product.
Brandon (03:44.08)
And we often hear a lot of talk about the world of private wealth undergoing substantial change around transfer of wealth from sort of the older generations through to the sort of emerging gen, next gen, those sort of buzz terms we hear sort of a lot thrown around. And obviously at times with vastly differing values and requirements to the current generation, obviously, you know, contextually layering that conversation.
opportunities or how I suppose is Vega looking to harness these opportunities and looking to capitalize on this sort of transfer of wealth that's due to take place.
Alexis (04:21.718)
Absolutely. We see two core trends that we think are going to be reshaping wealth management for the years to come. Number one is the one you mentioned, which is demographics with the emergence of a new generation of high -wealth individuals. And number two is a new asset allocation paradigm with alternatives and private markets becoming more and more important in people's portfolio allocation. Those two trends we think are going to drive the wealth management industry for the years to come. And that's really what we're betting on at Vega.
So to your first point around demographics, wealth transfer, obviously this new generation has very different expectations when it comes to user experience, right? We're digital native, we're used to doing everything on our phone. So the standard way of delivering wealth management services, which tends to be very offline, kind of human interaction, is important, right? You will still have some of that, especially in the high -end for segments, but we believe a big chunk of the user experience actually going to have to go digital.
And we're seeing that trend play out already. If you think about the private world space right now, you really have two categories of companies, right? You have the digital disruptors. So those kind of direct to consumer, let's say, robot advisors or other kind of digital with management propositions, we're trying to build trust and build a brand. And on the other hand, you have the incumbents, the offline players, we're trying to digitize themselves. At the beginning, we take the bet that we are better off equipping the latter category. So helping those incumbents, those larger players,
already have a brand, already have established trust, to be attractive to this new generation of high -end wealth individuals by digitizing themselves. And for us, it's not about only digitizing the user experience, but it's also about internal processes. Traditionally, the wealth management industry is very pen and paper in the way it operates as well. And we think there's a tremendous opportunity to help those wealth managers truly digitize their operations and cut a lot of costs, which then can be, you know, re -passed on to the customers in terms of better fees, better services.
So we think this is something which is going to be very important to us to come forward.
Brandon (06:18.64)
Definitely. And something else we often hear a lot about is the industry isn't just seeing a handover of clients and sort of a changing client demographic, but also of advisors and professionals coming through that are perhaps of the younger generation cohort themselves. How are the next generation of industry leaders different to their predecessors in terms of their outlook and approach to wealth management?
Alexis (06:42.295)
I think you see that they're embracing technology much more aggressively, rather than the previous generation. You have a tremendous shortage of financial advisors, especially in the UK. And clearly, you're going to have to shift to a new model where advisors are able to serve more clients. Otherwise, you're just not going to be able to cope with the demand. So we're seeing younger advisors, especially some who break away from the private banks or the bigger wealth management firms, are looking to set up their own shop. We're seeing them as much more inclined.
to embrace technology and think about it much more strategically. A lot of people in this industry think about technology as a cost. I think there's a huge opportunity for people who think about it much more as a way of creating value as opposed to a cost centre. So we're really seeing that with a bunch of advisors who are maybe coming out of the big private banks and who really want to set up their own shop and do it from scratch with technology at the core. We think the winning model in wealth management is going to be a hybrid one, where you still have...
human interaction is still a financial advisor where you can call for the complex topics, but the bulk of the experience will go digital. And that will really allow advisors to serve more clients in the end. And we think that's going to be significantly better for the industry to really face this kind of shortage or advice gap that we have in the UK currently. So we're seeing that. The other element is we're seeing a lot of more entrepreneurial approaches to wealth management. So traditionally,
A lot of the more old school advisors were happy running their client books more as a kind of flat thing. We think there's a bunch of younger advisors who are much more business centric, much more focused on how they create an actual company around this and really putting technology at the core, also for those processes on the client acquisition side of things.
Brandon (08:27.344)
And part of Vega's mission is to, of course, bring the tools of the institutional world to a sort of broader audience through technology, crucially, first and foremost. And this includes a broad range of financial products and including alternatives in private markets. How is Vega enabling a broader participation of private wealth into those asset classes? And what are the implications for those alternative asset managers looking to engage with that sort of audience?
Alexis (08:53.945)
Yeah, absolutely. So in terms of the wealth managers first, obviously we see the wealth managers as the gatekeepers here. So our goal is not to build a direct to consumer proposition, where we go directly to individuals and onboard and much more to equip those wealth managers so that they can give the better products to underlying clients. So I think around that is obviously product markets and alternatives are actively new in the product wealth space, right? When you think about the penetration in the UK of alternatives, you're really hardly in the low single digit.
in terms of asset classification. So there's obviously a lot of education to do in that space. It's not going to go super quickly. Advisors still need to understand those products. They're not familiar with them. But what we're trying to do with our technology is to really remove the hurdles for advisors to embrace those financial products, not only by giving them access to products. We think access is increasingly commoditized. We're a technology company. We're not focusing so much on structuring our own financial products, et cetera.
What we think is essential is to remove the hurdles for participation of the wealth market in the private side. And look, those hurdles are really operational, right? Private markets and alternatives are much harder to manage from an operational standpoint. So if you're an advisor with 50 clients and they all have a couple of private markets funds, it quickly becomes very hard for you as an advisor to handle all of that. So we've digitized that whole journey to enable advisors to really...
distribute private markets the same way they would do it for the public asset classes. So that's one. The other element on the private market side of things is we're building a whole suite of tools on analytics and portfolio management to enable advisors to mix those private markets products, which they're not familiar with most of the time, with traditional portfolios, right, which we think is essential. We think we're really moving to an era where people are looking at alternatives and private markets in isolation to a phase where people think much more about rebundling.
Rebundling in terms of the standard portfolio construction, but also rebundling of private markets with other pillars of wealth building, such as the equity management, credit, tax and financial planning. So that's really what we're trying to drive for advisors for our technology. And to your second question on alternative asset managers trying to tap that audience. So our first audience from a client standpoint was wealth managers and multifamily offices.
Brandon (11:01.808)
Hmm. And are you seeing more interest? Sorry. Yeah, no, please.
Alexis (11:15.899)
but we're actually building another product right now directly for alternative asset managers to help them serve this audience at scale. If you look at the big managers, the big listed players, the Apollo, the KKR, the Glaxo, et cetera, wealth is their number one priority in terms of growth. This segment is largely untapped. They see it as a huge opportunity to grow very fast. The problem is they're not set up operationally to serve that audience either. They don't have the client onboarding processes. They don't have...
the reporting tools. So one of the additional products we're building at the moment, and we'll tell people more about it in a few months, is actually in partnership with a bunch of alternative asset managers to enable them to service that client demographic at scale.
Brandon (12:00.336)
And are you seeing more interest amongst investors from certain jurisdictions over others or not maybe?
Alexis (12:06.811)
So, to look at Vega for now, we're based in the UK. It's our home market, so we're focused really on the UK. We're having a bunch of discussions with continental Europe players, but the bulk of our focus at the moment is the UK market. But look, we think this is a trend which is not specific to the UK at all. The same is true, obviously, in the US, which is perhaps five years ahead when it comes to this trend. But you know, continental Europe as well, there's a lot to be done there.
Brandon (12:33.584)
Brilliant. And slightly off script here, I hope you don't mind me asking, but obviously you're a bit of a disruptor in what is perhaps quite a stable, you know, previously existing sort of industry, if you like, that is quite used to the traditions and the conventions. Have you as a firm been accepted with open arms by sort of managers and wealth advisors and so on, in terms of what you're trying to do in terms of sort of lightly disrupt the industry through a technological angle? Is that welcome?
Alexis (12:40.508)
you
Alexis (13:03.42)
Yeah, look Brandon, we're disruptors, but on the other hand, we're really equipping those players, right? We're not trying to displace them. We're not a digital disruptor in the sense of trying to take clients away from the traditional wealth managers. We're much more focused on equipping them with our technology so they can compete with those disruptors. So I would say in general, we've been quite welcomed by the industry. And you know, those topics are received very top of mind, right? Every wealth manager at the board level is thinking about this kind of great wealth transfer, what the implications are.
Brandon (13:21.68)
Hmm.
Alexis (13:31.964)
for their underlying clients. So this is very top of mind. And technology, obviously, is also a very important topic for them. Traditionally, innovation in wealth tech has been very limited. Most of the technology around wealth is effectively coming out of brokerage platforms, investment management platforms, or very much low tech products with a few APIs here and there. So you know, we see our approach from a user experience standpoint in terms of what it unleashes in terms of capability.
Brandon (13:49.552)
Hmm.
Alexis (13:58.876)
for the underlying wealth managers is very different. So we're seeing pretty good reception. The other element which is very interesting is obviously the wealth management space is going through a big consolidation phase, right? And consolidation for us is actually a tailwind. As firms consolidate and buy smaller players, they're much more likely to think about the technology strategically and embrace that, you know, really at the board level to think about value creation. So actually we think this is a good moment for solution like ours.
Brandon (14:27.734)
Excellent. And of course, Vega has worked with Guernsey firms and the sort of Guernsey financial services commission, the regulator here on the island, on your launch. What benefits have you found working with these firms and our regulator here in Guernsey?
Alexis (14:43.869)
Yeah, look, we thought long and hard about the jurisdiction we're going to be focused on in terms of our entities. And we ended up picking Guernsey really for a couple of reasons. Number one is flexibility, and number two is speed of execution. So when we're benchmarking a bunch of different jurisdictions, it became very clear to us that Guernsey was frankly the fastest and the most inclined to embrace technology. So that was super important for us because in the end,
What we're doing is not only about building technology, but it's also about convincing people to embrace your processes. So you need to make sure you find the right partners for it. Our experience with Guernsey has been really good. So we work with IQEQ in Guernsey, with Colors CREAL. So our board member, Linden Trott, has been tremendously helpful in connecting us to the industry players on the islands. We're super excited for our partnership with Guernsey.
Brandon (15:34.672)
Yeah, that's definitely certain, certainly something we hear time and again is obviously access and flexibility of regulator, but also access and, um, the ability to sort of access gate, you know, the, uh, the, the decision makers and the policy makers quite free freely. And actually the, you know, the, uh, the gatekeepers are few and far between. So, um, sounds like you've, uh, sort of, uh, had the same experience was really good.
Alexis (15:57.054)
absolutely, we did a roadshow in Gerizy in January with Michael Tander and Linda and it was a really great time. So we're definitely coming back in a few months.
Brandon (16:06.352)
Lovely. Well, thank you very much for your time today and for joining us on the podcast, Alexis.
Alexis (16:11.358)
Thanks for having me, Random.
Brandon (16:12.816)
It was great to talk through the exciting changes to the investment landscape for high net worth individuals and families and learn a bit about Vega. I particularly enjoyed hearing about how Guernsey is working with the firms like Vega and how the Island can act as a safe pair of hands for firms embracing this technological change. So thanks also to you for listening. If you enjoyed this discussion, we have a backlog of interviews on the Guernsey Finance podcast channel. You can check them out by searching Guernsey Finance on your preferred podcast platform.
We also have links to Alexis and Vega in our show notes. So check them out to hear more from them to find out more about Guernsey and its specialist financial services industry. Head over to our website, guernseyfinance .com. We look forward to welcoming you back to the podcast soon until then it's goodbye from Guernsey.
