Interview with quirion—robo advisory market 2020 In conversation with Martin Daut, Managing Director, quirion

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Robo advisor quirion claims to offer the best digital investments in Germany. Within the scope of a large series of interviews with various robo advice providers, we were interested in how quirion achieves this goal and what their USP is exactly. We spoke with quirion CEO Martin Daut, who explained the reasons for his personal commitment to quirion and his post-coronavirus view of the market.

 

How would you describe quirion’s scope of services in no more than two sentences?

quirion is the digital asset management company for all those who want to invest their money in an easy, inexpensive and professional manner while benefiting from the opportunities offered by the global capital markets.

What is quirion’s investment philosophy?

In short: maximum diversification in equity and bond ETFs at minimum cost. And all this without forecasting—because nobody is able to predict the short and medium-term market development.

In more detail: we derive our portfolios’ asset class allocation directly from the findings of capital market research. As a result, the portfolios are maximally diversified, with a maximally diversified global stock ratio. This demonstrably reduces the investment’s fluctuation intensity by eliminating unsystematic risks. In addition, we make use of the knowledge that global equity and bond markets can generate other determinable risk premiums in addition to the market premium (3-factor model according to Fama/French). For this reason, we incorporate these additional premiums by highlighting smaller companies (small caps) and fundamentally low-valued assets (value stocks) when creating a scientifically sound portfolio. As far as bonds are concerned, we generate additional yield premiums by investing in bonds with long maturities (term premium) and weak credit ratings (credit rating premium).

Which target groups does quirion address with its product range, and how many AuM and customers do you have in each segment?

At the end of April, quirion managed approximately EUR 410 million for nearly 20,000 customers. Our target group includes every saver and investor who wishes to take advantage of the opportunities offered by the capital markets at low cost.


In the wake of the coronavirus crisis, our authors have spoken to a number of other robo advisors about the effects of the crisis on the industry:

To the interview series with the robo advisors


How much do private customers with an investment volume of EUR 10,000 have to pay for quirion’s services, and how do you compete with other robo advisors and traditional asset managers?

In our standard model, investment amounts of up to EUR 10,000 are free of charge. Since—to our knowledge—no other robo advisor or asset manager has a comparable pricing model, quirion is by far the cheapest provider. A new study carried out by the German Institut für Vermögensaufbau (IVA, institute for asset accumulation), which compared the quality of robo advisors with asset management services of traditional banks, also proves the cost advantage and the high portfolio quality of robo advisors in general and quirion in particular.

 

What investment strategy do you pursue and how do you manage risk?

quirion pursues a pure rebalancing approach. Our scientifically based investment model follows the overall market and deliberately refrains from so-called active—more precisely, forecast-driven—management. After all, no one is able to correctly predict the development of individual market segments or even securities in the long term—capital market research has repeatedly proven this in numerous studies. We use artificial intelligence to determine the appropriate investment strategies for our customers.

We use a robo-interview to ask the customers about their knowledge, goals and risk tolerance. This allows us to find the balance between equity and bond ETFs that best suits their investment profile.

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Meanwhile, there is a multitude of providers for robo advisory, B2B and B2C. How does quirion differentiate itself, i.e. what exactly is your USP?

We democratize access to asset management! Mobile and on the Web. The combination of low fees, low minimum investment, savings plans starting at just 30 EUR and sustainable portfolios—coupled with a scientifically sound investment strategy and a first rank in the non-profit German consumer organization Stiftung Warentest’s product/service test—make for a very good package.

What is your (marketing) strategy to gain new customers? What role do partnerships play?

We rely on focused, modern online and performance marketing as well as on our investment quality and the resulting test wins. Our market research has revealed that we have thus succeeded in establishing quirion as the third most famous digital investment provider without any support. We only enter into partnerships via classic affiliate marketing.

Which business area do you believe holds the greatest growth potential? What areas do you want to focus on in the future or add to your business?

We already offer savings plans, sustainable strategies and special retirement provision portfolios. We anticipate very strong growth especially for savings plans. The potential for robo advice is generally still very huge, considering the volumes currently still invested in expensive classic investment funds.
In the medium term, the cooperation and ‘software as a service’ segments are also very promising, for example as a partner for company pension schemes of large modern companies that use our mobile or Internet platform as a financial investment offering for their mainly younger employees.

Let us now turn to the challenges of the coronavirus crisis…

How has the coronavirus crisis affected your business so far? What are your biggest challenges right now?

This means that even now there are investors entering the business or increasing their investments and who recognize the potential of structured ETF asset management—even though our portfolios were also hit by the coronavirus crisis. The customers reacted very prudently during this crisis. Presumably because they also understood that digital asset management is not a trading product.

However, this also involves a risk: crash reports are very prominent, recovery reports then much less so. As a result, the securities culture in Germany is suffering.

At the end of the day, however, opportunities for robo advisors outweigh the risks: customers and people interested in their range of services recognize that robo advisors are good value for money—in contrast to actively managed funds, which are expensive and fail to beat the market in the long term.

We have one last question for you …

What have you always wanted to state in an interview, but have never been asked?

I have always wanted to be asked why I am committed to exactly my company.

My answer to that: because not a single financial services provider in Germany has made democratization and access to asset management for all investors possible by combining the use of modern technology, a decent product attitude towards the customer (fair, inexpensive, independent) and such credibility (our parent company is the first and largest fee-based advisory bank in Germany). Our business model has eliminated customer barriers. Being able to help shape the growth of this company is a great motivation for me.


In uncertain times it is more important than ever that financial services providers remain good partners for their customers and present themselves as part of the solution. You can find further information on here.


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