After spending several years at private banks, Chandrima Das knew the inner workings well enough to understand that when it comes to wealth management, not everyone is in the same boat.
“Individual investors often pay more fees and are less aware about [their own] performance than institutional investors,” explains Das, the chief executive officer and co-founder. “Even if they have the same amount of wealth, their money might be managed differently.”
This disparity got her thinking about ways to use technology and algorithms to democratise – to a degree – the process of investing. Along the way, the goal was to make wealth management less costly and more efficient.
Her vision took shape in the form of a robo-adviser called Bento, which Das, stresses is different from other platforms of its ilk.
Far from being a fully-automated technology solution to replace humans, its intention instead is to work in tandem with client advisers and relationship managers, she explains.
Driven by algo
Bento uses algorithms to test-out strategies for clients. In taking this approach, it first aggregates client data across multiple banks and then offers holistic advice based on real-time data to construct custom-built ETF portfolios that fit their specific needs and objectives.
“Bento brings both strategic and dynamic modelling using technology to the HNW space and B2B at a very low price point,” explains Das.
In short, Bento determines the risk profile and investment objectives of clients, suggests a model portfolio based on this information and, when market conditions change and the portfolio veers from its goals, it brings it back on track.
Feeding Bento the latest data on market research is Willis Towers Watson. And parent firm Mesitis Capital is looking at a similar partnership with Mercer to input covariance metrics to further strengthen Bento’s research.
Indeed, market data is crucial to the firm’s success. “[Any] model is as good as the inputs that go into it, otherwise it can be garbage in, garbage out,” says Das.
What sets Bento apart from other firms like it, she believes, is its ability to customise a portfolio.
“We do not buy model portfolios. We have a set of behavioural finance-related risk questions that try and determine how much loss can a client take, the objective of investors and which biases they may have,” says Das.
This makes the outcome customised and iterative. “Plus, we have tools that aid an adviser to impart institutional-grade, quality advice at the individual level,” she adds.
Ultimately, every aspect of the portfolio construction process is guided by a simple philosophy: a robo-adviser should be a tool that helps construct customised portfolios and not give cookie-cutter advice.
So depending on a client’s preference, Bento can delete asset classes or add new ones to reconstruct the portfolio, while keeping the risk profile constant.
In striving to match the risk profile of clients with suitable assets, Bento has divided equities in different regions into separate bands, based on their market behaviour.
Within the US, for example, there is US growth, US value, small-cap and large-cap. Similarly, Europe is divided into the UK, Euro zone, Nordics, large-cap and small-cap, because each one of them behaves differently.
And when finally picking stocks, the tolerance band of clients is matched with those sub-asset classes to ensure it is uniquely suited for the individual.
Further, clients can opt to keep custody of their portfolio with any bank of their choosing, in which case Bento manages the money as an external asset manager through a sub account. Or, clients can open an account with Bank of New York-Pershing, which Mestis Capital has tied up with.
Essentially, in an increasingly-competitive fintech environment, Bento’s proposition is designed to keep costs low, both for clients and for itself.
This means it is focused – specifically, on HNW individuals, family offices and B2B deals.
Das is also hoping for regulatory tailwinds to propel Bento further.
Currently, many institutions in the region rely on transaction fees for up to 90% of their revenue, she explains. But given this is cyclical and regulators have started to turn against fees from selling funds, banks have started to look at ‘stickier’ revenue options of the kind that Bento’s core portfolios can provide.
The firm can also help relationship managers (RMs) to use smart technology to also enhance client relationships and leave them with more time for each client.
“If the bank starts gradually to move towards more of a recurring-revenue model, then there is less reliance on the RM selling a new idea in every conversation,” says Das. “So the RM can technically onboard four to six times the number of clients, and have a larger access to funds.”
Although still new on the block, she says that some recognition has come Bento’s way already. Venture capital data provider CB Insights, for example, recently ranked it among the top 90 global wealth tech firms.
As Bento clicks with advisers and tech enthusiasts alike, Das says the priority now is to further fine-tune the algorithms and build a whole retirement suite.