220-Year-Old German Bank Mulls Robo-Adviser for Companies

(Bloomberg) -- (Machine translation provided by Google and reviewed by Bloomberg editors.)

220-year-old Hamburg-based private bank M.M.Warburg & CO, which now uses an online asset manager to also attract private clients with smaller wallets, might expand this offer to semi-institutional customers by the end of the year, according to investment chief Christian Jasperneite.

The company’s so-called Warburg Navigator, which was launched last year, accepts private clients with a minimum investment of just 20,000 euros. For a fee of 1.2 percent, the bank handles the investment of assets, such as ETFs and actively managed funds. In the financial industry, the term robo-adviser has prevailed for such offers, however Warburg claims to rely not only on algorithms, but also to incorporate its own market forecasts in portfolios.

"This could be interesting for semi-institutional clients too, and we see a gap in the market here," Jasperneite said in in an interview with Bloomberg. He pointed to foundations that want to invest, for example, a smaller six-figure euro amount, while still complying with strict investment rules. "With our digital asset management, such clients can ensure the quality of their investments without having to employ a human manager who keeps an eye on the portfolio to comply with investment guidelines on a daily basis."

As another example of semi-institutional clients, he mentioned a company that has at least 500,000 euros in cash, but now has to pay a penalty rate at its own bank and is therefore looking for alternatives. Such inquiries have already been received, he added.

Matthias Huebner, partner at management consultancy Oliver Wyman LLC, sees "potential for robos with semi-institutional investors, but there are hardly any convincing solutions out there," he told Bloomberg. "Most providers initially focused on private investors."

According to the consultant, there are currently around 40 robo companies in Germany. Industry giants such as Deutsche Bank AG are also active in the market. Digital asset managers apparently receive a lot of money. "Assets under management have exceeded 1.5 billion euros and are now heading for the 2 billion euros mark," Huebner said about the German market.

Warburg does not reveal any customer numbers for its online asset manager. The bank is satisfied, and many customers invest more than just 20,000 euros, Jasperneite said. "On top, we now reach customers who we did not reach before."

In addition to semi-institutional investors, he also has an eye on the original target group for potential growth of Warburg’s robo-adviser. "The Germans have billions in their checking and savings accounts," Jasperneite said. "That does not work, especially not in times when interest rates are close to zero."

Warburg works with two other companies on its online asset manager. Baader Bank was selected as the custodian bank and the Berlin-based fintech Elinvar takes care of the technical platform.

Jawerneite does not believe that Warburg is diluting its own brand by accepting customers with smaller assets. "On the contrary," he said. "The feedback from existing customers on our digital asset management was consistently positive."

Original Story:
220 Jahre alte Hamburger Bank prüft Robo-Beratung für Firmen

To contact the translator on this story: Stephan Kahl in New York at skahl@bloomberg.net.

To contact the translation editor responsible for this story: Stephan Kahl at skahl@bloomberg.net.

Reporter on the original story: Stephan Kahl in New York at skahl@bloomberg.net.

Editors responsible for the original story: Erhard Krasny at ekrasny@bloomberg.net, Stephan Kahl

©2018 Bloomberg L.P.