Tillit: How one investment platform is trying to change the industry
The CEO of one of the newest DIY investment platforms has called for her competitors to up the quality of their investment information.
Tillit, which means ‘trust’ in Swedish, was founded by CEO Felicia Hjertman, and offers a curated number of funds with a boatload of information behind them.
The platform launched three years ago, after Hjertman found that investment platforms had become overloaded with jargon at the expense of investor confidence.
“The problem we saw is that there’s too much choice, and too little high quality information,” she said. “We believe in quality over quantity, but we also believe in choice that doesn’t overwhelm you.”
When a fund is on-boarded onto Tillit, its manager must fill out a 20-page long questionnaire, delving as far as into areas like the culture of the firm.
Following meetings with managers and salespeople, the funds are sent to Tillit’s investment committee, which meets once a quarter to review new pitches for those that may join the platform.
Famously, the investment platform industry came under criticism after the role of Hargreaves Lansdown in promoting Neil Woodford’s failed Equity Income fund.
Legal action against Hargreaves by investors in Woodford’s fund is currently ongoing.
“When there are warning signs and red flags and concerns, I think that should be flagged to customers.”
Felicia Hjertman
With Tillit, the firm has pledged to conduct ongoing due diligence, where the team meets with a manager at least once a year, along with other meetings with the investment team.
“We have a really hard requirement around wanting access to the people making the decisions, so we can ask them the questions we need to ask them, and we know we have an open line of communication,” Hjertman said.
Communication with clients is also essential, she added, stating that as soon as issues arise with a fund, customers will find out as soon as possible.
“When there are warning signs and red flags and concerns, I think that should be flagged to customers,” she said.
Now, the platform is expanding into pensions, and Hjertman is eager to keep fighting the giants of the investment platform world.
How Tillit works
While there may be thousands of funds on giant investment platforms like Hargreaves Lansdown and AJ Bell, investors may struggle to understand what each fund manager is doing differently and which fund would be right for them.
Despite Tillit’s best efforts to push the industry forwards, Hjertman said the quality of information about what people are actually investing in was “still not where it needs to be”.
On Tillit, the funds are first shown to prospective investors with a sentence that explains them, such as “Investing in the sweet spot between small- and large-caps in the UK”.
Information is also immediately displayed with the fund’s five-year returns, and its fee.
Tillit has only one investment platform fee, which starts at 0.4 per cent and drops by one basis point every year that clients stay until it hits 0.25 per cent. It charges no extra fees for ETFs or investment trusts.
The new pension scheme, which Tillit launched earlier this year, starts out at the base 0.25 per cent.
Pensions are currently being rolled out to partnered employers, with a particular focus on financial and tech companies.
Hjertman said that the pension had been particularly appealing to asset managers themselves, as fund managers and those that work at the company often don’t have the ability to invest in their own funds when going through traditional pension providers.
“The way that we built the investment platform is that when we’re talking to an asset manager, we can say we can onboard all of your funds,” she explained, leaving those that work at the company able to put their pension in a place they “believe in”.
“We can also onboard them in any share class you like, so if you give access to an institutional share class for your employees, we can build it in,” she added.
Pensions and a UK mandate
As the investment platform moves into pensions, Hjertman was hesitant to enter the debate on whether the government should be pushing providers to invest in the UK, stating “I think we have to be really careful not to direct money that isn’t the government’s to direct”.
Instead, she argued that pension providers should be looking at a key area that the UK is “lagging behind” on: Venture capital.
In the US, pension providers will often invest in high risk assets like venture capital, whereas in the UK, some large pension providers are so hesitant to take risk that they cap their equity exposure at just 65 per cent.
This is “not right”, she said, stating that as people increasingly live longer, “we need a lot more in our pension”, and putting it into high growth assets like venture capital, and not just in the UK, could be a great way to do that, she said.
While it might be riskier, when you’re young, you have decades to grow your pension, and so should be less worried about the downside risk of falls in the market.
However, she was keen to state: “We have to think about if you are overwhelming a market with capital that it cannot absorb,” by pushing for venture capital cash to head to the UK specifically.