In this Spotlight feature, we speak to Fountain’s Co-Founder, Nishil Parekh, about what inspired him to set the app up, how to improve financial literacy among millennials and how this age group approaches personal finance.
Can you tell us a bit about Fountain?
What inspired you to set it up?
Fountain is a goal based investing platform that is using smart technology to build investment plans that revolve around you. By automating the advice process, and bringing it online, Fountain can offer a bespoke investment experience at a fraction of the cost of a traditional adviser.
After working for an investment bank in London, both founders, Nishil [Parekh] and Dann [Bibas] realised that for the everyday person in their 20s and 30s, having access to simple investment advice was not affordable, complicated and filled with jargon. There’s an irony to all this: the rich can access financial advice
to maximize every pound, but those who really need to move up the ladder are left high and dry.
Stunned by the scale of this problem, we rolled up our sleeves to better understand “what kind of investment advice do millennials actually want”? It was clear. Millennials want investment advice that will help them reach their goals: the keys to a first home, a dream wedding, or the trip of a lifetime.
Oh yeah and it better be affordable, convenient and on their smartphone! So…Fountain was born!
What makes it different from other
investment apps out there?
Other investment apps out there have focused on a tech friendly solution for investing, but offer very little in terms of actual financial advice and a personalised experience for the user.
We’ve built a financial adviser chatbot which gets to know the user, finds out what their goals are and offers simplistic advice to empower our users to invest towards their lifestyle aspirations. The app then revolves around the user’s goals and evolves with them throughout life’s many milestones. Oh, and if you need that human touch, there is always a friendly finance expert on hand to speak to.
And that’s why we find ourselves in a very unique position in this space – we’re offering investment advice combining friendly experts and smart technology that revolves entirely around you and your goals.
How far do you think robo-advice
has helped plug the advice gap?
Not enough. Most robo-advisers funnily enough actually don’t offer real financial advice because they haven’t gone through the necessary steps to receive a license to advise from regulators. As a result, they’re simply a convenient platform for people to invest at a low cost. And this is great for people who know what they’re doing when it comes to investing. But everyone else has to either navigate through mountains of acronyms like ISAs, LISAs, SIPPs, filter through blog posts filled with tons of jargon or get advice from “know-it-all” family members. As a result, the “advice gap” is still a big problem in the UK, and Fountain is set on tackling this head on.
Do millennials approach personal finance differently from other age groups?
There is ample data showing that millennials are frustrated with traditional financial services and lack the necessary resources to make the right decisions. This is why we’ve seen challenger banks become so popular with millennials, in addition to budgeting and investing apps.
Millennials are one of the of the largest generations in history and this group is about to move into its prime spending years. However, house prices are unaffordable, wages have flatlined and the cost of living is high. It’s not surprising millennials spend the cash they do have today more freely and find it hard to invest towards their medium to long term goals. For example, a recent study showed four in 10 millennials have no pension provision and 58% said they were unsure they would have enough money to support themselves when they stopped working.
Robo-advisers can help make investing more relatable to millennials by leveraging technology advancements such as artificial intelligence, empower them through financial education and provide easy access to the right investment products that match their goals and lifestyle aspirations. Robo-advisers can also provide insightful analytics for millennials to help them understand their good and bad spending habits, while encouraging them to find the right times to save and invest based on their financial circumstances.
What do you think are the key issues
around millennials and financial services. What would you propose as solutions?
The financial advice gap and improving financial education are key issues.
A report by the Financial Conduct Authority (FCA), the financial regulator, on how to make financial advice more accessible cited surveys showing that one in five people cannot read a bank statement and that one in three cannot work out what the interest on their savings should be. The FCA also said about half of consumers think that pensions are difficult to understand. Improving financial literacy is crucial to people making better decisions with their money and improving their quality of life.
There are many solutions for this issue. For example, schools and universities could be doing a lot more to ensure students understand the basics of personal finance such as budgeting, debt, taxes, investing, interest rates and so on. Forming good habits with money from an early stage is vital for when they start
working life and take on more financial responsibility.
The FCA has done a great job in acknowledging the importance technology will play in closing this advice gap and providing an environment for fintech companies like Fountain to tackle the issue. With the new PSD2 regulation set to come into play next year, people will have more control over their financial data, and in turn spur greater innovation from fintech companies to provide tailored advice and services to help people manage their money. Regulation has to continue to create an environment where the cost of access to financial advice and information is reduced.
Apart from millennials, who else
might be interested in Fountain?
Anyone who wants a simple way to start investing towards their goals and
a better lifestyle!
To find out more about Fountain, visit https://www.fountain.money