Keep it Simple, Stupid
Gemma Godfrey, CEO of online wealth manager Moola, explains why she believes it’s time for finance to cut out complexity. Dan Matthews reports
Gemma Godfrey wants us all to KISS more. It’s the reason she created the finance management online investment service Moola. But don’t get too excited. Gemma isn’t on a crusade to encourage a spike in lip-locking, she just wants the financial services sector to ‘keep it simple, stupid’.
She argues that the language used by professionals is esoteric and hard to understand, meaning barriers to entry feel higher than they should. The net result is that the average saver or investor is habitually confused, and occasionally demoralised, by the lack of clarity.
This, Gemma says, deters people from engaging with financial services, which is a loss to both the industry’s businesses and to the thousands of people with spare cash but without a clue about where to put it.
“In financial services, we need to KISS more,” she says. “There is a serious lack of keeping it simple. It’s about no longer focusing on ‘pushing products’ and instead solving real customer needs; giving people what they want, in the way they want it.
“Ever since the financial crisis, people have demanded more control over their money, a greater understanding and access. We still have a way to go.”
She argues that confusion is a byproduct of an industry that feels it needs to sound smart in order to justify fees. But in a post-credit-crunch environment, success comes from empowering the customer by delivering information in a relatable and engaging way.
Influential expertThe Moola CEO, labelled “the UK’s most influential fintech expert” by newspaper City AM, argues that a few simple tweaks would make things a lot easier for the average investor. These improvements, combined with a digital interface that allows people to access information about their money in real time, form the bedrock of her online platform.
“There are two sides to this coin,” she explains. “Yes, people need to take an interest in their finances to afford all the things they want to in life. But at the same time, the financial industry needs to make investing engaging, with clear guidance to help people to do it.”
Gemma’s views on financial services have been honed during a stellar career. Despite having graduated with a first class degree from Leeds University as recently as 2004, she has amassed an impressive level of senior experience, ranging from board positions at major companies to powerful advisory roles and regular commentary slots on Sky, CNBC and the Huffington Post.
Between February 2012 and August 2015, she headed up investment strategy at Brooks MacDonald, a publicly listed wealth management business with $10bn of assets under management. Quick success, she says, comes from hard work and an education based on science, technology, engineering and mathematics (STEM) subjects.
“My father worked in the industry so I grew up with finance and I soaked up the lessons. I went to a good school in north London where pupils were encouraged to test themselves. My friends and I worked hard and I was always just quite driven.
“I did a degree in quantum physics which set me up for a career in finance because you are taught to apply yourself and solve problems. I wanted to get out there and use those skills to do something practical. A STEM background opens doors and doesn’t just restrict you to the lab.”
A battling spirit and a knack for problem-solving propelled Gemma through her career and continues to do so. On some of her boards she was the only woman and 20 years younger than everyone else; but being the only person fitting her demographic was a source of motivation, not embarrassment.
Today she is pregnant with her second child and, while she is keen to avoid the ‘supermum’ tag, she is equally determined to plough on with building her business.
“People need to take an interest in their finances to afford all the things they want to in life. But at the same time, the financial industry needs to make investing engaging, with clear guidance to help people to do it”Dedication and hard work also explain her media success, she says, which has culminated in a star turn as an advisor to Arnold Schwarzenegger on the US version of TV show The Celebrity Apprentice. This, Gemma says, is one of her proudest achievements to date.
“People ask me how I got it and what’s the secret. Well the truth is I worked [very hard]. I work so hard to get exposure, it’s not like The Times or BBC Breakfast just falls into your lap.
“I tell them that you have to start small and do every little thing that comes your way. You get up at 5am, you do stuff no one reads, you hone your media skills, you build a network – which changes because people in media move around a lot – and ten years later, bam! It’s true it takes years to be an overnight success.”
If physics is a problem-solving science, then financial advice answers the questions governing people’s everyday lives: how they can grow their money to afford major life costs, such as buying a home, funding children’s education or paying for a wedding.
Connecting with clientsThe question facing the industry, meanwhile, is how to connect with a wealth of potential clients who are undecided as to where to start.
According to Deloitte figures from 2012, 5.5 million adults in Britain either lack access to a financial advisor or for one reason or another have opted to cease using one. AXA Wealth says the UK has a shortage of financial advisers; just one for every 2,700 people. In the US the ratio is one to 1,400. And PwC says, in a report published in 2013, that about half of the country’s liquid wealth is not invested in products and services offered by banks, wealth managers and independent financial advisers. This equates to about £2tn going begging.
This is the market Moola is tapping into, and Gemma has a track record of connecting with prospective customers via non-traditional means. She has amassed an enormous Twitter following (approaching 55,000 at the last count) that soars above the social media presence of even the most successful fund managers.
It disproves the notion that finance is better discussed behind closed doors and away from prying eyes. Getting the message out there is part and parcel of forcing the industry out into the open where it has room to thrive.
Gemma’s popular TED talk on the subject of KISSing has no doubt helped to swell those numbers, as have regular TV appearances – but why invest so much time and effort in Twitter?
It’s not just a profile, she says: “Social media enables a business to directly engage with their target audience and gather feedback on what it is they’re looking for. It’s a powerful real-time two-way dialogue.”
More generally, digital technology has provided a platform to greatly improve services in finance across the board. The cost of starting up is lower and new entrants have shaken up the economy in recent years, providing leaner and more relevant products direct to consumers.
“Technology enables businesses to offer services to people they wouldn’t have been able to reach previously, tailored for the way they live their lives,” says Gemma. “Automation reduces costs, so services can be offered for a lower price, opening up access for people while enhancing operational efficiencies and profitability for the firm.”
Moola was founded in 2015 to capitalise on these changes and disrupt the market. Co-founder Andrew Jordan was previously part of the team that launched VouchedFor, a service connecting investors with top financial advisors.
Part of the motivation for creating the new business came from this experience. Andrew witnessed first-hand the pent-up demand in what he and Gemma identified as an under-served market. Another part is the chance to work with financial advisers (FAs).
A new partnership with technology provider EValue will offer advisers forecasting tools, enabling them to give affordable advice to those who couldn’t stump up the fees before.
“We use technology to reduce the normal overheads and we deal with the whole process for smaller clients, including onboarding, background research and suitability checks,” says Gemma. “We grow the clients and when they get big enough, the FAs can take over.
“We guide them towards a portfolio, they decide whether they want to invest. Then we execute it for them and report back. They can always see details of how well their investments are performing through the online interface.”
Gemma’s business mantra is to ‘solve problems’ rather than ‘sell products’. If you can create something that addresses a latent need, the product will sell itself. In the case of Moola, this means helping people understand how to make their money work harder, which, in the context of the UK’s chronic savings shortage, is tackling a very big problem indeed.
But, fundamentally, it is further evidence of a move towards the ‘service’ aspect of financial services. Customers want more control, easier and greater visibility. Businesses that can provide this will do well in the new environment.
This article was originally published in the January print edition of The Review. The print edition is available to all members who opt in to receive it, except student members. All eligible members who would like to receive future editions in the post should log in to MyCISI, click on My Account/Communications and set their preference to 'Yes'.