TWO former Scottish Widows investment directors have set up a new research service and are aiming to attract thousands of high net worth individuals as members.
SlimCat Investments, based in Edinburgh, creates online equity portfolios for long-term investors and charges a fixed-price fee of £150.
That allows it to comply with the forthcoming Retail Distribution Review which brings in new rules on financial advice.
Colin Beveridge, global investment director at Scottish Widows Investment Partnership (Swip) from 2004 to 2010, and Kaori Ishii, investment director of Japanese Equities at Swip from October 2006 to September 2011, are co-directors in the venture alongside communications consultant Sarah Burnett.
They expect to deliver a dividend yield of around 4% if clients follow their advice.
Mr Beveridge hopes to attract 3000 members to the online portal, which has just launched following a period of beta testing, over the next two years.
He said: "I'm really looking forward to getting started. Since leaving Swip I did a lot of thinking about what I wanted to do and what type of business I could put together to address some of the challenges in the industry.
"I wanted it to be different and use technology to leverage cost-reduction benefits for clients.
"If you invest £50,000 or £100,000 in a product then it is the same product even though under a percentage-based fee model you will pay more the more you invest.
"In the wealth management industry we should be in the business of trying to increase clients' wealth. We think we have identified a really interesting alternative for people in an industry that needs to be challenged.
"It is our aim to provide an online service based on our investment philosophy connected with investing in equities for dividend sustainability and growth.
"We are not focused on expanding product. There is already too much product in the industry."
Mr Beveridge said more than 500 companies had been researched and those with excessive levels of debt, low margins and low dividend yields had been excluded. SlimCat now monitors 40 stocks with 20 of those forming its core portfolio of recommendations. It will also offer its services to firms and advisers.
Mr Beveridge said: "As we have built some industrial models for analysing companies and have sophisticated analytics we see we could engage with firms and advisers to give them an insight into our investment strategy. So we very much see there being a consultancy part of the business.
"Long term this is a business that can get into other markets outside the UK. There is lots of growth potential in the model.
"It is about finding companies that pay dividends and pay them regularly. If you can identify stock with dividend sustainability then capital growth almost always follows it."
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