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Profile: How Strawberry plans to shake up discretionary distribution

Profile: How Strawberry plans to shake up discretionary distribution

Exeter is many things: home to one of England’s most charming cathedral squares, and unfortunate proof of the abilities of both the Luftwaffe and British post-war town planning. It is not, however, a place that has ever felt close to the white heat of technological revolutions, whether industrial, space age or digital.

This makes it a slightly unusual place to encounter a company often compared to disruptive discretionary businesses such as Nutmeg.

At little more than three months old, direct-to-consumer platform Strawberry Invest is still more promise than actuality, but founder James Priday (pictured), director of fledgling discretionary business Prydis Wealth, has no doubts about the potential.

‘When we looked at the research, it said that [individuals with] £72 billion in investable assets would consider investing via an online platform,’ says Priday, one of this year’s Wealth Manager Top 30 Under 30 managers. ‘Even if we only win a very small amount of that, it would really be a very big thing.’

He adds the company deliberately set up Strawberry Invest as a standalone business with a different client profile and strategic aims to the parent company.

‘Charles Stanley has developed Charles Stanley Direct, and while they are a well-funded company that will obviously make a success of it, there is an element of saying “come to us for excellent management and broking” and then saying “yeah, just do it yourself”. We didn’t want to muddy what we do [as Prydis].’

Challenger brand

Entirely self-funded, Strawberry Invest remains very much the challenger brand in the developing field of discretionary platforms, with much more limited functionality (and marketing) than its larger, venture capital-backed peers.

But the company has turned thrift into a virtue, with a simple and clean user interface it says is less intimidating to regular savers than full-spectrum investment research and modelling tools. It has also overcome its lack of advertising budget with an enthusiastic social media presence, which has brought it national attention. 

The company’s home in a retooled Georgian terrace house on a back street just outside the city centre might at first seem incongruous. However, Priday says it is just one of a new wave of enterprises helping Exeter to make a great leap forward from seat of county governance into the 21st century.

‘The university has been awarded a £260 million research grant and they are really pouring that into new facilities. They are looking at Oxford, Cambridge and the Silicon Fen and all of that, and really going after them, making a big play for that status,’ he says.

‘It’s very ambitious. We are going to have the fastest connections in the UK, in terms of fibre optic cables, pretty soon. [The city] is growing – you have Charles Stanley here, Rathbones, Ashcourt Rowan and Investec have just opened here.’

Prydis Wealth's history

Prydis Wealth was formed in 2010 when James’s elder brother Joe, a former PricewaterhouseCoopers accountant, returned to Exeter to take over the family book-keeping business from their father.

Bringing a couple of clients who were too small to get much attention from his former employer but big enough to keep a small company busy, he set about relaunching the business as a full-spectrum private client firm, covering law, accountancy, corporate planning and investment.

James – who was lecturing at Exeter University as he completed a masters in finance and prepared to take a job with Ernst & Young in Bristol – was invited aboard. ‘[Joe] said to me, I’ve done the Big Four thing, and trust me, you won’t enjoy it.

 

‘The great thing about the business under dad was that he had a couple of FTSE 100 directors as clients and had one really high-end client who gave us the confidence to push ahead. He said that he could see we were punching hard above our weight, and he helped us with the branding and corporate side of the business.’

Investment division Prydis Wealth now manages £120 million on behalf of 450 clients, while the wider business takes care of around 800 and employs 52 staff, 10 of whom are investment specialists.

What has made Prydis Wealth stand out?

In an increasingly crowded field in the city, the company has stood out thanks to its local roots and full range of services. It boasts compound annual growth of 15% over the last two years, and is on course for annual income of £2.5 million this year, £850,000 generated by investment.

Its website (itself slicker than those of several national discretionary brands) boasts endorsements from regional royalty such as Cornish comedian Jethro and local business leaders such as the Brake brothers, founders of the eponymous international food distribution company. 

The web-native confidence that flowed from being a young business headed by young directors was a significant catalyst in the birth
of Strawberry.

‘We look after a lot of owner-operators and part of that is that they like to have some control, and maybe have 10% of their money to play with and invest as they want, so we were looking for an in-house platform service.’

Rather than develop one from scratch, the company white-labelled the architecture behind Ascentric from owner Investment Funds Direct Limited (IFDL).

‘They then came to us [and said] they could see we were enthusiastic adopters and had ambitions, and suggested we try and do something direct-to-consumer,’ says Priday.

‘I suppose you could say we were stereotypically young and ignorant and we just thought “let’s have a go”. When [IFDL] came to us, they and we weren’t really thinking mass market or orphaned clients ,or anything like that.

‘[But] we wanted to make it appropriate for first-time investors. When people see some of these institutional names they can seem a bit unapproachable. And then when you get to the site, there is a lot to confuse people – screens filled with charts and lots of research and fund updates.

‘It really was just about me and a couple of mates plugging away at this at weekends and evenings for a couple of months.

‘[For the name] we literally just thought Apple/BlackBerry/Orange – people seem to just like fruit. And Strawberry has the association with pick-your-own, which seemed appropriate to us.’

The discretionary platform business is going through a fertile period – in addition to Nutmeg see also former Wealth Manager cover star Money on Toast (issue 250, 20 March) – but Priday says he has paid little attention to the competition.

‘I honestly don’t know if it was stupidity or inspiration, but we really haven’t looked all that closely at what other people were doing.

‘We didn’t want it to be influenced by their decisions, and we wanted it to be much more organic. A lot of [platforms] look very much the same, with a lot of the same information and research,’ he says.

‘It is always going to be a work in progress. We are feeling our way toward what people want, and we fully want people to engage with us and tell us what that is. We are trying to put ourselves across as a service for savers, not “investors”.’

The company has so far signed up 190 accounts on the platform, although not all have actually executed an investment yet.

Bullish outlook

Priday remains bullish on the outlook, saying he has a ‘very manageable’ target of 1,000 accounts by the end of the next financial year and £10 million in assets under management ‘at which point it is commercially viable’.

Clients pay 0.35% up to £50,000 invested, tapering down above that figure. IFDL still manages all asset custody reporting and so takes 0.25%.

The development of the service has been so rapid, the feature that is the killer app of the online model for rivals – the ability to distribute in-house models nationally or even internationally – is still a work in progress.

While the company has highlighted some of its favourite multi-asset funds, such as Jupiter Distribution and the Invesco Perpetual Balanced Risk funds (while staying short of anything that might be considered advice), its own internal models will not be available on the site until July.

Performance – albeit some of it modelled in back-testing – has been decent. Over the five years to May 2014, the balanced Temperate portfolio has returned 92.45% versus its benchmark IMA Mixed Investment 20%/60% Shares return of 48.91% and the FTSE WMA Stock Market Balanced index return of 69.37%.

Over the same period, the company’s Adventurous fund has returned 101.78% versus the IMA Mixed Investment 40%/85% shares return of 61.40% and the FTSE WMA Stock Market Growth return of 76.23%. 

James Priday’s CV

CII – Diploma in financial planning, CISI investment advice diploma (securities)

2014 Launched Strawberry Invest

2010 Became a director at Prydis Wealth

2010/11 Msc accounting & finance/lecturer at University of Exeter

2007/10 BA accounting & finance

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