Obsolete technology and hierarchical organisational structures are holding back innovation in asset and wealth firms, believes one of Luxembourg’s leading entrepreneurs.
Financial services entrepreneur Revel Wood is in ebullient mood during a visit to London from his Luxembourg base. He has earmarked UK and US expansion as key new initiatives for the ONE group solutions fund servicing business, which he founded with a 12-strong team back in 2019.
The Zimbabwe born businessman — who has secured Luxembourg citizenship, now that UK passports are “not so freely acceptable” after Brexit — has benefited more than most from the Grand Duchy’s “phenomenal expansion” during the last 15 years he has been working there.
Driven by the success of the Ucits brand — a cross-border fund product enabled by a European directive back in 1988 — Luxembourg has been a key beneficiary from EU rules because it prioritised “substance”, requiring financial groups using its base to employ legions of staff there. The latest wave of post-Brexit arrivals boosting his business has included a raft of private equity firms keen to do business in Europe.
Ireland, the rival financial centre, is sometimes a preferred hub for US investment groups marketing their wares to Europe. But much of the Brexit-related business is pitching up on Mr Wood’s Luxembourg doorstep. His client list includes Franklin Templeton, DWS, JP Morgan Asset Management, Bank of Singapore and ICBC.
During the last five years, Mr Wood’s start-up has sprouted into a global business employing more than 100 staff, including offices in New York, Zurich, Dublin and Mumbai.
Wealth managers are also joining the Luxembourg party, attracted by expertise in alternative assets and presence of major consultancies including Deloitte, PwC and EY.
Bureaucratic bugbear
Yet it is not all sugar and spice in the investment industry he loves. Mr Wood’s bugbear is the inefficiency of the business he is keen to serve. Having held management positions at Northern Trust, RBS, Bank of New York Mellon and Schroders, he has long been keen to highlight lack of standardisation in data and poor standards of operations across both asset and wealth management firms.
Prospectuses for new product launches, he complains, can amount to 2,500 pages, much of it irrelevant material for investors. Most large groups, he feels, are also held up by a 30- to 50-year build-up of bureaucracy and difficult-to-dismantle technology stacks.
“When we started five years ago, we had no legacy, no systems and no clients,” he recalls fondly. “We had a clean slate unencumbered by clunky technology, but a team where even the least experienced person had been in the industry for 17 years.”
Mr Wood shakes his head, still smiling, when asked if he could work for a hierarchical bank again in future. Rigid rank and file structures are suited to certain institutions, he says, recalling his national service in the South African Defence Force, but not for the flexible, fast-developing environment needed for financial services.
“For two years in the military, we slept for three hours at night and spent the rest of the time running,” he recalls. “They got you so tired mentally and physically that you could not think. This serves a purpose when you have to run at a machine gun on the front line, but not in business, where we need more innovation.”
Mr Wood is still constantly running, preparing for races, rugby tournaments and ‘Ironman’ challenges between meetings. But he also spends more time thinking. The lesson he shares with clients and contacts is a modern and simple one: brain must triumph over brawn in today’s investment industry.
