As far as Investment innovation goes, the new market entry from King Alexander, an off shoot of King Price, definitely fits the definition.
The new linked investment service provider (LISP) has been developed with a plan to revolutionise the investment space for private individuals, certainly as far as theie fee structure is concerned.
The new platform does not offer anything differenyt as far as funds choises are concerned, where investeors will be able to select their existing funds or a mix of funds. They do however make a radical departure with the way the fees work, and investors are safe-gaurded against poor fund performance through an innovative approach. If your funds do not perform – you do not pay any fees – guaranteed!
Fair Trading Fees the Foundation
King Alexader was founded by seasoned financial services innovator David Lloyd, on the perspective that the current retail investing model is fundamentally unfair.
“Since day one, these platforms have been too expensive, and investors take on all the risk regardless of the performance that is actually delivered. King Alexander Investments changes this as clients now only pay when they are ‘winning’,” says Lloyd.
The other innovation is that account holders pay a fixed mothly “family” fee of R100 ex VAT without any sliding scale. This is also has no sliding scale structure – R100 and no more irrespective of the scale of the investments held. The R100 also applies to a “family” so you can add your family members or even your best friend or neighbour and so reduce you overall cost per person.
So How does it work?
Essentially investors only pay when they’re ‘winning’: Investors only pay for asset management and advice fees in the months when their investments grow. If there is no growth or the fund does not meet agreed-to minimum growth levels, then no fee is charged in effect.
The fund managers and Financial advisors will still get their fees, however this is then calculated and a credit passed back to the investor by King Alexander.
Built-in protection is automatically included: Investors benefit from 100% initial protection with future gains locked in, and executors’ fees are also covered on death… All at no extra charge.
World First Investment Offering
This new model is certainly a game changer in the retail investment space and is the first platform that charges a RAND platform fee. The same amount charged to every customer.
So you know exactly what you’re going to pay. 100 RAND per investor family, no more. So if you had a husband and wife who had two plans each, each plan would only pay 25 RAND a month.
That is a real game changer with no one else in South Africa offering anything similar, and it doesn’t stop there.
Because when anyone invests, there is an innate risk involved. In the short term, it is possible that returns can be disappointing, and that is unavoidable and there is no way one can avoid this. This is why medium to longer term investing is always the way to approach wealth creation unless one is actively playing the stock market with an even higher risk factor.
What King Alexander has done is to provide a product where each month, if the returns are disappointing, you pay zero for your advice fees to your advisor and zero to your investment managers. So you only pay when you’re winning.
This is a remarkable point of departure from almost all other investment platforms and this is certainly a world first offering.
Customer Centricity Works for All
The focus on adressing customer pain points can also be a bonus for the brokers. By utilising the new platform for clients, these clients are going likely to be happier with their investments as they are going to earn better returns because they can actually now use the protection. They can invest in funds that have a bit more stock market exposure without the concern of incurring fees without growth.
And they’re then incentivised to invest more because their admin fee doesn’t go up when they invest more. By ensuring the customer is happy, they don’t leave their advisor, who long term lands up earning more.
If a customer is getting better returns, the advisor fees, which are a percentage of what the customer invests, go up. If a customer invests more with a broker they will make more in fees. Nett result is that advisors can be better off without it costing clients more.
Royal Partnership
In 2022, David Lloyd partnered with King Price founder Gideon Galloway and the King Price team, who hold a great track record of customer-first disruption in the insurance industry.
Over the past three years, King Alexander Investments has been developed and the product built from the ground up, with the support of King Price’s in-house actuarial, legal and compliance teams, and expert external advisers.
The model they have created is very simple with a resoundingly clear offering that is likely to disruption – A fixed Rand fee for administration, only pay for advice and investment management when you are ‘winning’, and 100% protection and executor fee cover on death included with all portfolios.
“We are here to help advisers build value whilst empowering their clients to invest with more confidence, get better returns, save money on administration, and get a fairer deal,” says Lloyd. “We knew there had to be a better way. And now, it is here.”
