The Belgian-Luxembourg startup Sopiad is launching a personalized rating solution for investment products and portfolios which repositions the client at the center of their financial strategy.
Launched in 2017 as a spin-off of HEC Liège, Socrates Portfolio Investment Adequacy (Sopiad) helps financial intermediaries (traditional banking and wealth management institutions, neo-banks and wealthtech) to adjust their asset and financial portfolio offerings with the profiles of their clients.
Launched by Georges Hübner, a professor of finance at the same school of management, the initiative takes the opposite view of the usual approaches to rating asset portfolios which is based only on the management performance of financial products (stocks, bonds, funds or multi-asset portfolios).
“We offer financial intermediaries a personalized rating solution focused on their end clients, and in line with their investor profile,” explains Pierre Nemeth, co-founder and CEO of Sopiad. “Our approach places the investor at the heart of the rating process. It thus initiates a change in dynamics, by encouraging financial intermediaries to put themselves in the shoes of their clients according to their profile.”
Thanks to a €400,000 grant from the Walloon region, the entity was able to develop its mathematical and financial model, then test and validate it, before launching the first version of its solution Safir (Synthetic Adequacy Fund Investor Rating).
Converted into a startup in March 2021, Sopiad raised 2 million euros last June from private and public investors, including the Liège-based investment fund Noshaq, the construction group Moury, and the Liège-based family office Ardent Invest.
Based in Liege and within the Luxembourg House of Financial Technology (LHoFT), it employs 7 people. Its governance includes two committees of scientific and business experts, such as Etienne de Callataÿ (economist, professor and company director), or David Suetens (ex-CEO of State Street Luxembourg).
“The vast majority of non-professional investors are overwhelmed by the multitude and complexity of available investment products and the uncertainty associated with them.”
“Our academic headquarters is in Belgium, but the business link is in the Grand Duchy,” explains the latter, who is also a co-founder of LHoFT, while he was running the US bank’s Kirchberg branch between 2016 and 2019.
Specifically, Safir evaluates the compatibility between the investment options proposed by the financial intermediary and the investor’s profile. The rating is synthetic: the evaluation is flexible and can cover a single asset (shares, bonds, funds) or an entire multi-product portfolio.
The analysis is based on purely technical criteria, such as the history of the financial product’s returns, its sustainable performance and its ESG choices. It also takes into account psychological elements, such as the investor’s stress in the face of risk, or his emotional reactions following losses.
The algorithms that determine the rating also measure the volatility of returns and track it over time to better identify the intrinsic character of the financial product.
The solution is offered as SaaS, allowing the financial intermediary to visualize the portfolio and its evolution over time, in relation to the defined profile. It is also available as an API.
“The vast majority of non-professional investors are overwhelmed by the multitude and complexity of available investment products and the uncertainty associated with them,” notes Julien Renkin, Chief Commercial Officer of the Luxembourg-based startup. “It is therefore difficult for them to find, understand and compare this information in order to choose the most appropriate product for their clients. This complexity increases even more when non-financial factors such as environmental, social and governance criteria are taken into account. With Safir, we want to reduce these uncertainties and support the investor in his investment decision.”
The startup plans to market Safir by the end of 2021, and to enhance it with a predictive performance analysis module in 2022.
Luxembourg will be its gateway to Europe and its target countries (Benelux, France, Spain, Italy), before attacking other markets, particularly in North America and Asia.