Exclusive: Former City Index senior executive Meir Velenski founds multi-asset trading firm with book of high net worth clients & £3.8 million AUM – FinanceFeeds investigates
There is most certainly a large diversification taking place within the electronic trading industry, in that most firms, large and small, located in regions synonymous with FX from Australia, to Britain, and from Cyprus to New Zealand are adapting their product range substantially to incorporate multi-asset trading facilities and not just be reliant on offering […]
There is most certainly a large diversification taking place within the electronic trading industry, in that most firms, large and small, located in regions synonymous with FX from Australia, to Britain, and from Cyprus to New Zealand are adapting their product range substantially to incorporate multi-asset trading facilities and not just be reliant on offering spot FX.
The Swiss National Bank’s removal of the 1.20 peg on the EURUSD pair in January this year may have spearheaded the move by established brands and newcomers alike, however there is much more to it than that, mostly that retail customers now expect a variety of instruments, strategies and trading methodologies.
Meir Velenski, former CEO of City Index’s Israel office, has embraced that line of thinking.
Coming from the commercial financial services sector in Britain, Mr. Velenski has understood for quite some time that there is a need for a portfolio of services, available via electronic retail platforms, that high net worth retail traders can use on an ongoing basis.
At City Index, Mr. Velenski began to pioneer the high touch model in Israel, and pretty much did away with any retention cost by hosting seminars at the company’s office, to engage the mature, semi-professional and professional high net worth investor. FinanceFeeds CEO Andrew Saks-McLeod was a regular attendee at the seminars, and noted that the majority of attendees were between 40 and 50 years old, edcuated and had stock and equity portfolios with Israel’s major banks (mainly Leumi and HaPoalim, the country’s largest interbank FX dealers).
A year on, Mr. Velenski has founded an entirely new service, which operates under his firm Velenski Financial Group.
Although originally founded in 1998 to cater to the needs of high net worth private individuals with regard to banking, investments, property finance, and business-to-business deals, Velenski Financial Group’s new direction is very avantgarde indeed.
Mr. Velenski met today with Andrew Saks-McLeod, in order to take a close look at the company’s business model, whilst enjoying smoked salmon on rye bread, fresh Jaffa orange juice and a superb local salad on a sunny Tel Aviv Sunday morning.
“I have spent a great number of years looking after the portfolios of high net worth individuals, both independently and whilst a senior executive within well-known investment and FX firms, and firmly believe that the most effective business is within that sector, but the customers have to be looked after properly, and require personal attention” explained Mr. Velenski.
Mr. Velenski then explained that the effort made in ensuring a quality service for high net worth customers not only generates far more revenue for the company, but also reduces retention costs down to pretty much nothing at all, and creates far less need to keep spending the average $1200 to acquire new customers, and removes the expense of trying to keep customers that have either lost their funds or withdrawn after just a few months.
Velenski Financial Group has thus far been focusing on traders only, and the customer base consists of self-traders and those with managed accounts which are managed by Velenski Financial Group. There are four categories, the first being those who want to trade their own account, or have a portfolio manager trade for them on their account across all asset classes. The second is a property department which consults with investors with regard to investing in international property. Thirdly, the company provides a service in which deals using international banks to raise finance can be brokered.
The fourth service that Velenski Financial Group offers is the sourcing of venture capital for sartups which are looking at stage three funding. Rather than engaging in crowdfunding, Velenski Financial Group sources one specific venture capital investor for a specific customer.
Mr. Velenski explained the fee structure which customers are subject to. “The minimum fee for our services that are not related to electronic trading is $5,000. For trading accounts, we do not charge any fee at all, but the minimum investment amount is $50,000 for FX or CFD accounts across all asset classes.”
“With regard to the caliber of our customer, we are a boutique firm with 10 staff and have no mass market plans, yet we have £3.8 million in customer assets under management. On the trading side we have volumes of around $1.6 billion per month with new deposits of $200,000 per month globally” – Meir Velenski, CEO , Velenski Financial Group.
The modus operandi of the company is placing business with major liquidity providers and holding commercial relationships with brokers, in order to refer business in the way that an IB would, but Velenski Financial Group handles all of the client facing aspects.
“We have been approached by several firms on a regular basis wishing to partner with us. Typically, these companies are not large, mass market entities like IG Group or CMC Markets, but instead British and Australian firms that are of high standing and are keen to do business and support a niche IB that provides high net worth order flow and large deposits. In terms of our other services, we are usually approached by smaller venture capital firms that want to take equity in our company whilst providing a service to us at the same time” explained Mr. Velenski.
“Currently we have 2 offices, one of which is in London, and the other is in Tel Aviv, Israel. Other areas where we have a lot of business are South America, where we have representatives in Brazil and Argentina who are private bankers and refer a good quality flow of contacts to us on a fee basis for many of our services, and a trading volume basis for electronic trading customers” explained Mr. Velenski.
“Another lucrative market for us is Europe, where we mainly serve the Jewish diaspora via an IB model” – Meir Velenski, CEO, Velenski Financial Group
When asked about the most interesting and diverse service the company provides, Mr. Velenski said enthusiastically “Probably the most interesting area we deal with is private banking and the physical FX delivery globally. These are areas of massive growth, and retail customers who are sophisticated, travel a lot and have portfolios in various jurisdictions are in increasing need of a good quality company to facilitate these services on their behalf.”
FinanceFeeds pointed out that most companies in this industry outside of North America have not adopted the high touch model, and have only just began exploring multi-asset provision to clients this year, whilst companies such as Scottrade, Charles Schwab and E*TRADE have been doing this successfully for a number of years, with branches in every town and everything from stocks, indices and many other tradable assets on offer, as American investors often have stock and futures portfolios – much more so than anywhere in other jurisdictions.
Mr. Velenski concurred that the rest of the world is playing catch-up with America, and must begin to offer a service which is well organized an allows good long term investment potential. FinanceFeeds can concur, as the general consensus has been that many non-US companies have pulled out of the American market citing non-feasibility, whilst the large American firms that never make it into the media are going from strength to strength by providing a portfolio by which clients can spread their risk across futures in commodities, indices, stock, even currencies as well as spot FX.
“The mindset of many established brokers must adapt in order to be able to accommodate the demands of high net worth traders” concluded Mr. Velenski. “Gone are the days where resting on one’s laurels and doing standard IB agreements to pump referring brokers for deposits would suffice. It is now all about the intelligent, sophisticated customer and the ability to offer a wide portfolio of services.”
Photographs: Top left – Tel Aviv’s ultra-modern architecture houses many high technology companies and financial industry leaders. Lower Right – Business in Tel Aviv is often initiated in these surroundings. Featured – Meir Velenski explains the evolution of firms to accomodate high net worth investors. All photographs copyright Andrew Saks-McLeod