MeDirect: 'we are the private bank for everyone'

MeDirect Bank, with its main headquarters in the European microstate of Malta, has expanded its operations to the Netherlands. MeDirect aims to be the private bank for every Dutch citizen. Not the kind of private bank where you are received in stylish rooms and served coffee in expensive china, but a mobile private bank. MeDirect offers (aspiring) investors two options: wealth management (MeManaged) and self-directed investing (MeSolo).

[finno] spoke with Job Mantz, the country manager for MeDirect in the Netherlands. What sets MeDirect apart from Evi, Semmie, Vive, BUX, DEGIRO, Peaks, or the investment solutions offered by traditional banks? And are they the "private bank for everyone"?

Four years later

It's May 2019. The second-to-last article appeared on [finno], and then there was silence for a long time. The writer of this article had been busy with other priorities for a while. But now we're picking up the pen again. It's a fitting moment because the penultimate article and this article have the same subject and protagonist. Four years ago, I wrote about Kendu, a separate app from ABN AMRO for accessible wealth management. At that time, Job Mantz was responsible for introducing Kendu. ABN AMRO had the ambition to make wealth management accessible to everyone.

In 2020, ABN AMRO pulled the plug on Kendu. In the first year, Kendu only attracted 5,000 customers. That was too few, according to a statement from the bank at the time: "It has now become clear that there is insufficient interest to justify further investments in Kendu." According to an analysis by the Dutch Shareholders' Association (VEB), the costs for investors were relatively high, and the competition was fierce. Job lingered at ABN AMRO for a while but traded a view of the Zuidas for occasional views of the sea from MeDirect's headquarters in Malta. Over the past few years, he has been working with a team in Utrecht on the introduction of MeDirect in the Netherlands.

Now it's May 2023, and MeDirect is entering the Dutch market as a broker and digital wealth manager. As they say themselves, MeDirect is there for the large group of Dutch people who are overlooked by traditional banks and wealth managers. "At many banks and wealth managers, despite all the promises, the customer is not truly at the center. With us, they are. It's about you: your money and your choices," says Job Mantz.

What makes MeDirect unique?

What sets MeDirect apart from Evi, Semmie, Vive, BUX, DEGIRO, Peaks, or the investment solutions offered by traditional banks? To shed some light on that, [finno] has compiled a non-exhaustive comparative overview of these market players. It is important to note that comparing investment solutions can be challenging. Of course, there are similarities. BUX and DEGIRO only offer an "execution-only" model, where you invest in stocks, ETFs, cryptocurrencies, commodities, etc., by yourself. MeDirect also offers the option of self-directed investing with MeSolo. MeSolo provides investors access to 17 stock exchanges in Europe and beyond, as well as a wide range of funds and ETFs. Customers do not pay transaction fees for buying and selling ETFs and investment funds. Both BUX, DEGIRO, and MeDirect MeSolo are transparent about their (transaction) costs, but not always about the fine print. For example, the free trades with BUX and DEGIRO are limited. MeDirect does not have any such conditions; there are no conditions attached to the free trades.

With its MeManaged proposition, MeDirect can be somewhat compared to the asset management solutions of Evi, Semmie, Vive, and Peaks. I say somewhat because they all involve online asset management. However, while Semmie, Peaks, and Evi work with model portfolios or model funds, the service provided by MeManaged seems to resemble private bank asset management the most. Or as Job puts it, "We offer the same level of service as a private bank, but for everyone and without all the hassle." In essence, MeDirect combines active management with passive ETFs in its asset management, allowing clients to benefit from a cost-effective solution for their investments. They also utilize the expertise of BlackRock, the largest asset manager in the world.

What MeManaged has in common with Vive's asset management is that both utilize the so-called Value-at-Risk (VaR) model. Value at risk is a method used to assess the financial risk of, for example, an investment portfolio over a certain period. VaR provides an estimate of the potential loss and the likelihood of that loss occurring. The VaR method helps asset managers develop a risk management strategy. Rather than fixed allocations of stocks and bonds based on your risk profile, the composition can be adjusted during the course of investment based on market conditions, always in line with your risk profile.

Where MeDirect differs from Vive is that with the latter, you can create investment plans for different goals and investment horizons, such as investing for a world trip or your children's education. When asked about this, Tom Kerckhaert from Vive explains, "Vive opts for a different, personalized approach to investing compared to Peaks and Semmie, for example, who choose model portfolios corresponding to a fixed risk profile, such as defensive, aggressive, and neutral. At Vive, the model portfolio is not the determining factor; it's the goal the client wants to achieve. In a split second, we calculate a unique plan for that purpose. With us, a customer can easily create an investment plan in the app for all their life goals, each with a tailor-made investment strategy and plan advisor to actually achieve those goals. This includes reducing risk when necessary or adjusting the strategy based on financial circumstances."

Download above comparison (PDF) here.

A knowledgeable investor yields more

MeDirect currently offers all new clients, whether they engage in self-directed investing, avail of wealth management services, or plan to save in the near future, the free basic investment training from Markets are Everywhere. Jan-Paul van Oudheusden, the founder of Markets are Everywhere, says about his platform: "Investing is fun, challenging, and nowadays, necessary. With my knowledge and experience, I teach you how to invest better and wiser." For MeDirect, the educational aspect is an important differentiating element. "We believe it is important that our clients have a good understanding of investing and regardless of whether they invest themselves or leave it to us, understand what it entails. This training can help with that," says Job Mantz. He is also honest about the fact that a more educated investor ultimately becomes an active investor and engages in more transactions with MeSolo. "We do not charge fees for transactions in ETFs and funds. This is how we hope to attract new clients and educate them. Hopefully, they will become active investors who also find their way to other securities."

Pension investing is hot

Above, investing for different goals has already been mentioned. Saving or investing for goals has been around for a while. Moneyou introduced Goal Savings (Doelsparen) in 2010 (it's interesting to see the 2010 iPhone app). In 2015, the first Dutch robo-advisor Pritle (later Binck, now Saxo) introduced goal-based investing in the Netherlands, as far as I can tell. Vive also offers this possibility.

An important form of goal-based investing that many providers are currently focusing on is investing with the goal of building a pension. DEGIRO, Peaks, MeDirect, Vive, Semmie, and Evi offer such solutions. It is important to make a distinction between the so-called third and fourth pillars of pensions. The third pillar involves a tax advantage for the customer, while the fourth pillar does not have that tax advantage. Currently, DEGIRO, Peaks, Semmie, and Evi only offer third pillar pension investing.

The recently approved new Dutch Pension Act will be an important driver for self-investing for pensions (third pillar). After the implementation of the new Pension Act, the pension accumulation in the third pillar will be aligned to a great extent, especially in terms of taxation, with the pension accumulation in the second pillar. This will provide much more fiscal (yearly) room for individuals to build their own pensions. Providers of investment solutions are eager to have a share of this market.

MeDirect will not yet capitalize on this interesting development. "The pension market is heavily regulated and complex. It requires a lot of expertise that we do not currently possess in the short and medium term. But never say 'never.' It is a market where a lot of disruption can take place, and pensions can help with scalability and a steady source of income," explains Job Mantz.

Where will MeDirect be in five years?

Job Mantz: "First and foremost, we are a bank, not necessarily a broker offering investment services. In Malta, MeDirect is a systemic bank, essentially a regular bank with bank branches as well. But the future growth of our bank does not come from our island group. That growth needs to come from outside. That's why we started MeDirect in Belgium about 10 years ago."

For MeDirect, the Netherlands is the third home market. Initially, they wanted to start in the Netherlands earlier, but Covid, among other things, threw a wrench in the works. Following the Belgian subsidiary, they will also expand their services in the Netherlands in due course. In Belgium, MeDirect also offers savings accounts and mortgages through the independent broker network of Allianz. In the Netherlands, MeDirect will offer savings accounts in the short term, but not mortgages. However, in the future, they intend to offer payment services in the Netherlands and Belgium. "But we will also maintain a focus on wealthtech," says Job Mantz.

What does [finno] think?

In addition to the offerings of traditional banks, more and more fintechs or wealthtechs are providing options for self-directed investing (execution-only) and online wealth management. The choice has become very extensive, and as a consumer, you sometimes don't know anymore what the best solution is for you. Personally, I would be primarily interested in the returns in my choice, but past performance is not a guarantee of future results, and providers are not always clear about returns. As shown in the overview above, comparing costs is not so straightforward. They are usually transparent about costs, but there are multiple cost models and denominations: transaction fees (fixed amounts) per trade, transaction fees (percentages), fund costs, fixed (service) fees per month. And sometimes "free" is not completely free or only limitedly free. It would be nice if providers used the same definitions.

It is useful to know that the independent comparison platform Finner can help you make a choice from the wealth managers, brokers, banks, and pension providers that best suit your situation.

With the introduction of MeDirect, the choice for consumers has only become greater. Apart from the focus on educating the investor, the differences between MeDirect and the competitors mentioned in this article are not very significant. MeSolo offers more choice in securities than BUX but less choice than DEGIRO. With MeManaged, they mainly aim to provide convenience, but it is not as if other providers do not offer convenience. An important distinction in the future may be robo-advice (in the pipeline) and the payment services. According to Job Mantz, investors increasingly want to have everything with one bank: "Unlike in the past, customers want to have as much as possible in one place."

MeDirect has made every effort to be very transparent about their rates. They also do not engage in retrocession, a compensation from fund houses whose funds they offer. "We do not want opaque income," Job Mantz said about this.

MeDirect may not be a significant addition to the market yet, but if we are to believe Job Mantz, the differentiation will increase over the years.

This article was previously published in Dutch on www.finno.nl