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The Connector Podcast - DFS Digital Finance Summit - Scientific-Backed Solutions for Modern Wealth Management: A Conversation with Sopiad
Pierre Nemeth, CEO and co-founder of Sopiad, discusses how their fintech company provides scientifically-backed resources to restore investor trust and help financial institutions comply with regulations. Sopiad's journey began with four years of academic research at LCC Liège before officially launching in 2021, addressing the lack of personalization in financial products and inadequate educational frameworks.
• Sopiad's main solution is SAFIR, a personalized portfolio diagnostic tool that takes a client-centric approach
• Unlike traditional analysis, SAFIR evaluates portfolio alignment with individual risk profiles and ESG preferences
• The solution serves financial advisors and portfolio managers by enabling personalized portfolio creation at scale
• Sopiad offers an AI storytelling module that converts complex analytics into educational narratives for investors
• The company received recognition as one of the world's most innovative ESG companies in November 2024
• Their unique approach links SFDR information from investment products to MiFID 2/IDD distribution requirements
• Sopiad collaborates with various industry associations to stay ahead of market trends
• Future vision includes more personalized investment products, gamified financial literacy, and transparent information
Visit sopiad.com to learn more about their solutions and how they address regulatory needs across different financial sectors.
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Koen Vanderhoydonk
koen.vanderhoydonk@jointheconnector.com
#FinTech #RegTech #Scaleup #WealthTech
Welcome to the Connector podcast, an ongoing conversation connecting fintechs, banks and regulators worldwide. Join CEO and founder Cohen van der Hooydonk as you learn more about the latest available trends and solutions in the markets.
Speaker 2:Another podcast recording live from fintech Belgium by the Connector with special guest Pierre from Sopiat. Who are you and what does Sopiat do?
Speaker 3:Hello Koen, my name is Pierre Nemeth. I am the CEO and the co-founder of Sopiat, and Sopiat is a fintech Fintech founded in 2021. Already, already, and the result of four years of academic research as well, before launching the company in 2021. So, really, the beginning of the journey of Sopiad started in 2017.
Speaker 2:Wow and when you say like universal studies, what does that mean? Is it particular university and where is it coming from? And what does that mean for you as a company?
Speaker 3:Yeah, so university, it was at LCC Liège that the company started the activities. So about the genesis, I mean before launching the company. So what we have observed in the wealth and asset management industries is a lack of trust coming from retail investors, mainly from retail investors, and two main reasons for that. The first one was the lack of trust coming from retail investors, mainly from retail investors, and two main reasons for that.
Speaker 3:The first one was the lack of personalization between product and investor preferences. I mean by lack of personalization a huge volume of information, complex products or too complex products, and I mean the integration of ESG on top of that has added a layer of complexity of what has been already assessed as complex and also a lack of educational framework. So really, that was the two main reasons and our mission is really clear it's to provide scientifically-backed resources to financial institutions with a double objective in mind Restore the investor trust of their clients so the clients of the financial institutions and help them to comply with the latest regulations.
Speaker 2:Well, I think it's fascinating that obviously this is a very humble goal, but how does that translate in day-to-day business at sopiot and fast forward from 2021? After four years of research, do you still feel that in your company?
Speaker 3:yeah. So the, when we said the mission is to provide scientifically backed resource, of course the I mean the main solution behind that is our personalized or portfolio diagnostic, which is called safir, is the most mature solution that we have for the moment. And what does it mean, personalized portfolio diagnostic? It means that when we say personalized, it's for two reasons the client-centric approach that we have at SOPIAD and using our solution, safir. Client-centric because when we analyze a portfolio, we do not only assess the performance of a portfolio, because when we analyze a portfolio, we do not only assess the performance of a portfolio, we also assess the adequacy, the risk characteristics and ESG preferences from an investor, for instance. So it means that I like to provide a concrete example.
Speaker 2:I love that.
Speaker 3:If we are both looking at the same portfolio, the same client portfolio, for instance, probably we might have two different ratings using our solution, because you will have different. We will have both different risk profile and ESG preferences, meaning two different scores or ratings at the end. So that's the first thing, and the second thing is that we are modular by nature. The solution is modular by nature. It means that we can analyze a portfolio and we can compare this portfolio with client profile. But we can also compare a single product, a fund, for instance not with the profile this time, but with investments, objectives, commitments about the funds.
Speaker 2:Now I'm glad you mentioned funds, because that's usually in the market. Like always a little bit of misunderstanding. Asset management, wealth management, unit linked. It's all about investments. So which typical type of clients do you serve?
Speaker 3:Yeah, good question was really born from the wealth management, addressing a solution for banks in the beginning and really to support our clients. The different key users on the wealth management side. The first key user are the financial advisor or the portfolio manager because, using your solution, they will be able to create, to adjust, to monitor personalized portfolio at scale, meaning that Could we say, suitability, and suitability behind that, using granular analytics to provide clear information about the suitability assessment. So personalization this is the first layer of personalization. It's behind that as well.
Speaker 3:Of course, we will provide for compliance officer as well a great solution because we will provide a clear response to accelerate I mean the support on the regulatory side, the response to the regulation and, for example, of course, mifi DSG. So these are the two key users and what we provide as well is a storytelling module, meaning that it's important for investors and for the advisor to share the fact that the portfolio is aligned with investors' preferences. But the next step is also to explain why it is aligned and why it is the good portfolio for the investors, and we have developed an AI storytelling that will generate, convert our analytics into a story and this story will be a personalized narrative and educational narratives for the retail investors or to share between the different users within the organization.
Speaker 2:What I always appreciated about Sapphire was the fact that you could look back in time and look over time, so it was not just a one shot sort of perspective. Exactly, does that come back in the narrative with AI?
Speaker 3:Yeah, exactly, so you can really analyze, investigate the evolution of a portfolio as well. It's not just a one-shot, you can check the evolution based on the company strategy, based on investors' preferences as well. So that was really the first to come back to your question, the first client segment that we address, the wealth management and a second one. Over time, we had asset managers that came to us to say, ok, you are comparing a portfolio with investors' profile, but what about comparing our funds with our commitments? And doing the same job of the suitability assessment, but this time not between the profile of the portfolio and the client portfolio, between the product and the commitment. This is why we have created, together with Arend, which is one of our partners, this engine, this suitability model, really addressing the SFD part in this case.
Speaker 2:Which is, if I'm not mistaking, the responsibility of the custodian right To have that sort of monitor obligation on the boundary set by the fund.
Speaker 3:Exactly exactly, and when I said ESG, it's not only about ESG, it could be also non-ESG information, it's really all compliance check that could be done on the asset management side. And the last segment is the life insurance business, because using your solution, as you have understood, we are addressing the product, the manufacturer, but also the distributors pain points, or, using the solution, life insurance can use SAFIR on the IDD side to cover IDD, to cover SFDR as well and to link ESG product information from the asset management side and the investment side to the distribution side, as well, back in November 2024.
Speaker 2:I know we're already 2025 and a lot of things have changed between now and November 2024. But you've been recognized as one of the world's most innovative ESG companies. So what has led to that price, by the way, congratulations. But what was the magic sauce that you used?
Speaker 3:I see three main aspects that explain this recognition. The first one is the fact that we ease the trade-off analysis between risk, return and sustainability components. So, it's not only about ESG here, I know, but our tools help really portfolio manager and advisor to quickly see how changing ESG criteria will have an impact on the risk return, so you make the story compelling, exactly, exactly, and really check what is the impact of one component compared to the other one.
Speaker 3:That's the first, I would say the first, reason. The second one is, as I explained, ai storytelling. Being able to create a narrative that will explain, a personalized and educational narrative for retail investors or even using across the organization, is really interesting. Why?
Speaker 3:Because personalized, because it will address a story that is aligned with investors' needs and preferences and also aligned with the company's strategies as well, and educational, because it will explain in a simple way this notion of risk return and ESG to the investors as well. And last but not least, and I think that's the most important point, as I said, we link information from the investment product on the SFDR side, for instance, to the distribution side as well to the client's portfolio, and so we link actually the information from SFDR to MIFI 2 or IDD.
Speaker 2:That will be displayed to the client. Well, I guess there's a little bit of an elephant in the room, especially because of the latest shift to deregulation. There's a little bit of an elephant in the room, especially because of the latest shift to deregulation. There's the omnibus plan. What is the impact on you and the business, or how do you see that? How do you look at that?
Speaker 3:We have, I think, a mixed feeling about the introduction of this plan.
Speaker 3:Let's maybe start by the positive thing about this plan and, of course, we had to find a plan to reduce the regulatory burden on businesses, and Omnibus plan was expected to simplify the publication of sustainability-related information and somehow to better harmonize the sustainable finance regulatory framework, which is, I mean, a good step for the future framework, which is, I mean, the good step, a good step for the future. But, on the other hand, the problem is that you will reduce the scope of ESG information disclaimed by companies as well, meaning that at the end, it will lead to a lack of transparency because the scope will be reduced. Then, on the SFDR I would say on portfolio information that would be disclaimed to retail investors, you have less ESG information coming from companies and again we will need them to manage information coming from different data providers having their own method, having their own way of assessing ESG and it could lead to what's happening for the moment a lack of transparency, a lack of trust coming from retail investors at the end.
Speaker 3:So a big challenge for asset manager and for the distributors to disclaim and explain this information to their clients.
Speaker 2:Well, which actually increases the risk of greenwashing. Whatever you put as a definition, right.
Speaker 1:Exactly.
Speaker 2:It puts the responsibility much higher on the distributor, exactly much higher on the distributor.
Speaker 3:Exactly.
Speaker 2:I see also that which sets you sort of apart, because you do a lot of collaborations in the markets FinFlex, for example, that's one of them but you do a lot of them. You even announced something today, a new client but how do you look at collaboration and how do you see like Sopiat getting into this European space?
Speaker 3:So we have a lot of collaboration with different associations. Of course, luxflag is one of them. We are creating other associations with other ESG labels as well and we try to extend that to Europe. We have also collaboration with Fintech Belgium, of course, the Loft in Luxembourg, the ABBL Fintech Circle the.
Speaker 3:AK Association, so many different associations that allow SAPIAT to stay ahead of the curve. I would say, ensuring that our solution not only meets the demand of financial professionals today but also anticipates the needs of tomorrow. And this is really key for us, because the different benefits for us is really this raising awareness and visibility that create this kind of collaboration for us. Is really this raising awareness and visibility that create this kind of collaboration for us. It's also an access to the latest trends, because we share and receive feedback from the ecosystem, from different industry leaders, from the regulators, from other fintech as well and I make the link to the last point it's an increasing, it's an opportunity regarding the networking and potential collaboration with other actors within the ecosystem. So a lot of benefits for a fintech company.
Speaker 2:I would say, because I think it ties nicely with the fact that you're born out of a university and R&D is very important for you guys. Yes, well, looking ahead a little bit for the next five years, what is it that's on the agenda and what would success look like?
Speaker 3:So if we look at the market on the investment side and if I go back to what is the trends on the non-professional investors and how the trends would look like to the non-professional investors, how the trends would look like to the non-professional investors we see the future becoming more personalized. The product will be more personalized, closing the gap between investors' preferences and available products on the market, Products that come more accessible and enjoyable. On bidding, financial literacy, for instance, gamification, simulation features are things that we see as a potential trend for the future as well. And more transparent information, product information as well and it makes the link with a stronger clarity on financial and non-financial information. That will improve trust and ease the comparison between product as well.
Speaker 3:And to come back to Sopiad, Sopiad's primary goal on the next five years is to fall. For us it's really to enhance investor trust and engagement. That's part of our mission. It means finding the right mix between science and latest AI trends as well to make investment decisions more transparent. Coming back to the transparency and the personalization, and the second one is the regulatory alignments supporting financial incitation and adapting to the evolving connection between SFDR and MIFID, for instance, IDD as well on other retail investment strategy, other regulation that are popping up and really important for the different actors on the market. Nice, good story. And where do they contact you? How do they find you that are?
Speaker 2:popping up and really important for the different actors on the market. Nice Good story. And where do they contact you? How do they find you?
Speaker 3:We have on our website using sopiatcom. Simply. You can have a lot of information about the different client segments that we address and the different solutions that we propose based on the client needs and these regulatory aspects that are really important for us as well.
Speaker 2:Oh, brilliant, that's the best way. The best way, pierre, thank you very much for this conversation. Thank you too.
Speaker 3:Thank you also yeah you're welcome.
Speaker 2:Thank you also to the audience and, as usual, there's more news to come, there's more updates, so please stay tuned. Thank you so much, thank you.