Profile: Meet David Lloyd, Founder and CEO of King Alexander Investments

What made you want to create a platform like this? 

My background is applying a very focused, client-centric approach, combined with out-of-the-box thinking, to disrupt various aspects of the rather staid financial services industry. But this has never been disruption for disruption’s sake. It is always disruption for the benefit of the client. With decades of global experience to my name, I started looking at South African investment platforms some years ago. Locally, they are known as LISPs (linked investment service providers), and they have always offered the same model, which is expensive and, I think, patently unfair.

Let us say that a client can earn X amount of rand with relative security from a deposit account but instead chooses to invest in the stock market – putting their hard-earned capital at risk to (hopefully) earn a much greater return. But, traditionally, the client literally takes on all the risk while everyone involved gets paid, at the same rate, regardless of whether the returns are good or not. Does that sound fair? There just had to be a better way! And, at King Alexander, we found it. Now, financial advisers and their clients have access to a new, lower-cost LISP: a completely unique, properly client-centric model that ensures clients only pay when they are ‘winning’.

What makes it so revolutionary? 

Where do I start? It is the first LISP platform in South Africa to charge a fixed rand platform fee. At just R100 per month, divided across all plans per investor family, this is the first game-changer we have put into play. Next, we are the first investment platform anywhere in the world to provide 100% GaranT cover on every plan. GaranT locks in both the initial contribution and future growth when it matters most: at death. We have built this peace of mind into our model at no cost to clients. In another world-first, King Alexander brings the “only pay when you are ‘winning’” fee structure to retail investing. Advisers still receive their ongoing advice fees and investment managers still levy their fees, but we track these and refund them to the client (even including the VAT) and instead only charge them for these services if their portfolio outperforms a preset target return (typically 1% to 1.5% a month).

What do financial advisers stand to benefit from the product? 

We have designed our LISP to work alongside advisers’ existing platforms – not to replace them. We want to be their second LISP, used just for those too risk-adverse clients or investors who think their fees are too high. It is also designed for those clients who resent paying asset management fees when their investments are not getting decent returns. By adopting King Alexander as their secondary platform for these very investors, advisers can be sure of two things: managing the investments will be simple, and the investors themselves will be comfortable that their concerns have been addressed. Our aim is not only to make these clients happier (and thus less likely to leave) but also to generate higher long-term returns that are only possible when investing in a portfolio with a higher equity component. And the upside for advisers? We can increase the value of their ongoing advice fees and, as top-up contributions are subject to zero platform fee, clients are incentivised to always invest with their adviser.

What have been your best – and worst – moments when working on a start-up? 

My career highlight has been making King Alexander a reality. Having the freedom to create and shape a business from end-to-end in line with my vision, without any legacy restrictions, while at the same time being able to tap into the considerable technical expertise and entrepreneurial experience of our main shareholder, King Price. A downside has been managing the sheer scale and variety of things that have had to be decided on or designed, then implemented or built, before we could go live. (And this is despite us outsourcing the administration to an existing, experienced company.) But fingers crossed, one day soon, all this work might become a part of my highlights reel.

What are some of the biggest lessons you have learnt along the way? 

The biggest lesson, I think, is how important culture is – especially when you want to turn an industry upside down. Partnering with King Price is the best decision I have ever made because they believe that anything is possible. To them, problems are simply issues that have not been solved yet. And, they have an amazing team which, right from the very top, believes in shared outcomes and brings a can-do attitude to work every day. I have found that there are many naysayers and doubters in the financial services industry. Too many people think that because the industry has always been this way, that means it is the best way. Luckily, none of them work at King Price! I have also learned a very important thing about myself: even while working with an outstanding team, I still constantly underestimate how long it takes to finish things. 

What has been the highlight of your career? 

This will probably sound corny, but it is true: launching King Alexander. Firstly, I believe that we are truly breaking new ground and lifting the standards of client-centricity. And secondly, after creating dozens of financial products for other providers, I have now finally created my own company. I am very proud of both these achievements. My shareholders and I still have very ambitious plans, though. We want to expand geographically, and we also aim to turn the traditional LISP platform, with its rather narrow focus, into a ‘super platform’ that will provide advisers with revenue streams they have never even dreamt of.

What finance/investment trends and macroeconomic realities are currently on your watchlist?

I am keeping an eye on what is happening to interest rates. Because investing in the stock market is a direct alternative to saving in a deposit account, these factors are inextricably linked. 

What are some of the best books on finance/investing you have read, and why would you recommend them? 

I would tell anyone to read anything by Warren Buffet. He combines good analytics with common sense, and overlays it with strong advice about avoiding hype. To paraphrase him, he will not ‘buy a stock market darling’ (because it will be overpriced) but he will buy a fundamentally good company when the market is gripped with fear (because then it is underpriced). It sounds easy but it is actually very hard to do.