Julian Thio & Nicholas Hilman: Co-Founders of Simpan

Julian Thio & Nicholas Hilman: Co-Founders of Simpan
Magani unites tradition with the new; reimagining the traditional batik shirt for the needs of our contemporary society. We combine Indonesia’s rich cultural heritage with the latest innovation in performance wear material to build the ultimate durable and comfortable shirt for the modern Indonesian man who is constantly on the move. 
As we celebrate Indonesia’s heritage, we also celebrate the individuals who are unintimidated by the sweat and hard work required to defy challenges, push boundaries, and move Indonesia forward.
Meet the #MaganiMen who have inspired us that with grit and endurance, there are no limits to what you can achieve. #NOSWEATNOLIMIT
#MaganiMen: Meet Julian Thio and Nicholas Hilman, Co-Founders of Simpan, Indonesia’s first direct-to-consumer digital investment manager dedicated to help investors’ achieve long-term financial wellbeing. Learn about their start-up journey and how Simpan leverages technology to create transparent insights and customized investment portfolios based on investors’ individual financial goals.

Nik is wearing Bamboo T-Shirt in Fusiongold Tenun and Julian is wearing Bamboo T-Shirt in Emerald Tesselation.

What is Simpan? 

Simpan is a direct-to-consumer Investment Manager focused on making it easy and meaningful for retail investors in Indonesia to build better portfolios according to their goals, and stay informed every step of the way. We want to take the noise out of investing or trading so that our customers can achieve their financial goals. 

Nik is wearing Phoenix Blue and Julian is wearing Sapphire Nitik.

Can you tell us about both of your backgrounds before starting Simpan? 

We both came from a financial services background and have worked in most parts throughout Asia. 

Julian was previously based in Singapore, and worked at LeapFrog Investments, an impact investment and private equity firm, focusing on investments within the healthcare and financial services sectors in Africa and Asia. He also worked at TC Capital, a boutique M&A (mergers & acquisitions) investment bank, focusing on cross-border M&A transactions for financial institutions. 

Nicholas (Nik) was previously at BlackRock, a global investment manager, across its New York, Hong Kong, and Singapore offices. In his last role at BlackRock, Nik was dual hatting-between BlackRock’s insurance (FIG) and official institutions (OIG) practice, where he worked with large institutions like central banks, sovereign wealth funds, insurers, pension funds, and endowments.

 How did you decide to become partners?

We met through mutual friends in early 2021 in Singapore. We were both at a stage of exploring new career opportunities. With our similar backgrounds and mutual interest in investments, we started exploring the idea of making an investment manager in Indonesia. 

Indonesia lacks meaningful and relevant investment products for retail investors not only from a returns perspective but also from a transparency and reporting perspective. Retail investors have a lack of access to information on how their money is being managed.

Furthermore, both of us were fascinated by the direct to consumer (DTC) model - the ability to connect directly with customers and tailor the entire customer journey. We believe we can create a DTC investment manager model by creating meaningful investments for our customers (investors), by building more targeted portfolios to cater to each investor’s risk profile and goals. 

Beyond working towards the feasibility of a business idea, we also wanted to make sure we were a good match as partners. Through the advice of a few of our friends who had gone through the journey, we worked on a ‘speed dating’ questionnaire - essentially a long list of get-to-know-your-co-founder questions ranging from values, work ethic, cultural mindset, etc.  Even though we’re early in the journey, this was important at the onset because our intention is to build a business together for the long-run, and understanding each other at a deeper level is important to reduce potential conflicts in the future. 

How is the transition from a professional to an entrepreneur?

As a professional you are provided a stable income based on your performance. However as we grew older, we wanted to change that narrative to create a stable income based on not just our own performance, but build productive assets that can produce income for us. As a professional your income is linearly correlated with time spent working, but as an entrepreneur, your income can be exponential as long as you build and scale your business. 

Of course, the transition to being an entrepreneur comes with adjusting your attitude and expectations towards compensation and risk. The transition hasn’t been easy and we know there are so many challenges to come, but the experience in building Simpan from scratch has been very rewarding.

As an entrepreneur you really get to develop your tolerance to risk and being able to handle key decisions to further develop your business. As a professional, most of the time you are handed a salary to provide a necessary set of work. Your risk is capped to how well you perform at your job. However, as an entrepreneur, there are endless challenges one faces, whether it is fundraising and in our case acquiring an operating business license, and navigating the intricacies of regulations, people, vendors and customers to build our business.

We are grateful for our professional experience in our careers thus far. Especially within our field, it’s crucial to pick up the skills and discipline to learn how global financial institutions work and understand what global standards are in the financial services sector. We strive to apply the global standards of transparency and professionalism to Simpan. 

Why did you start Simpan? What was the motivation?

On a personal note - we’ve been away from home (Indonesia) for a long time due to our careers. We always wanted and had the conviction to build something back home. We felt that Indonesia didn’t have a truly digital investment manager focused on going direct-to-consumer. What this meant was that asset managers in Indonesia are still focused on institutional clients, whether pension funds, financial institutions, corporates, as well even High Net Worth Individuals. We felt that this needed to change. 

Retail investors are becoming smarter, the availability of digital tools has made it easier to connect with a wide range of retail customers. We also see the recent boom in retail trading over the pandemic as a positive.  More people are interested in participating in the capital markets, and we are grateful for the fintech startups that have come before us to begin educating the larger population on investing. 

However, we felt that investment solutions were not being offered to individuals who work hard for their savings. Furthermore, we felt that there is a lack of trust towards asset managers. Due to the sheer amount and severity of financial scandals over the last few years, the industry has not looked after the core interests of their retail clients. Selling agents are incentivized by sales fee which induces trading mutual funds; every 1 or 2 years, or even earlier! Selling agents approach customers to switch funds to generate fees based on the new flavour of the month. Fund managers are at times not transparent with their investments, leading to risky investment behaviour and misaligned views over risk. We felt that direct-to-consumer was the way to go to solve some of these problems: to be able to remove unnecessary fees and charges, create alignment between investment manager and customer, and provide a meaningfully transparent customer engagement for investors.

More broadly, we recognize that Indonesia’s capital market has huge room for growth. In Indonesia, roughly only 3% of the population are registered investors, while capital markets are still quite shallow, and our financial institutions are relatively small when compared against the population.  The market for investing will only grow.  As an illustration, the Employees Provident Fund (Malaysia’s private sector pension fund) is ~$200bio in AUM. Malaysia has a population of ~80 million.  Meanwhile, BPJS Ketenagakerjaan is ~IDR 25bio in AUM. Indonesia has a population of over 270 million. 

How do you see Simpan’s role in your customer’s lives?

The Indonesian capital market is crowded with noise. Influencers are talking about the next stock or cryptocurrency to trade. Securities brokers are inducing trading behaviour by buying or selling based on technical signals. Market rumours create speculative behaviour, which induces investors to ride the wave or risk of being FOMO. There’s a lot of cuan mentality or in other words short term investing mindset, with speculative and emotionally-charged decisions to buying/selling.

We want to take the noise out of investing or trading so that our customers have peace of mind and while achieving their financial goals. In addition, technology and smartphone penetration has also dramatically improved over the last decade, which allows us to scale tailored services that were once only available to wealthy investors. 

We view Simpan as providing clarity to people’s lives so they can achieve financial wellbeing. 

How do we help customers achieve financial wellbeing? To know that you are saving enough for your investment goals, to see your savings grow, but most importantly to have your money work for you so that you enjoy the things you do whether it is the work you currently do, time spent with family and friends, or a passion project you want to pursue. While doing the things you love, your capital is being put to work with Simpan to meet your investment objectives.


How do you differentiate Simpan from the other asset management players?

From a digital product standpoint, Simpan’s mobile application allows us to connect directly with our customers in a scalable way, provide investment solutions, and offer them transparent insights in an easy to go format. Simpan will be able to provide better customer analytics to understand customer needs as well as investment analytics to evaluate risk and return attribution for our investment products. 

We also currently see that most content made by traditional investment managers are now in forms of presentations and webinars. While we think webinars are important, they are often long (1 to 1.5 hours) and scheduled after work (even on a Friday) or over the weekend. For most people, they do not want to sit down watching a finance webinar after work or over the weekend. They would rather be spending time with their family and/or friends. In addition, the content traditional asset managers push out are often formatted for institutional clients - dull and complex, such as equity research or the inclusion of investment jargon that may not be meaningful for the customer. 

By putting your money with Simpan, we are working for you to create investment portfolios to meet your investment objectives. We also provide the necessary investment reporting one would expect from an institutional or a High Net Worth client, but in a format that is meaningful for our retail clients. 

From an investment product standpoint, our funds are focused on what is relevant for our customers. Institutional asset managers track their performance based on benchmarks. What we found was that for the last 10 years, the IHSG (Indeks Harga Saham Gabungan) grew only ~4% returns per annum (to confirm), and the largest equity funds generated 1-2% returns per annum. In the view of institutional asset managers, if their equity fund performed higher than the index, then that would be a positive. So imagine if the index decreased by 5% in one year, but the fund decreased by 2% in the same year. In that sense, institutional asset managers would suggest that they performed the market. But for retail investors, their savings are slightly eroded. While equities are cyclical, we believe that this is not good enough for retail investors. We are finding investment opportunities that generate consistent and positive returns. While this is not easy, this requires a more proactive investment approach as well as prudent risk management to ensure that we protect our investor’s capital. 


As start-up founders, walk us through a week in your lives?

Every morning is dedicated to catching up on updates of individual stocks or the overall market and economy. On a typical morning, we would review the markets at around 8am Jakarta Time. The night before, the US markets open and that gives us an indication of where the Indonesian stock market is headed. Around 8.30am, the North Asian market opens where we can see an overview of the overall Asian stock market. At 9.00am, the Indonesian market opens and so we typically see what are the movers for today’s market. 

Nonetheless, each day is dynamic since as founders we cover different aspects of the business. Typically Monday’s would have an investment and marketing meeting, Wednesday a compliance and risk management meeting, Thursday a app development meeting and Friday a back office development meeting and a meeting with our investment advisor. Monday typically becomes a day where we review last week’s fund and market performance and what the implications are for the week going forward. Throughout Tuesday to Thursday, we typically work on the developments to bring new customers/investors in and build the business. By Friday, we reflect on what progress has been made and set ourselves up for the following week. 



What challenges do you guys face as relatively young players in the Indonesian financial market?

Within the financial services industry, we see that there are the traditional players and new-age fintech. There is a stigma in investing that one requires to be aged with experience that has worked in large financial institutions. While that is sometimes true, we believe that young professionals are able to take action if they are passionate, eager to learn, honest with themselves and hold themselves up with integrity. 

We take inspiration from global players within the digital investment management space, as well as traditional financial institutions to bring them closer to home. We ask hard questions on what the customer wants and how do we deliver meaningful products to them. 

As a young newcomer in this space, we face resistance from the status quo. Comments such as “retail is expensive”, or “how do you compete with the large asset managers?” or “do you have any track record or AUM (Assets Under Management)?” come up often in our discussions within the capital markets. This is especially true also with hiring where we find that our biggest challenge is to hire talented young professionals from established organizations. Like how we were also previously professionals, the stability of income and a reputable brand name are appealing factors which make it understandably challenging to make the jump to join a start-up.

However, we strive to try to build a business that generates investment performance through organizational alpha rather than individual fund manager skill. We believe for the continuity of our business and alignment with our customers, organizational alpha should be the framework that allows us to drive performance. 


What is organizational alpha?

Organizational alpha is essentially a philosophy for creating a high-performing organization - especially within Investments. We typically attribute Alpha, or good performance to a single portfolio manager / investor, and the performance of a specific investment fund or portfolio.  We simply don’t think that’s the full story. 

The success of a fund or organization, for example, has a lot to do with making sure we have a comprehensive investment philosophy; robust back-end processes so that we understand all of the risk we are taking; making sure we have proper checks and balances for good governance, etc.  It’s about maximizing our strengths and minimizing the opportunities for error across all functions in our business - across legal & compliance, investments, risk, fund admin, client reporting, and so on.


What about Magani resonated/appealed to you?

We see similarities in Magani’s and Simpan’s approach to provide solutions for people. Much like how we are taking the noise out of investing so that our customers can achieve financial wellbeing, Magani eliminates the hassles of everyday, office-friendly wear. Magani has created modern batik for young professionals and entrepreneurs to go about their day comfortably and elegantly.

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