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Juraj Hrbatý: My Story of How I Founded Finax.

Why did I decide to start Finax? The story of why Finax’s profit is not my number one goal. The story of how we managed to earn more than 23 million euros for our clients.

Juraj Hrbatý | Our process | 15. December 2021

I am a financier body and soul. Mathematics has always been my favorite subject. At a time when tennis started making my brother Dominik his first major money amounts, which he consequently invested in the stock market, I figured out finance would be my life hobby.

I graduated in financial management, and after finishing my tennis referee career, I got a job in a licensed brokerage firm. I enjoyed the work. Seeking to learn as much as possible about the world of finance, I continued to study and obtained the internationally recognized title of a Certified Financial Analyst (CFA).

Just like doctors dream of saving lives, I believed I would help people make money on the stock exchanges.

However, the encounter with reality quickly proved this idea to be delusional. After years in business, I realized that the financial sector is based on fees and the owners‘ interests in financial firms are at odds with the interests of clients who have their returns reduced by fees.

My family and friends kept asking me “Ďuri, what is worth investing in? Do you have a good product?” But I was selling products good mainly for our company.

The sentence my former boss once told me after I suggested some pro-client improvements stuck in my mind to this day: “Ďuri, can you see a red cross above that door? No! So do what I’m telling you, we‘re not charity!”

Even volatility (rapid movements in the stock market) is a warmly welcome phenomenon, as it induces retail investors to buy and sell more frequently. Buy at the right moment, sell at the right time, then buy again cleverly and sell again quickly. Frequent trading means more fees for the broker.

The company’s profit has always been the top priority. Internally, I still struggled with my values, but the system in place gradually ground me, also due to attractive remuneration. After all, data collected by Eurostat via their Structure of earnings survey also prove this. According to this dataset, financial and insurance services belong to the two best-paid sectors in the CEE region.

Cancer Changed Everything

After 10 years in business, an event occurred that changed my outlook on life. I got cancer. Things went very fast. Diagnosis, surgery, chemotherapy.

I belonged among the youngest patients in the daily chemotherapy department at the oncology institute. Although my chances of getting cured completely were high, I got moved deeply by looking into the eyes of suffering people every day. Here I realized the fragility of human life and the narrow line between being and not being. That year, two of my friends died of cancer, which emotionally struck me even more.

That's when I decided I have to change my job. I desired to be able to look back in another 10 years and feel proud of my work. To make my children proud of daddy and his results.

I decided to put all my experience and savings into a project that would make the clients‘ benefit a top priority. One in which we would manage clients' savings fairly and transparently. And in which we would seek to pass all the knowledge about personal finances to our clients so that they could be financially as fit as possible.

I faced the most difficult task of my life

Building an economically functioning securities dealer from scratch without taking any clients from previous businesses is a very difficult task in itself.

What‘s more, selling investments exclusively online was still pure sci-fi in 2017 Slovakia. Investments do not work like other consumer goods. I like to say that people use to wake up in an early December morning, suddenly realizing it's high time to buy Christmas presents.

In contrast, they do not wake up realizing the need to start saving for retirement or with the need to create an emergency fund. People around me argued that Slovakia is not the USA and it is not ready to trust and invest online.

We began writing the story of Finax in this office at the beginning of Bratislava's Vrakuňa

To make matters worse, with a cheap online service, unparalleled in that time’s Central Europe, and an intended 1% portfolio management fee, a calculation showed me that I would have to get more than 100 million euros under management in a relatively short time.

Back then, this value meant that I would have to become one of the largest securities traders in Slovakia.

When I presented my business plan at the National Bank of Slovakia, many just shook their heads. I planned to reach a break-even point, when revenues equal costs, only in the fourth year.

I had my vision, my plan, and I trusted my experience and the people I surrounded myself with. I decided to do everything in my power to make Finax a success story.

Finax's current headquarters before moving in October 2018 and in February 2020.

Ďuri, do it as if you were doing it for yourself

One of my best friends once told me that whenever he ordered a service, he would tell the contractor a beautiful sentence: "Please do it as if you were doing it for yourself." I stuck to this philosophy while building Finax.

Apart from the real estate in which we live, my wife and I only own financial assets. 97% of our financial assets are investments in Finax at the full fee and only about 3% are in the form of a small cash amount in the bank.

My wealth is thus invested in the same way as the wealth of all Finax clients. None of us at Finax knows a better and more profitable way of investing than the one we offer to our clients, and we are convinced of it. I am personally also relieved to be finally able, with a clear conscience, to recommend a product in which my family and friends can value their savings.

What makes Finax’s loss favorable for clients

Many of you already know the rest of the story of Finax. We are the most successful Slovak investment startup in history. We currently manage more than 200 million euros for more than 25-thousand satisfied clients.

After operating in the market for more than three years, we can say that experts have evaluated our portfolios to be the best investment portfolios in Slovakia. In their risk class, they regularly beat major mutual funds or investment solutions of other securities traders.

Finax Founders with CESAwards Best FinTech Startup 2019 award.

We have always been tough on the competition, writing unpleasant but fair articles to their address, the correctness of which was checked, among others, by the National Bank of Slovakia after they were challenged by the competitors. Last year, we neared a 10% market share in net client deposits compared to mutual funds in Slovakia.

From the birth of Finax, I knew I would do business differently, bring fresh wind, and point out the wrongs of the financial world. There is no better way to prove to the world that building wealth is effective and beneficial to people than comparing the available solutions.

We’re going after the competition and it, therefore, comes as no surprise that they are trying to find our weak spots. Following the publication of the 2020 financial results, we received information from several channels that the financial loss of Finax is something our clients should be worried about. However, the opposite is true. The loss of Finax is fully in line with our plan.

Since our competition has been profit-oriented for years, they understand our loss as a risk. The risk associated with the business model sustainability. Contrarily, I perceive our current loss as a tool that is currently contributing to our long-term sustainability.

That is to say if the service is cheap (and additionally very fair, transparent, and meets the needs of clients), it will become so popular and sought-after among clients that the business will attain a snowball effect. This happens when you throw a snowball created by honest work down the hill, and it automatically starts picking up more and more snow.

When I look at the dynamics of our sales, the snowball effect is apparent despite the low fees.

The forecast that we would reach a break-even point in the fourth year which I presented at the meeting at the National Bank, as mentioned at the beginning of my story, truly hit the mark. I expect December to be the first month in which monthly revenues will match the level of monthly expenditures.

Frankly? I do not expect any profit in the next year either, as we would like to use all the extra revenues for further expansion of the company and we, therefore, plan to operate only with a balanced budget.

Finax is well-capitalized. During our existence, two rounds of external financing were realized, in which we received 3 million euros from a key investor.

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The profit of clients warms my heart

We have already earned more than 23 million euros for our clients (as of 31 August 2021). The most successful investors have earned returns of more than 50% on their deposits in Finax. We are developing financial literacy on several fronts, working on materials for primary and secondary schools.

In English, we have published 95 blogs on various financial topics. We are a great team and Finax is our passion. I'm already can’t wait to see what the next year brings.

Six years of my journey have just passed, and I am beginning to feel that in four years, I will be able to look back feeling proud of the work I have done.

In the end, I have a kind request for you. If you find the story of Finax inspiring and want to promote our fair and transparent way of doing business, please share this article among your friends or on your favorite social network.

Thank you for granting me a chance to take care of your money, and I promise you will be the top priority as my clients.

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Juraj Hrbatý
Juraj Hrbatý
Chief Executive Officer
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