Freedom Holding Corp (FRHC)

[Quintessence]

Timur Turlov: Everyone has the freedom to be an investor. What we bring is infrastructure and expertise.

General Director of the investment company Freedom Finance - about the broker’s mission, Apple shares and the financial center of the Far East

Business July 5, 09:00

https://primamedia.ru/news/828576/

The investment company Freedom Finance, which is actively expanding the network of representative offices in the regions of the Russian Federation, opened a renovated office in Vladivostok on ul. Fontannoy, 28. In an interview with the correspondent. Timur Turlov, PrimaMedia IA Director General of Freedom Finance, explained why the company decided to enter the Far East market through the regional center, how much money it takes to become an investor and how to distinguish a good financial consultant from a “seller of miracles”.

Reference: Freedom Finance Investment Company LLC is a Russian investment company, part of the international holding Freedom Holding Corp. The company has been on the market for more than 10 years. It has been conducting brokerage, dealer and depository activities and provides securities management services. - The US stock market. In addition, the company operates on the stock markets of Russia and Kazakhstan. It provides access to trading on the Moscow Stock Exchange and the St. Petersburg Stock Exchange, the Kazakhstan Stock Exchange KASE, on America NYSE, NASDAQ, CBOE, CME, AMEX and the European stock exchanges LSE and Euronext are owned by the Russian Bank OOO Freedom Finance ("FIN Bank"), the online stock store Freedom24.ru and the Kazakhstan broker JSC Freedom Finance. "

- Freedom Finance today has dozens of branches in Russia, and the network continues to expand. Can your affiliate be considered an indicator that there is money in the region, is there capital for investing?

- I think that it is quite possible to consider our presence in the region as a kind of indicator. In general, when deciding on the opening of the next branch, we look at several high-level factors - the total number of the population, how many people live in large cities, the size of the GRP. At the same time, by no means in all regions that looked "rich" in their presentation materials, we opened our branches.

There is another very important factor - this is how we manage to put together a good, strong team in the region. If we manage to find professionals who have a sufficiently high level of qualification or can quickly increase it, who have a good reputation, then this is no less important a factor when deciding than the GRP or population distribution by cities.

The success of a financial organization largely depends on how well we build relationships with customers. Naturally, it is important how competitive are investment products. Our products are quite complex, and here the key factor is how strong our team is, because without good, strong consultants, you can be unclaimed even in a very rich region.

Vladivostok is one of the cities where we are absolutely sure that we came here for a reason. Discussion of the possibility of opening a branch here started in 2017 at the III Eastern Economic Forum. Thus, the preparatory stage before opening new offices of Freedom Finance and FIN Bank allowed us to form an excellent team and a pool of customers who were interested in our products, our expertise, including an analysis of the situation on the US stock market. Therefore, we definitely understand now that we have both those who need money and those who want to place their free money here.

- The branch in Vladivostok is still the only one in the DFO. And why all the same you have come to the Far East not through Khabarovsk?

- The role of Vladivostok in the federal district is growing every year. Vladivostok is now largely a macroregional financial center, and its role has recently been strengthened. And to start from the capital is always logical. In fact, even if you have some rich satellites, you always, as a rule, start from the capital. Because people from other large cities are going to solve their financial issues in the capital. But the reverse process occurs much less frequently.

Therefore, we have determined for ourselves that we, of course, begin with Vladivostok, and then we look at Khabarovsk, we look at Yuzhno-Sakhalinsk ... And, I repeat, it was here that we were able to assemble a real team for a successful market entry.

- What your company hopes to get in the region is clear. What can Freedom Finance give to the region?

- Our arrival here was largely connected with the initiatives of the presidential envoy to the Far Eastern Federal District Yury Trutnev and the Ministry for the Development of the Far East. In fact, we were at the Eastern Economic Forum in 2017 at the invitation of the Ministry of Eastern and Eastern Development. We believe that the development of the capital market is good

- Is the Far Eastern market as a whole competitive for you?

- Yes, it is competitive. But the competition here is lower than the one we see in the European part of Russia, for example. In a sense, the level of competition here is partly similar to what we see in Kazakhstan, in Almaty and Astana.

If we analyze and compare some things, then we see that people from Vladivostok do not so often go to settle financial issues in Moscow, as the residents of, say, Nizhny Novgorod or even Novosibirsk do. Very long distances and time differences also make it very difficult for Moscow companies to manage their local offices.

Therefore, the entrepreneurial community and all financial organizations that, to be successful, delegate a large number of decisions to the heads of their subsidiaries are much more independent here. Delegation culture is very close to Freedom Finance. In addition, we have a successful experience of entering rather rich, but “undeveloped” territories, where, in fact, there was no culture of working on financial markets before us. For example, we were able to become the largest broker in Kazakhstan, despite the fact that we are, in fact, the only brokers with Russian roots in that market today. And I am sure that with our team we will implement our approaches and skills here in the Far East.

- The team is important, of course. But there must be other competitive advantages. For example, you have an office in Vladivostok - “two in one”: both brokerage services and banking services. What is the interest for your customers, partners?

- Any of our clients has several tasks, and we become the most versatile service for him, which covers a substantial part of his needs. With the help of a bank, a client can deposit cash in order to transfer it to his brokerage accounts and invest in foreign securities, then sell his investments, receive money in his bank accounts and, if necessary, cash them. The bank issues payment cards, thanks to which it is possible to get access to the invested funds in order to simplify some procedures. We also offer currency exchange services at exchange rates and high-grade savings products.

And from this point of view, we are trying to build a truly universal retail bank that will serve our clients interested in investments. At the same time, we do not pretend to create some kind of wide retail. We understand that the client of the bank, in fact, is the client of the investment company itself. We want to give more opportunities to people who invest in the stock market, to offer a more comfortable service than in large state-owned banks or some other financial organizations. This is due to the principle of "one window", due to the fact that the manager can help you with a lot of questions, starting with the issue of an international card and ending with the opportunity, by selling stocks, immediately withdraw money.

- Well, what is the “entry threshold” for a client? What is the starting amount to start investing?

- We have, in fact, from the very first day of work, never tried to impose any specific "entry threshold" on our client. We have a project Freedom24.ru - this is an online stock store, you can basically buy one share and pay for the purchase with your bank card. In this case, the transaction takes place at the price of the Moscow Stock Exchange or St. Petersburg Stock Exchange. The project client can buy, say, a package of 10 shares of Sberbank for 2 thousand rubles.

At the same time, of course, our average check is higher, at several hundred thousand rubles. If someone wants to try, we open a brokerage account without any minimum amount, then people decide themselves. In the US market, where we also work, the average bill is above $ 25,000, despite the fact that we do not set a minimum threshold here either. Again, there are people who, through our bank, can deposit at least $ 250 on a brokerage account without a fee, say, one share of Apple for this money. A more optimal strategy - especially if you make a lot of transactions, actively buy and sell - will be to use a sum of several thousand dollars, it is more economically justified.

But, I repeat, it is quite possible to buy one share and hold it. The same Apple shares, for example, "shot" - that is, they went up in price - over the past 10 years, more than 10 times. We do not charge money for the storage of shares, the client will pay a brokerage commission of $ 1-2 for the purchase of shares. And the commission is fixed: you buy one share for $ 25, or you buy 100 shares for 2.5 thousand dollars - you pay one commission.

- Freedom Finance, as you mentioned earlier, provides a service for investing in the US stock market. How can this market really be of interest to our investor?

- The last 10 years for us access to foreign markets and especially to the US stock market was, of course, the main activity. Why? The answer, it seems to me, is quite simple: the American market plays the role of a universal hub, where large business attracts capital from around the world. This is just a fairly convenient platform where hundreds of companies from around the world attract billions of dollars every year, and investors place their capital. It should be borne in mind that the United States is one of the largest economies in the world, with a fairly stable political regime, with the protection of the rights of investors.

And today - even in spite of the geopolitical situation - I do not see any significant risks for Russian private investors in the US stock market. In the entire history of the sanctions applied by the United States to some countries, currency assets and securities of ordinary citizens of a particular country have never been blocked. Even in the case of sanctions against Iran - the toughest - the accounts of ordinary Iranians in the US have never frozen.

If this happened, there would have been no talk of any “universal hub”. Americans are reasonable people, they understand that sanctions damage both sides of the conflict always. So, it is quite reasonable to hope that the current sanctions standoff will gradually decline.

- And speaking generally, what products are in demand today by Freedom Finance clients?

- In general, people probably have only one key basic need - to save and increase the money they earned. But the first rule, which every investment consultant should always remember, is any financial one: two different people will have absolutely identical portfolios, absolutely identical decisions only in exceptional cases. Someone older - and more conservative, someone younger - is inclined to take risks. Someone and at a young age is quite a conservative. And depending on how much a person is willing to risk, how big a profit he wants to get, how tolerant he is to some kind of losses, we try to make him an absolutely individual portfolio of various investment instruments.

We are between the poles of risk and profitability. Let's just say, there is conditionally absolute reliability of public debt, where you can put money in Russian government bonds, which now bring 7-7.5% per annum, guaranteed by the Russian government. There is an investment in the obligations of any medium-sized business, for example, even from Primorye, where it is possible to receive income in rubles at 12-14% per annum. Of course, these are slightly different levels of risk, but in the case of medium-sized businesses, this is nevertheless an obligation, these are fixed income instruments, and the company will be obliged to pay remuneration on them, to be responsible for this with all its assets. At the same time, there are stock exchanges, there are brokers who prepare this issue, study the issuer's financial condition and protect the investor, providing the necessary information disclosure and conducting initial checks.

And there is also the opportunity to buy stocks, for which, of course, there is no guarantee of repayment of the principal amount and receipt of some kind of income. But here the income can be multiple of investments. For example: Sberbank shares for the last 6 months increased by about 30%, and before that they fell by 30%. And this is a story on which you can potentially make good money, but where you need to be prepared for certain losses.

In different cases, of course, there will be a different risk, different income, and the work of our advisers will help the client to figure it out, help evaluate, look at those things that are not obvious to a non-professional investor. And to say in the end that "other things being equal, it is better to choose this one." Or - "we see a little more potential from company" A: risks for company B are obviously higher, and they pay the same, therefore it is better to buy securities of company A. "

- How can a client choose a broker, financial advisor? What you first need to pay attention to?

- There is talk about the company, then it’s worth starting with formal things - having a license of the Central Bank of Russia, basic parameters of the company’s condition. If a company has a license, we understand that it meets certain criteria. At the same time, the regulatory requirements, as we know, are constantly growing, and only a large, sustainable business is now able to meet these requirements from year to year.

The second important point is the understanding that we live in an era of sometimes fake, fake news, when competitive battles are fought on the Internet. Media space is filled with a huge amount of fake reviews about companies - both negative and positive. In this situation, I would recommend to talk with the company's specialists myself, to understand how well they really understand the subject matter, what kind of education they have.