By Daniel Lanyon on 29th May 2018
The digital wealth manager is hot on the heels of Nutmeg, the market leader, in terms of gathering assets.
Scalable Capital has passed more than €1bn of assets under management (AUM) just 2.5 years after launching its digital wealth management services, according to a statement by the firm.
This makes Scalable Capital the clear market leader in Germany and one of the leading firms in Europe behind one of the industry pioneers in the UK Nutmeg which manages more than £1bn at the last measure back in 2017.
Scalable says its average portfolio size has fallen from approximately £40,000 back in April 2017 to £28,000 while the average age of clients has increased since the firm’s launch. The average age of a Scalable Capital client is currently 50, eight years older than it was a year ago. More than a third of investors are over 55 years old. The proportion of female clients who have funds managed by Scalable Capital via joint or individual accounts now stands at 37 per cent.
New customers typically increase their initial investment significantly within the first six months. The company also manages many large portfolios - portfolios with a volume of over £100,000 account for close to 40 per cent of the total assets under management.
Almost half of customers also use a free savings plan, which averages over £350 per month.
Scalable Capital now manages assets for over 30,000 customers with an average investment amount of £28,000. Partnerships with ING-DiBa in Germany, BlackRock and Siemens Financial Services have been important drivers of growth, the firm says.
"We’ve grown our assets under management faster than the robo-advice pioneers from the US who started a few years before us and which now manage more than ten billion US dollars,” he said.
Wealthfront and Betterment both took longer to reach Scalable's current AUM with the former needing 30 months and the latter 48 months although it should be noted that this was in the very early days of the 'wealthtech' trend.
“Our rapid growth shows, above all, that there is a real demand for digital wealth management. But we are still at the very beginning: millions of savers all over Europe are looking for a technology-based and cost-effective form of having their investments managed for them," Miller added,
Scalable Capital, founded in 2014, saw €100m of inflows in its first in the first eleven months. In the eleven months that followed, assets then increased fivefold to €500m. Now, six months after this, Scalable Capital manages more than a €1bn.
"The market for digital wealth management is currently growing faster than the ETF market did in its early days. We are therefore convinced that the majority of investors will use digital investment solutions in a few years' time. The use of leading technology and the cost advantages are compelling reasons to use digital wealth managers rather than invest in actively managed funds. When you add to that how few people feel confident managing a capital market portfolio themselves, a service like ours is the obvious solution for most private investors," says Adam French, co-founder and Director of Scalable Capital.
Scalable Capital most recent partnership was with ING-DiBa, Germany's third-largest bank in terms of customer numbers, began in September 2017. Since then, more than 20,000 ING-DiBa customers have invested over £440m. Its first major partnership, with Siemens Private Finance, and second with BlackRock, also offer their respective employees wealth management services have also greatly contributed to the rapid growth in AUM.
Back in January it made the move into 'hybrid' robo-advice' with the launch of human advice from regulated financial advisers on demand for customers.
Now in its sixth year, the AltFi London Summit returns on 18th March 2019 to 155 Bishopsgate. Last year proved to be a crucial turning point for the key players building the future of finance. Leading platforms launched oversubscribed IPOs, digital banks proliferated and mainstream financial institutions started their own disruptive propositions. With 2019 certain to be another landmark year, more questions will be asked by regulators with investor interest in disruption also poised for more rapid growth.