UK robo-advisers to watch out for in 2017

A number of wealth management start-ups have recently launched in the UK.

As robo advising grows in popularity among users, a number of recent companies have launched in the UK that investors (and banks) should keep an eye on.

Robo advice is the name given to online wealth management companies that use automated algorithms to allocate assets into portfolios based on questionnaires that take into account an individual's risk appetite, among other things.

The technology is popular in the United States and is expected to grow dramatically in both the U.S. and UK over the next three years. Consulting firm A.T. Kearney expects robo advisers to manage around $2 trillion in the U.S. alone by 2020.

Nutmeg was the first move to robo-advising in the UK in 2011, although the firm prefers to call itself an ‘online wealth manager’ and has taken the largest market share, recently revealing it had 20,000 customers and £600m of assets under management (AUM).

But who are the newest robo adviser entrants to the UK market? We identified six recent start-ups that investors should watch out for in the coming year.

Wealthify

Launched in April 2016, the Cardiff-based firm has 2,000 customers. The firm invests in a range of assets and ETFs and a minimum investment of £250. It charges 0.7 per cent to 0.5 percent on portfolios and also charges an average 0.28 per cent in yearly fund charges. Investors can cut their fees however, by recommending friends to the platform. If friends join a client’s “circle,” they get a 5 per cent fee discount, which increases to 20 per cent once 50 people are signed up.

The platform exceeded its £1m crowdfunding goal through a Seedrs campaign in November, with over 650 investors. It had previously raised £1.55m from investors and is backed by the Welsh government.

Scalable Capital

The London and Munich-based platform reached over £100m in assets under management in January. The company operates in both the UK and Germany and has over 2,500 customers. It also passports into Austria via its German operation.

The firm’s model is slightly different from other robo advisers in that it doesn’t divide portfolios into low, medium and high risk. Instead, it asks clients the percentage that they would be willing to risk in the most adverse financial conditions.  It then uses automated algorithms to manage the risk of portfolios on a daily basis so none would dip over the projected risk percentage.

MoneyBox

This start-up is aimed at the younger crowd and passive investor and markets itself as the app that “invests your spare change.” It works by linking up a bank account and rounding up your purchases and investing it in a portfolio. It has three portfolios to chose from, with tracker funds through BlackRock, Vanguard and Henderson.

The platform has no minimum amount but charges a £1 a month subscription fee, a yearly 0.45 per cent platform fee and fees charged by the fund providers, which vary from 0.22 per cent to 0.24 per cent.

The company is also hoping to launch a Lifetime ISA in April. The ISA is a government initiative aimed at helping 18 to 40 year olds save for retirement or a house and gives a 25 pre cent annual bonus on any investments made up to £4,000.

Munnypot

Started by Simon Redgrove and Andrew Fay, founders of financial advisers Cavanagh Group, this firm aims to simplify investing for UK residents. Clients can look at different scenarios to determine the best investment for them. The service offers five trackers and a minimum investment of £250. The platform has an annual 0.11 per cent fee and a Vanguard investment fund fee that rages from 0.15 per cent to 0.22 per cent per year, each charged monthly. The firm also charges a one time initial advice fee starting at £5 and a monthly monitoring fee starting from £0.42p. The company is backed by SEI Wealth Platform.

Moola

Approved by the Financial Conduct Authority in December, this start-up is backed by BlackRock and Winterflood and plans to launch in the UK soon. The platform will provide investing with a minimum of £200. It also aims to help financial advisers offer services to smaller customers.

The company received backing from Run Capital, Odysseus Investments and other investors last year.

Novofina

European wealth management firm Novofina is bringing its product to the UK this year, aiming for up to 20 per cent returns. Novofina 7plus and Novofina 20plus will target annual net returns of 7 per cent and 20 per cent, respectively.

The platform will have no management or service fees but does have a minimum investment of £30,000.