AltFi Insights: 1 in 4 UK robo-advisors shuttered in two years

The world of digital disruption to wealth management continues to grow, and be well funded by investors, but the market has not been smooth sailing for all and the industry is yet to see explosive growth in assets. Nonetheless, most start-ups are still going strong.

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AltFi Insights are articles where we analyse, unpack or exclusively reveal something new happening in peer-to-peer lending, fintech and more.

Digital wealth management, or robo advice as it used to be called, has been around for more than a decade and launched into the UK in 2011 with the arrival of Nutmeg. Things started to get really interesting around 2016 and 2017 when a flurry of companies were founded to attack the space dominated by traditional wealth management, an industry looking after £1trn of investors' assets.

By mid-2017 there were about 17 robo advice services, mostly independent start-ups offering risk-targeted model portfolios. These were Nutmeg, Scalable, Moneyfarm, Fiver a Day, Money on Toast, Munnypot, Moola, Wealthify, Wealth Horizon, Risksave, eVestor, Click&Invest, Netwealth,Wealth Wizards, UBS Smart Wealth and ETFMatic.

Today four of these platforms have closed or pivoted their business models, according to research by AltFi.

These include: UBS SmartWealth, Click & Invest, RiskSave (which has switched into providing compliance services) and Fiver a Day. Money On Toast appears to still be going although does not appear to be actively marketing its services.

UBS SmartWealth and Click & Invest (a venture from within Investec) are both offerings from incumbents with deep pockets who launched with strong marketing campaigns but closed citing high costs associated with customer acquisition.

RiskSave has pivoted to offering a compliance hosting platform to fintechs and asset managers. Fiver a Day meanwhile has shuttered access to new clients owing in its words on its website: “A combination of helping those involved with the alleged British Steel Pension Scheme scandal in Port Talbot and getting ready for MiFIDII, means that we are currently unable to process new applications:

In the past two years, five new digital wealth management platforms have launched in the UK Wealthsimple, Fountain, Tiller,Exo Investing and most recently Rosecut.

At the larger end of the spectrum, Nutmeg and Scalable Capital continue to raise money in large rounds. Nutmeg raised £45m from Goldman Sachs, among other investors at the start of 2019 while Scalable raised €25m this week, from existing investors.