Wealthify: is this robo-investor the future of savings?

By Oliver Smith 7 April 2016

This is the latest online platform looking to help you invest your hard-earned savings.

A shocking third of all Brits don’t have any savings or investments outside of their pension.

It’s facts like this which led to the launch of Nutmeg in 2011 and Wealthify today.

Both businesses share similar ideas, instead of having to pay someone to invest your money in the stock market, a costly undertaking for most people, technology can be used to pool funds, algorithms can make investments and overall costs can be reduced.

The businesses in this space are known as robo-investors.

“Every person – not just the wealthy – deserves access to the best investment proposition and financial advice, at a fair price, any time of day or night,” Nutmeg’s Nick Hungerford told The Memo last year.

In the US Wealthfront, which only launched in 2011, has seen great success and now manages $2.6bn worth of people’s investments.

However while robo-investors sound great on paper, the UK market has been a tougher one to crack and, despite high-profile TV and billboard marketing campaigns, so far Nutmeg’s success has been limited.

Today, on the final day of Money 20/20 in Copenhagen, Wealthify is launching to see if it can grow that number of people using robo-investors.

“Wealth management in the UK is massively over-complicated,” Wealthify co-founder and chief investment officer Michelle Pearce told The Memo. 

“We’re going to fix that.”

Second mover advantage?

But coming into a fledgeling market with a large, well-funded competitor (Nutmeg) who has not managed to create much success seems like a daunting challenge, but it’s one that Pearce is confident Wealthify will succeed in.

“Our USP is our simplicity, you can be up and running in minutes, and that’s because we’re targeting the mass market who aren’t served by traditional wealth management,” said Pearce.

“Our fees are lower than Nutmeg’s at the smaller end of the market, that’s better for ordinary investors, and we have a second-mover advantage as people are already becoming more aware of robo-investors.”

Wealthify is not going to be running flashy TV ad campaigns or billboard advertising, instead Pearce it will rely on targeted digital advertising and a cleaver referral scheme.

The fee that Wealthify charges (between 0.5% and 0.7% annually depending on the size of your investment) will be reduced if you invite family and friends to use Wealthify into what they’re calling your ‘Circle’.

Get 2 people in your Circle and Wealthify cuts its fee by 5%, 50 referrals and it’s reduced by 20%.

“We feel Brits don’t talk enough about finance, we want people to be a bit more American, to start having those conversations and Circle will help promote this,” says Pearce.

But can Wealthify use this, along with lower fees and more targeted advertising, to succeed where Nutmeg, with its nearly $40m in venture capital funding, has not?

And do people actually want to put their savings into online investment platforms like Nutmeg and now Wealthify?

We’ll just have to wait and see.