Investec Click & Invest, Tiller Investments and most recently Moola have all shut their digital wealth manager operations in the last 12 months. These closures add to the existing concerns over the long-term sustainability of robo advisers’ business models. However, despite these concerns, today we have seen some positive numbers from market leader Nutmeg. We also continue to see groups looking to enter the market.
Many of the newer entrants seem more interested in the ‘advice’ bit of robo, rather than digital wealth management. The latest wave of ‘robo-advisers’ are looking at hybrid models of fully regulated financial advice facilitated by digital tools and some guidance.
- Vanguard Personal Advisor is the firm’s digital wealth manager in the US, which provides face-to-face advice alongside digital tools. It has recently announced plans to offer low cost advice in the UK.
- Fidelity launched Fidelity Go in the US and Fidelity Wealth Expert in Germany, combining active management and digital advice, and plans to introduce a similar service in the UK.
- Lloyds Banking Group plans to launch a robo-advice service in 2020 for customers across its core banking brands: Halifax, Lloyds and Bank of Scotland.
The advice gap isn’t getting narrower. Many providers see this as a growth opportunity: providing financial advice en masse by integrating fully regulated advice with digital guidance tools.
However, the direct-to-consumer investment market is highly saturated – there are too many groups competing over a relatively small group of customers. Without growing the market by appealing to those who need more than just guidance, there will be more business casualties over the next couple of years.
We will be covering this and other trends in the D2C market in our upcoming report ‘UK D2C: Market Overview’. For further information about our research, please get in touch.