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Moneyfarm Acquires Wealthsimple’s UK Book of Business

The direct investment market in the UK has not been exempt from recent world developments. The market is undergoing a great deal of change. Mike Barrett, consulting director at the Lang Cat, describes British direct investment as a considerably difficult market to break into.

Currently, the ‘Big Four’ companies – Hargreaves Lansdown, AJ Bell, Interactive Investor, and Vanguard – are enjoying client retention rates of over 90%! Understandably, this makes it quite difficult for newcomers to gain market share. Simple Fast Mortgage’s Rob Peters echoes Barrett’s sentiment about success in the UK direct investment market. To gainfully win British consumers over, providers will have to demonstrate astronomical levels of dedication to the UK context.

Perhaps this is one of the reasons that compelled Canadian robo-advisor Wealthsimple to exit the UK market. Started in 2014 by Brett Huneycutt, Rudy Adler, and Michael Katchen, Wealthsimple has an international client list of over 2 million and holds $15 billion in assets. As a direct result of growing a healthy client list for four years, Wealthsimple’s total assets under management in the UK is 3% of its business total.

Despite this small measure of success, once the new year comes along, Wealthsimple will sell its client list of 16,000 customers, along with £272 million worth of assets, to its UK rival, Moneyfarm. Caroline Murphree, Wealthsimple Europe CEO, indicated that, while it has been a privilege to serve UK customers, the company would like to pay more attention to its market share in Canada for the time being.

Fintech experts have observed that perhaps there has been a mismatch of cultures between Wealthsimple and the UK fiscal climate. The Canadian company embraces a holistic approach to finances, whereas the local UK customer attitude tends to be more single-minded. Sarah Kocianski from FoundersFactory said that concentrating on their home market may help Wealthsimple operate in a way that is more closely aligned with their guiding principles.

Regarding the deal with Moneyfarm, Murphree is confident that Wealthsimple’s clients will find a good home with the Italian-born digital wealth management company. For Giovanni Daprà, co-founder and Chief Executive Officer of Moneyfarm, doing business with Wealthsimple highlights Moneyfarm’s dedication to working and thriving in the UK market.

Moneyfarm is going from strength to strength. It has recently surpassed the £2 billion mark for assets under management. In 2021, Moneyfarm has enjoyed a 57% increase in the number of new clients added to its roster. The 16,000 customers from Wealthsimple will be another feather in Moneyfarm’s cap.

The company is well-qualified to cater to Wealthsimple’s clientele in the same professional manner that it caters to its own. The two companies have many similarities, including the overarching business goal of providing accessible and affordable investment options to their customers. Both businesses use a combination of human investment consultants and digital expertise to achieve this goal.

Wealthsimple’s client offering includes investment products priced at 0.7% to 0.9% of the overall portfolio. Their products also included pensions, JISAs, and ISAs. Once they have migrated to Moneyfarm, Wealthsimple’s clients will gain access to Moneyfarm’s globally diversified ISA stocks and shares portfolio. Clients will also reap the benefits of top-notch protection measures for their wealth. Moneyfarm has extensive security protocols to ensure the safety of clients’ assets. Furthermore, clients will have access to consultants whenever they need one.

Wealthsimple’s planned departure from the UK market is not a terrible shock to industry experts. Analysts have described the robo-advice application and consultation market in general as a heavily saturated and increasingly competitive one. Simon Jones from InvestingReviews, a financial comparison website, predicts that 2022 will see more robo-advice firms leave the UK in the wake of the Canadian company’s exit.

Wealthsimple appears to have given the arrangement with Moneyfarm a great deal of thought. Though they are rivals, Moneyfarm is the right parallel company with which to link up. The only downside seems to be decreased competition in the UK robo-advice market. Fewer companies in the market mean less choice for individuals and potentially more unsatisfied customers.

Moneyfarm proves to be the exception to the rule, though. With its 101% year-on-year increase in net inflows documented in 2021, and the aforementioned massive increase in assets under management, Moneyfarm seems well up to the task of filling in the gap left by Wealthsimple. Customers who are making the move from Wealthsimple to Moneyfarm believe in Moneyfarm’s ability to deliver excellent digital solutions to the market.