Total US assets looked after by “robo-advisers” – online sites that give tailored financial advice to investors – hit $19bn in December 2014, according to consulting firm Corporate Insight. Though robo advice is not yet as common in the UK, it is becoming an increasingly popular way of avoiding the high costs of active money management. The majority of products are aimed at customers with smaller investment pots, but one of the more recent additions to the market, Netwealth, is specifically targeting higher-net-worth clients.
Netwealth was launched in 2015 and is now backed by Boris Johnson’s former economic adviser, Dr Gerard Lyons. Founders Charlotte Ransom and Thomas Salter developed the product after finding that “a core financial consumer base was either underinvested or unhappily invested, due to concerns over cost, transparency, performance and quality within discretionary wealth management”. The product has a £50,000 minimum investment and will aim to attract clients from private banks such as Coutts and Brewin Dolphin.
Netwealth charges a tiered 0.65% fee, which is cut to 0.5% for investments over £250,000 and 0.35% for investments over £500,000. The latter fee equates to around one third of the cost of the average actively managed portfolio. Fee amounts cover investment management, execution charges, tax reporting, transaction fees and regulator performance reporting. Although Lyons will give macroeconomic advice, the portfolios are put together using an algorithm that takes people’s financial goals and saving habits into account.