Robo-Advisors Reap Rewards from Growing Demand for Low-cost Investment Service
22 de Noviembre, 2018
Tiempo estimado de lectura: 3 minutos
Through Q3 2018, 800,000 new DIY investment accounts — where customers decide on investment choices without the help of financial advisors — were opened in the UK.
Of those new account openings, a third were with one of the UK’s leading fintech robo-advisor operators, including Nutmeg and Moneyfarm, compared with 11% a year ago. The total number of DIY investment accounts, inclusive of customers of robo and traditional platforms, rose to 4.8 million in the same period — a 22% uptick.
But fintechs are some distance away from disrupting incumbents. While fintechs have posted impressive customer acquisition numbers, incumbent fund supermarkets have grown their market shares across the last 12 months. In the last three years, 20% of new non-advised customers opened accounts with incumbent fund supermarket Hargreaves Lansdown, which dominates the UK’s online DIY investment market with a 42% share. Together with Interactive Investor, which acquired Alliance Trust Savings to grow its own market share to 13%, the two incumbents control over half of the UK’s DIY investment market. Such is the gulf between fintechs and incumbents in the space: Hargreaves’ £94 billion ($120 billion) in assets under management is 31 times larger than the combined assets of all UK robo-advisors, per The Financial Times. This suggests that despite the early success of fintech robo-advisors, the story is not as triumphant as it might seem, according to Holly Mackay, founder and CEO of Boring Money.
Fintechs need to convince customers to increase deposits if they truly expect to disrupt incumbents. Startups in the space have gained traction by slashing investment fees and charges commanded by incumbents, allowing them to attract those with smaller investment capital — Nutmeg, which has 60,000 customers, doubled its account numbers between 2016 and 2017, for example. However, on average customers of these startups tend to have considerably smaller portfolio sizes, £10,485 ($13,440), compared with the DIY market average of £47,000 ($60,249). So, the likes of Nutmeg and Moneyfarm have opened up the investment market to those previously underserved. If fintechs wish to capitalize on their growing investor numbers and disrupt incumbents in earnest, it’s vital they persuade customers to grow amounts invested — by attracting their pension assets, for instance. Separately, incumbents like Fidelity, the third biggest DIY investment platform in the UK, would be wise to consider partnering with fintechs, for example. Such partnerships could help fintechs thrive while helping the likes of Fidelity narrow the gap on market leaders.
Fuente: Business Insider
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