16 min Read
21 Nov 2017

Written by Damien

Damien is one of the most widely quoted money and investment experts in the national press and has made numerous radio & TV appearances. He created MoneytotheMasses.com while working in the City when he became disillusioned with the way the public were left to fend for themselves because they could not afford financial advice.

More about Damien

Wealthify Review – is it the right investment choice for you?

Wealthify reviewWho are Wealthify?

Wealthify is a UK based independent robo-advisor which invests in ETFs to keep clients' investment management costs to a minimum. Similar to other robo-advisers (such as Nutmeg, Moneyfarm and Scalable Capital) Wealthify uses an automated process to create portfolios that align with a client's appetite for risk. In October 2017 Aviva, one of the largest insurance companies in the UK, acquired a majority stake in Wealthify. It was yet another example of an established financial institution acknowledging that robo-advice firms like Wealthify represent the future of investing in the UK. The biggest challenges facing robo-advice firms are gaining funding (from financial investors) and client acquisition. As they charge their clients such low fees their profit margins are very slim so they need to acquire large numbers of customers in order to become profitable. The arrival of Aviva should soothe that headache for Wealthify as it can now be promoted to Aviva's extensive client database.

How does Wealthify work?

Wealthify has a team of investment experts who have developed an investment process that uses algorithms to select the best funds and create an investment plan that suits the client's attitude to risk. The Wealthify investment team then continuously monitor and adjust a client's portfolio to maintain their investments in line with their attitude to risk. Clients can keep track of their investments online on PC, tablet or phone via the Wealthify app and can add or withdraw money with just a few clicks. So far so good.

Wealthify application process

An investment can be made with a minimum of £1 and additional investments or withdrawals can be made at any time. This minimum investment level puts Wealthify on a par with the likes of Moneyfarm who also allow you to open an account with just £1. By contrast Nutmeg require a minimum one-off contribution of £500 or a regular monthly contribution of £100. Scalable Capital on the other hand require a minimum contribution of £10,000.

Customers are accepted over the age of 18

Low minimum investment of £1

No charges for opening or closing accounts so you could move to another service if you become unhappy in the future.

When you open an account you first have to choose between a general investment account or a Wealthify Stocks and Shares ISA, as shown in the screenshot below. If you have not used your annual ISA allowance then it would be preferable to invest via a Wealthify ISA as any income or capital gains will be tax free.

Wealthify Stocks and Shares ISA

I chose a Stocks and Shares ISA. Now usually with most robo-advisers they first require you to complete a risk profiling questionnaire of some kind before providing a sample portfolio. In this regard Wealthify is much slicker than many of its peers as you get straight into building an investment portfolio. Once you've chosen the plan type you want (i.e an ISA) you are presented with a 'Create Your Plan' page as shown below (click to enlarge the image). The user interface of this page is very good with the use of scroll-bars to set your investment amount, how long you want to invest for and the level of investment risk you are happy to take. You are then presented with a projected value for your investment by the end of your stated investment term, but of course this is not guaranteed.

Creating a Wealthify plan

 

You can then choose to see how your plan will be invested and you will be presented with a portfolio like the one below which shows you the types of assets Wealthify would invest in on your behalf (click to enlarge).

Example Wealthify portfolio

You can see from the screenshot that I went for a 'confident' investment style, or in other words Wealthify's medium risk portfolio. It is pretty cautious with around 50% of the assets in low risk investments such as cash and bonds while 28.5% is invested in equities. If you compare this asset mix with the medium risk portfolio for Moneyfarm (see my Moneyfarm review) I'd have expected to see a medium risk profile with at least 50% in equities.

To produce your own Wealthify portfolio as I have it will only take a couple of minutes which is quicker than other robo-advice propositions. So I suggest that you take a few minutes to see the Wealthify portfolio that would suit your attitude to risk. It's free to do so with no obligation on your part. Once you've done that you can also alter the portfolio risk level to see how it impacts the asset mix, which is a useful exercise. Once you have been presented with a portfolio you are then invited to begin setting up a plan, which in the first instance means going through a multiple-choice questionnaire to see if investing is suitable for you, as shown in the image below. The questions you are asked include:

  • Whether you plan to withdraw at least half of the money within the next three years
  • Whether you accept the possibility that the value of your money will go down
  • Your understanding of what constitutes a high risk investment
  • How you would feel if your investments fell by 20% in a 12 month period
  • Your current savings levels
  • Your current amount of debt

Depending on your answers you can in fact be rejected by Wealthify on the basis that investing is not suitable for you, if for example you have no savings and high levels of debt. This is kudos to Wealthify as investing isn't for everyone and shows that they are living up to their moral and legislative obligations. Of course there is nothing to stop you changing your answers to ensure that you can still invest with Wealthify but that is true of any robo-advice service. Assuming that you pass through the screening process you can then fund your investment online.

What products does Wealthify offer?

As well as a general investment account Wealthify offers an ISA product which, along with the minimum investment of £1, makes an ideal starting point for new investors. At present there is no Wealthify pension. That's not unusual for a so-called robo-advisor and Nutmeg remain one of the few robo-advisors that does (here you can find out more about the Nutmeg pension). Wealthify currently do not offer a Junior ISA although they are working to provide one in the future.

What is Wealthify's investment strategy?

Wealthify invests mainly in passive investment funds such as Exchange Traded Funds (ETFs) and Mutual Funds. The mix of funds in a client portfolio will depend on their attitude to risk and is monitored constantly to ensure the mix of funds still reflects the client's investment goals and the portfolio they selected during the account opening process.

How do Wealthify manage their portfolios?

Wealthify manage portfolios with a mixture of automated and manual systems to create and monitor client's portfolios. Global markets are constantly monitored using computer based algorithms which is a cost-effective strategy allowing clients to invest with lower fees. In addition to the automated process Wealthify experts use their knowledge and experience to make adjustments to client portfolios where appropriate. In this regard they are just like many of the other robo-advice services such as Nutmeg, Moneyfarm and Scalable Capital.

What are Wealthify's fees?

Wealthify's annual fees vary between 0.5% and 0.70% depending on the value of the investment.

  • 0.70% - £1 up to £15k
  • 0.60% - £15k up to £50k
  • 0.50% - £50k and above

The chart below compares Wealthify fees vs Moneyfarm vs Nutmeg vs Scalable Capital fees

Investment amount Wealthify portfolio fee Nutmeg managed portfolio fee Moneyfarm portfolio fee Scalable Capital fee
£0 - £15,000 0.70% 0.75% 0.70% 0.75%*
£15,001 - £20,000 0.60% 0.75% 0.70% 0.75%
£20,001 - £50,000 0.60% 0.75% 0.60% 0.75%
£50,001 - £100,000 0.50% 0.75% 0.60% 0.75%
£100,001 - £500,000 0.50% 0.35% 0.50% 0.75%
over £500,000 0.50% 0.35% 0.40% 0.75%

*Scalable Capital has a minimum investment amount of £10,000. Moneyfarm has a minimum investment amount of £1 (the same as Wealthify) whereas Nutmeg's has a £500 minimum lump sum for an ISA or a regular monthly amount of £100

In terms of cost Wealthify is very well-priced if you are investing up to £100,000 but is less competitive for large investors with over £500,000. In addition to the Wealthify fees stated above there is an average fund charge of 0.19% which is typical for a robo-advice firm.

Wealthify performance

When a Wealthify account is opened a 'predicted value' figure is provided which indicates the potential value of a client's investment over a period selected by the client. This is not a guarantee and I'd argue that it is of limited use.

Wealthify have 5 investment plans (Cautious, Tentative, Confident, Ambitious & Adventurous) whose performance is monitored regularly against industry benchmarks.

Wealthify released their one year performance in February 2017 which indicated that it outperformed the industry benchmark in all investment plans as follows.

1 Year performance v industry benchmark

  • Cautious - +0.06%
  • Tentative - +0.13%
  • Confident - +1.20%
  • Ambitious - +2.47%
  • Adventurous - +5.05%

But more importantly how does the Wealthify performance compare to other robo-advice firms? The lack of up-to-date available data on Wealthify's performance is hugely disappointing and a negative mark against them in my view. However running with the data that we do have the table below shows how their performance compares to Moneyfarm and Nutmeg over the year to February 2017.

Wealthify vs MoneyFarm vs Nutmeg performance

Wealthify state that their investment performance for the year to February 2017 (which is the most recent information available) is as shown in the table below : Nutmeg's published performance data doesn't allow for accurate comparisons but the table below shows the Wealthify vs Moneyfarm performance for the same period. To produce the comparison I've compared the comparable Moneyfarm portfolios vs the equivalent Wealthify portfolios. Moneyfarm actually offers 6 portfolios versus Wealthify's 5.

Wealthify Moneyfarm
Cautious 8.86% 8.30%
Tentative 11.86% 16.5%
Confident 18.28% 18.9%
Ambitious 22.25% 23.1%
Adventurous 28.50% 25%

Based on this date range above Wealthify has performed well at the cautious end (which may not be surprising given my observation of their portfolio mix earlier) but also at the highest risk level. Given how impressed I was with Moneyfarm's overall performance (see my Moneyfarm review) Wealthify customers should be able to sleep easily. However, as soon as the latest Wealthify performance data is released I will crunch the numbers again.

What other services do Wealthify provide?

Wealthify is not regulated to provide financial advice to their clients but investments up to £50,000 are covered under Financial Services Compensation Scheme  (FSCS).

Wealthify customer reviews

Below is a sample of reviews published from existing Wealthify customers via Trustpilot:

'Always available for help by e mail/phone and that what counts and makes you feel confident in the business and ability to work for their clients' - Chris

'I'm generally happy with the service I've received, but I can't comment on the investment performance as I've only had my ISA for 6 months' - Mike

'Very happy with the service and the easy of keeping up to date with everything, would definitely recommend to any friends or family'  - Jackie

'Excellent company and investment service that makes me comfortable parting with my money. Wealthify is the future with its roboinvesting platform' - Paul

'Great website. brilliant customer service-respond quickly to any concerns.
Fees are fair and transparent' - Pete

Conclusion

  • Wealthify provides a value for money, hassle free passive method of investing in the stock market and is ideal for beginners given that you can start investing with as little as £1.
  • Its charges for investors with under £100,000 to invest are very competitive.
  • The lack of recent performance data is disappointing but the data that does exist compares favourably with its peers, even the likes of Moneyfarm which has performed very well since launch (I cover this in more detail in my Moneyfarm review)
  • It's worth bearing in mind that there is no reason to not invest with more than one robo-adviser, to stop you having all your eggs in one basket. As with other robo-advice firms (with the exception of Scalable Capital) Wealthify's tiered charging structure is their attempt to discourage you from doing this.
  • Wealthify, or any other robo-advice service for that matter won't suit those wanting to be more involved in how and where their money is invested. If you want to take a more hands-on investment approach which empowers you to run your own money and make your own fund decisions then have a look at my 80-20 Investor service.

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