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US robos looking at UK market for advice expansion

US robos looking at UK market for advice expansion

American robo-advisers are eying up the UK and pondering whether to move into its market.

Several large firms, including United Capital and Charles Schwab, are exploring their options while Vanguard said it could not rule out a move to the UK for its digital advice service.

Joe Duran, the chief executive of advice firm United Capital, which manages $15bn (£10bn) in assets, said the UK is an attractive market for companies in the USA.

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“It has the same language and is philosophically and culturally aligned. There are revisions we would have to make but not big ones,” he stated.

“The UK has quite a developed planning community, probably the closest to the US, what you have not got is a lot of the behavioural economics.

“We have looked at the UK, Australia and Canada, and the UK seems to be the best solution.

“You have got some really great technology-only solutions. I don’t know you are as far along with the bionic solutions where you are providing an integrated end-to-end solution, which is what we have built,” Mr Duran continued.

While he expressed interest, any moves probably would not happen until spring next year.

“We are a huge believer in having local market knowledge and we would partner with a local group unless we were able to acquire somebody we thought really knew the market and had the scale we could support.”

Meanwhile Charles Schwab, the California-based stockbroker with assets under management of $2.6trn (£1.7trn), runs Schwab Intelligent Portfolios. This is an online service which allows investors to invest as little as $5,000 in an exchange-traded fund portfolio of up to 20 asset classes, with access to the company’s financial planning services.

In the six weeks after launch last spring, Schwab’s service had attracted $1.5bn (£963m) in assets, while Intelligent Portfolios had $3bn (£1.92bn) at the end of the second quarter, with 39,000 accounts.

A spokesman for Charles Schwab said: “We are always exploring opportunities across a range of markets, including the UK, but we do not have anything specific planned at this time.”

At roughly the same time last year, Vanguard also began offering an online Personal Advisor Service, which helps its clients draw up a personalised plan which is put into action and managed for an annual fee of 0.3 per cent.

Through the end of June 2015, the service had more than $21bn (£13.4bn) in assets under management, made up of $11bn (£7bn) in new assets, in addition to assets transitioned from their legacy advice service.

A spokeswoman for Vanguard said the company had no plans to bring this digital advice service to the UK at the moment, but said it couldn’t be ruled out in the long-term.

This rapid growth by big brand entrants in the US eclipsed independents like Wealthfront and Betterment, which have been working on automated advice technologies for far longer.