Investments  

Blackrock takes stake in robo-adviser

Blackrock takes stake in robo-adviser

Blackrock, the world’s biggest asset manager, has taken a large minority stake in robo-adviser Scalable Capital, FTAdviser understands.

Scalable Capital, which launched in the UK last summer, describes itself as “Europe’s fastest growing digital wealth manager”.

It doubled its assets under management to €200m (£172m) in the first quarter of the year.

The robo-adviser exclusively uses low-cost exchange traded index funds in the construction of its investment portfolios.

According to Scalable Capital, the ETFs it uses have a total cost of 0.07 per cent to 0.5 per cent per year, at an average of 0.25 per cent, much less than active funds.

For a portfolio of £10,000, Scalable Capital charges a fixed fee of £6.25 per month to cover investment management and all trading costs, plus ETF costs of £2.08.

FTAdviser understands a formal announcement about the buy will be made tomorrow morning.

Blackrock declined to comment.

However in a recent interview on Scalable Capital’s website, Pollyanna Harper, head of UK intermediary sales at Blackrock’s ETF business iShares, discussed the possibility of the fund giant working with tech providers.

“As a big player, we can start to leverage the nimble tech providers for what they are very good at,” she said.

“This will also help the tech providers establish their brand presence across the market. 

“At the moment, I don’t think that small providers with low brand awareness will succeed without the backing of a larger brand.”

Nearly a third of large banks and asset managers expect to buy a financial technology firm in the next 18 months, according to a report compiled by law firm Simmons and Simmons in April.

Those findings came as the regulator’s director of strategy said greater use of robo-advice will address the Financial Conduct Authority’s concerns about advice charges.

Christopher Woolard was speaking in April after the FCA expressed concerns some consumers were not getting value for money when they paid for advice.

He said the FCA is encouraging greater use of robo-advice to make sure people can access advice at different costs.

However robo-advisers have some way to go to gain the trust of consumers.

Robo-advice is less popular than financial advisers, friends or even the internet, according to research published in May.

The fifth annual ING International Survey Mobile Banking 2017, which quizzed nearly 15,000 people across 15 countries, found nine in 10 Europeans would not let a robo-adviser manage and make decisions about their finances unilaterally.

And a recent survey by HSBC of 12,000 people across 11 countries found just 21 per cent would trust an automated service to give them mortgage advice.

Scalable Capital had not responded to a request for comment at the time of publication.

laura.miller@ft.com