Investec closes loss making robo-adviser

Investec closes loss making robo-adviser

Investec has decided to close its Click and Invest robo-advice business, following two years of losses.

In the annual results of the company, released to the stock market this morning (16 May), the company said Click and Invest lost £12.8m in the year to the end of March 2019, having lost £13.5m in the year to the end of March 2018.

The company has taken a write-down of £6m on the capitalised value of the software operated by Click and Invest, taking total losses to about £32m in two years.

The company’s statement announcing the closure said it will seek to use Click and Invest’s technology in other parts of the business instead.

It has written to clients to begin the process of moving their investments elsewhere which will take place over the next 90 days.

The company stated: "Investec Click & Invest launched just under two years ago, and we are extremely proud of the service we have provided and the consistently positive feedback we have received from clients. 

"However, the reality has been that the appetite for investment services such as ours remains low and the market itself is growing at a much slower rate than expected. 

"We fully appreciate that this announcement will be of real sadness to both clients and staff of Investec Click & Invest.

"Our prime concerns from this point are to minimise disruption for clients and ensure that employees are treated with respect and fairness."

Clients will be offered to sell their investments or transfer them to another provider without charge. The the management fee has also been suspended throughout this transition period.

Simon Bussy, a consultant at Altus, has long been skeptical of the viability of robo-advice businesses.

Last December Mr Bussy, who works with robo-advice firms, told FTAdviser many robo-advisers were spending too much money on acquiring new customers to have a viable business model, and the advertising strategies they have used have been ineffective.

He said: "I think the business models of these firms is going to have to change, they are going to have to move away from having a business to consumer model and into being more business to business, and into being technology providers, with their tech enabling the incumbent players, such as banks, to improve their proposition."

He said the most likely outcome for such firms is they get incorporated into bigger, traditional, providers who wish to access their technology.

The company reported that total assets under management in its wealth and investment business decreased by 1.7 per cent during the year, to £55.1bn, with the fall being due to adverse market and currency movements.

Investec also confirmed that its previously announced intention to float the UK asset management business on the stock exchange and demerge it from the rest of the Investec group, will take place in the second half of this year.