Robo-adviser launches for 'middle market' clients

Robo-adviser launches for 'middle market' clients

A new wealth management platform powered by artificial intelligence has been launched to serve the "invisible" £3.2tn middle market.

Rosecut will provide investment-focused financial advice to individuals who have £100,000 to £2m in investable assets.

In a statement, the platform said the affluent ‘middle market’, which it claimed comprised of approximately 9m under-serviced UK individuals, representing total investable assets of £3.2tn, had become "invisible to traditional wealth managers in recent years" due to high compliance costs.

Qiaojia Li, previously co-head of the Asia desk at Coutts Bank, and Rosecut’s chief technology officer Gustavo Silva, co-founded the new platform.

The platform’s proprietary AI will replicate bespoke adviser sessions in private banks.

Ms Li, who is chief executive of Rosecut, said: "The retail market has excellent digital access to solutions that are tech-based and easy to use, but these solutions lack the sophistication to manage significant sums.

"The high net worth individuals and beyond, meanwhile, have great face-to-face services, albeit quite expensive.

"However, the middle market falls between the cracks, forcing investors to use a combination of retail platforms and IFAs in order to hash together their own imperfect form of wealth management."

She added: "This section of the market is one of the most receptive yet most underserved. Put bluntly, it has been abandoned by the private banks.

"Therefore, we created an all-inclusive, technologically native platform that not only fully serves the middle market, but has found a way to redefine what service means."

Mr Silva said he wanted financial planning and investment strategy to be "as easy as creating a Spotify playlist".

He said: "Our AI-driven platform allows our accredited wealth managers to quickly and easily deliver a completely bespoke strategy where users can plan, allocate and invest in real-time.

"Being digitally native in this way allows Rosecut to be cost efficient and scalable."

But Darren Cooke, a chartered financial planner at Red Circle Financial Planning, said this area was over-serviced, rather than under-serviced.

He said: "Their target market is hardly invisible to 'traditional' wealth managers, it is exactly the space most financial advisers will target and the space all DFMs currently target with their existing MPS offerings.

"The existing robo offerings also seek to target this space, although they also cater for lower value funds."

Mr Cooke added: "They claim to offer the service at a lower cost but they don't actually say what their fees will be. Most IFAs offering face-to-face advice would look cheap compared to private bank offerings.

"It really doesn't seem to be anything genuinely new and, given the track record of other businesses in this sector, I hope the backers have deep pockets."

Robo-advisers have come and gone in recent years, many citing cost problems for their departure.

In May for instance Investec closed its Click and Invest robo-advice business following two years of losses which amounted to about £32m.