Robo-advice firm Moola turned over just £889 pounds in the final full year of its operations, losing £1.3m the same year.
The robo-advice firm, which was founded by Gemma Godfrey in 2015, will close at the end of February, following an announcement from its parent company Mercer.
Data from Companies House for Moola Systems, the company which operates the platform, shows that for the year to the end of April 2018, the company had a meagre turnover of £889 pounds, with a cost of sales of £324,000 and administration expenses of £1m.
This led to a loss for the year of £1.3m.
Turnover rose in the following six months to end of December 2018, rising to £3,768, while the cost of sales were £139,500, less than half the previous year’s total, for the half-year period.
Administrative expenses, however, were over £800,000 which is more than half the previous year’s total, despite the period covering only six months. The loss for the six-month period was £967,000, which, calculated on a pro-rata basis, is greater than the loss for the previous full-year period.
The company had seven employees in that year, including two directors. The total salary bill was £405,000 for the full year, of which £46,000 was paid to directors.
Ms Godfrey sold the firm in 2018, and ceased to be a director in November 2019.
JLT Employee Benefits acquired the business from Ms Godfrey in 2018, and Mercer bought JLT on April 1 2019.
When asked about the low turnover figure, a Mercer spokesperson declined to comment.
At the time the closure of Moola was announced, a Mercer spokesperson said: “We can confirm we have taken the decision to close down Moola. All existing investors have been contacted and given options as appropriate to them.”
Customers must now close their accounts and sell the assets. Any client who incurs a capital gains tax bill as a consequence of doing this, and can prove this to the satisfaction of Moola will be compensated by the company.
The closure of Moola follows the decisions of Investec and UBS to close their robo-advice businesses. FTAdviser has previously revealed how Nutmeg were spending £3 for every £1 of revenue.
Mike Barrett, consultant at the Lang Cat said he hoped the travails of firms in the robo-advice market would mean there is more “realism” about the prospects for the sector in future.
He said: “The challenge robo-advice firms face is the cost of acquiring customers is high, while the customers they do win tend to be millennials who don’t have a lot of cash. Maybe they put in £50 a month because that is what they can afford, and if the robo-adviser is charging less than 1 per cent a year as a fee, that isn’t really a business model.
"The problem with Moola is it offered a bit of advice and access to mostly passive investment products. That is pretty plain vanilla as an offer, and they are not by any means the cheapest, so it's hard to see what the point of differentiation from the others in the market was.
"I think the point of difference was supposed to be Ms Godfrey, who is well known and a terrific communicator, but it wasn’t enough. There were quite a few firms with the same sort of offer in the market.”
Simon Bussy, consultant at Altus said: "The reality is that Moola is one of the robo-advice firms that has been left behind by changes in the market. The first generation of robo-advice firms came to the market by asking clients a few questions to understand their risk profile, and then putting them into products that match the risk profile.
"But new firms have come to market that offer a broader range of personalised advice, where it is not just about the product, and they are offering that for the same sort of price that companies such as Moola were charging for a more basic service."
He added that may firms which had been doing what Moola was doing have moved towards being a B2B provider, and that was something Moola never did.
david.thorpe@ft.com
