According to Giovanni Daprà, chief executive and co-founder of Moneyfarm, the new tax-efficient pensions wrapper has been created to simplify Sipp investment for individuals, allowing them to transfer and consolidate their investments easily and tax efficiently.
Called the Moneyfarm Pension, the Sipp portfolios will be managed in-house by the wealth manager, and will only invest in what the Financial Conduct Authority has deemed 'standard' assets, such as exchange-traded funds, and it will not invest in illiquid or esoteric investments.
The make-up of the portfolios will be structured by Moneyfarm to suit an individuals' risk and wealth profile.
The portfolios will also have a target date functionality applied to them, so investors can input their anticipated retirement date and, as this approaches, the portfolio asset allocation will automatically adjust to ensure suitability up to the point where investors need to decumulate.
Mr Daprà said: "The majority of 401k plans in the US use target date funds, and we think this is a very simple way of helping people achieve their financial goals the nearer they get to retirement.
We want to create something that will help people have a holistic view of their finances so they can reach the outcomes they want.Giovanni Daprà"It is about helping each individual maximise the potential outcome and help investors take control of their own finances."
He added that by asking customers to set a date for their retirement, Moneyfarm could "provide more personalised automated financial advice through our digital platform and encourage future planning and money mindfulness as part of everyday life.
"Ultimately, individuals can now take charge of their own retirement, which is simple to setup, monitor and manage."
Mr Daprà also highlighted the basic 'tiered' approach to charging, based on assets under management across all portfolios managed on the Moneyfarm proposition, including any Isa accounts.
He said: "There are not a lot of Sipps in the market with this level of quality at such a low price.
"In fact, some are very expensive propositions.
"We think that for these prices and with this level of guidance this is offering value for money."
Tiered charging structure based on assets under management per year (%) | |||||||||
£10,000 | £25,000 | £50,000 | £70,000 | £150,000 | £250,000 | £500,000 | £750,000 | £1m | £2.5m |
1% | 0.98% | 0.94% | 0.93% | 0.88% | 0.85% | 0.82% | 0.78% | 0.76% | 0.72% |
The Moneyfarm Pension, which has been trialled over the past month with a couple of hundred customers, will soon offer flexi-access drawdown - a feature which is expected to go live at some point in the second half of the year.
To avoid a delay in customers receiving tax relief from HMRC, Moneyfarm will be taking on the up-front cost of basic rate income tax relief for investors.
Mr Daprà was keen to stress this is not a 'robo' portfolio, as "unlike other Sipps, human expertise comes as standard", he said.
Not only will the portfolios be managed by humans but also specialist investment consultants will be on hand to explain investment products and portfolio performance.
Last year, the Italian robo-adviser told FTAdviser it had launched a partnership with Allianz Global Investors to provide active wealth management at low cost.
The new pension product is one part of this development but more plans are being drawn up by the firm for future launches.
According to Mr Daprà, Moneyfarm is exploring how it can use technology to help investors take their "whole household wealth" into consideration as a kind of personal dashboard.
"We want to create something that will help people have a holistic view of their finances so they can reach the outcomes they want."
This "work in progress" could take into account things such as bank accounts and other savings, which he said could help people better manage their finances, but there is no definitive timeline set for the development or launch of this.
Chris Daems, director of Cervello Financial Planning, said: "I am a fan of innovation in the marketplace, although I am not convinced Moneyfarm's proposition is that innovative.
"The charges aren't particularly competitive when compared to potentially alternative options, especially if an individual has access to a lower cost alternative platform or workplace pension.
"I am sure the proposition will have a market, although I am struggling to see where it fits into the wide range of options available."
simoney.kyriakou@ft.com
