The chief investment officer of Nutmeg has said he doesn’t fear banks moving into the robo-advice market.
Shaun Port said the fact large providers and banks were moving into the sector would be a boost for him and his rivals.
He said: “I am really excited about everything happening in this market.
“If you think about it, banks going out there and saying there is a different way to invest rather than being with an IFA. That is great for us.
“My fear is people just use it as a distribution channel and build a pretty website.”
He said the large number of first-time investors in the robo-advice market meant companies which offered this service would have to go beyond simply selling a product.
He said: “When you lose money in your first month, that is really scary. And the chance (is) you lose (money) in your first year is 40 per cent.
“It is not just a product sale, it is an ongoing relationship.”
Mr Port added robo-advice had reached a "tipping point" given the number of people who were signing up to it, with 10,000 joining Nutmeg in the past six months.
A number of large banks are reported to be weighing up their options about whether to enter the robo-advice market.
In January the Financial Conduct Authority revealed half of the companies working with its dedicated advice unit - set up to help foster different types of financial advice offerings, including robo-advice - were banks.
Meanwhile LV has launched an automated financial advice service which focuses on the retirement income market.
But Vanguard, which launched its Personal Advisor Service in the US in 2015, has said it has no plans to bring it to the UK.
Adam French, founder of Scalable Capital, also expressed concerns about the use of robo-advice for distribution.
He said: “With people like Vanguard coming to the market, doesn’t it show this is the future?
“But if you buy through an asset manager, you are just going to get sold Portfolio 1 from that asset manager.”
damian.fantato@ft.com
