Scalable Capital has become the latest robo-adviser to close its doors to the direct-to-consumer UK wealth market.
The company will no longer serve retail customers directly in the UK, instead consolidating its wealth business into one platform in Germany.
Scalable Capital, which is backed by BlackRock and has assets exceeding €3bn, said it would help clients transfer their accounts off the UK platform and work closely with its custody partner to "ensure a smooth transition".
The robo-adviser entered the UK market in 2016 and soon launched a low-cost financial advice service with a fixed fee of £200.
Unlike many of its rivals in the British robo-advice sector, Scalable Capital was aimed at those with higher assets. It had a minimum investment amount of £10,000 compared to the £500 limit Nutmeg has or the £1 limit for Wealthify.
Scalable Capital told FTAdviser it was still "deeply committed" to the UK market, largely through its B2B partnership on digital investing with banking giant Barclays.
Barclays launched its digital advice service Plan & Invest last year in partnership with Scalable Capital, in a move the bank hoped would help close the advice gap in the UK.
The service can be accessed by current account customers with a minimum of £5,000 to invest and offers active and passive funds through a managed portfolio.
The wider market
The UK robo-advice sector saw a flurry of launches in recent years, many of which attracted capital from large financial services firms such as Schroders, which backs Nutmeg, and Allianz, which backs Moneyfarm.
But some have not fared as well as expected. In May 2019 it emerged Investec was closing its Click and Invest robo-advice business following two years of losses, while Moola shut its doors in January last year.
Commentators have said the challenge faced by many robo-advice firms was the heavy cost of advertising and marketing to acquire new customers, while others have predicted they will have to evolve into technology providers in order to survive.
Ruth Handcock, chief executive of Octopus Investments, said the advice gap in the UK remained significant and, while robo-advisers could help narrow this gap, a significant proportion of people still wanted some human help to sit alongside technology.
Ms Handcock said: "The robo-advisers are fighting for the ‘self-directed’ market, the people who are comfortable making decisions on their own, but I think that’s proven to be a smaller and more competitive customer acquisition space than some had expected.
"In my view, there is a much bigger market opportunity for those who can offer a blended solution, which uses technology to do lots of the heavy lifting within the advice process, combined with a friendly human to understand goals, build trust and help their clients make what are often very significant financial decisions.
"Lots of advice firms now recognise this too and have started to invest more heavily in technology and develop new solutions, which could lead to a blurring of the lines between robo and ‘traditional’ advice."
Last month the Financial Conduct Authority pledged to continue its support of robo-advice, despite acknowledging concerns surrounding its slow uptake with consumers.
But the regulator did find public awareness of robo offerings was on the up, with assets under advice for automated advice services sitting at £3.2bn in Q3 2019 — 700 per cent up from the £400m just three years before.
rachel.mortimer@ft.com
