Online wealth manager Moneyfarm raises £40m in round led by Allianz as FCA scrutiny fails to deter investment in robo-advice
Digital wealth manager Moneyfarm has today grabbed £40m in a funding round led by the asset management arm of insurance giant Allianz.
The funding round – which saw contributions from new parties Endeavor Catalyst and Italy's Fondazione di Sardegna, as well as existing investors United Ventures and Cabot Square Capital – is the largest to date by a European digital wealth manager.
It brings the total raised by Moneyfarm, which manages around £400m of people's money, to £60m, as the business aims to compete with peers such as Netwealth, Nutmeg and Wealthify.
“Moneyfarm’s aim is to help individuals better manage their money and increase their wealth to reach their goals,” said Giovanni Dapra, chief executive and co-founder of Moneyfarm.
“We firmly believe that efficient investment management has to be coupled with clear investment advice to achieve the best outcome for our customers over the long term. This is where we see the real value added from digital investments."
A crackdown by the Financial Conduct Authority (FCA) on so-called "robo-advisers", which use varying levels of automation in their advice-giving and investment selections, has seemingly not deterred large institutions like Allianz from ploughing money into the sector.
The FCA warned digital wealth advisers that they must tighten up their businesses, as it found several were misleading their customers on fees and were failing to properly discern their investment needs and risk appetites.
Yet other firms such as Scalable, Nutmeg and Wealthify have had little trouble raising capital from huge names such as Blackrock, Schroders and Aviva respectively.
Moneyfarm creates a profile for its investors when they register and asks for their investment time horizon and the amount they are investing against their current wealth. It then uses algorithms to recommend a portfolio that best fits their needs, as human managers make the investment decisions to sit alongside the digital advice.
"This capital will help bolster our product and investment advice offering as we explore integrating goal-based investments," said Dapra.
"Adding an additional layer of personalisation means that individuals and families will be allocated portfolios that help them achieve their financial dreams, whether it’s a child’s higher-education or building a retirement nest-egg. We’re excited about incorporating more data points into the investment advice process so investments are catered to households as well as individuals’ investment needs."