Article on robo-advice & the connection to Monzo


#1

Hi all,

I’ve written an article attempting to demystify the world of robo-advice. There’s a bit in there about how Nutmeg and the like could be given a boost by Monzo’s marketplace. Getting people into the world of investing who hadn’t previously considered it.

Any comments gratefully received. I know a lot of people on here are real experts in all matters fintech!

Thanks,
Reuben


(James Wheatley) #2

@ralph Good article. Not something I have really thought about doing but gets me thinking, it could be a project for the new year.


#3

I think it’s dangerous - it’s expensive and offers nothing over a balanced fund like lifestrategy.

I’ll bang this drum again - every properly conducted study of investment performance shows that over 10 years, more than 80% of actively managed funds fail to beat the market. And your chance of picking the 20% is remote.

Management = reduced perfermance.

Follow Buffet’s advice and what his estate will do with his money for his family when he dies - stick it in the cheapest tracker you can find.


#4

I certainly take your point. Excessive charges and less than stellar performances have both been big problems for years.

That said, isn’t some knowledge required in order to pick the right tracker? For example, ploughing everything into a FTSE100 tracker carries risks as it’s all shares. LifeStrategy funds are great but if you buy direct from Vanguard you don’t get any help matching the funds to your circumstances/goals/age (beyond a risk rating). Intimidating to novices who don’t get the concept of investing risk.

If you go Hargreaves to get more help (or another platform) then the total cost for a LifeStrategy fund is 0.67% vs Nutmeg’s 0.94%. So we are not talking a huge gulf.

I am no particular cheerleader for robo-advisers but novice investors are the ones most likely to get themselves in trouble.


#5

I find the view that the capital will find the best return itself to be compelling. So how do you find where global capital is putting its money? You invest in a global tracker.

You balance that with minimum risk investments (bonds etc) according to your age/risk profile.

Done.

Then as you learn, you can throw a small proportion of your money away trying to beat the market.


(Splodf) #6

As a sidenote I’ve ran some tests in the last couple of months on Nutmeg and Wealthify. Both with medium and high risk (admittedly Wealthify is ethical) and Wealthify is far exceeding Nutmeg at the moment, even in turbulent times like ours.

Nutmeg is down 4 & 6% ( Med Vs High)
Wealthify up 1.6 & 2% (Med Vs High)