Wealthsimple will no longer provide investment services in the UK as it looks to shift focus to its Canadian business.
This comes four and a half years after the company launched in the UK.
In addition, digital wealth manager Moneyfarm will buy Wealthsimple’s UK business book. Wealthsimple will transfer its 16,000 existing UK-based customers to Moneyfarm by the end of January 2022 and will no longer provide advisory services.
Deal adds £272m in assets under management to Moneyfarm, helping accelerate the growth of the company.
Wealthsimple sent a letter on 6 December to its customers to let them know if their account is eligible for the transfer. If so, they will still pay the same fees they paid at Wealthsimple or Moneyfarm’s fee for an account of their size – whichever is lower.
If customers’ accounts are not eligible for the transfer, they “will need to withdraw or transfer your account based on the account type”.
There will be no associated fees or charges for the transfer of investors’ accounts to Moneyfarm. The transfer of eligible Wealthsimple accounts is expected to take place on or around 28 January 2022.
As of 6 December, the Wealthsimple mobile app is no longer accessible but customers will have full access to their account from a phone or computer using a web browser.
Wealthsimple said in a statement on its website: “This decision was a result of a shift in focus to our Canadian business for the time being. We have valued you as a client over the years and enjoyed being your trusted investment adviser.
“However, we are confident that your investments will continue to be in good hands with Moneyfarm. Our first priority in making this decision has been to find the right partner to support our clients on their continued investment journey.
“That is why we chose Moneyfarm, a leading European digital wealth manager, who share our mission of making investing human, simple, and low-cost.”
Giovanni Dapra, Moneyfarm co-founder and chief executive, added: “This is exciting news for us and will have a significant impact on our business, not only from the point of view of growing our customer base and assets under management, but it is also clear evidence of our commitment to the UK market.
“We have a lot in common with Wealthsimple UK as both firms provide a simple, cost effective and transparent service. We are confident that customers who migrate to Moneyfarm will find our service the best on the market and an ideal solution for them.
“The vast majority of clients will be transferred over to Moneyfarm. Because we invest in non-fractional ETFs in our portfolios, however, we need a certain amount to be invested in order for us to be able to purchase enough ETFs to create a well-diversified portfolio.
“Unfortunately, below a certain threshold, there is no way for us to construct and balance a portfolio and we run the risk of a client having a portfolio which is inappropriate for their risk level. In those instances – which are few – we do not feel comfortable offering our service and therefore will opt not to.”
Adam Walkom, co-founder at London-based Permanent Wealth Partners, said: “The difference between setting up an app-based investment service and full financial advice couldn’t be larger and the general public is clearly waking up to this. Finance can be scary and intimidating and people can and will make mistakes.
“That’s unfortunate, but there is no substitute for a real person to talk through your situation and help you. Yes, of course it costs more, but what price do you put on peace of mind and long-term wealth building?”
Rob Peters, director of Altrincham-based Simple Fast Mortgage, said: “The robo-advice market is currently saturated in the UK and competition for would-be investors’ business is fierce, so it’s no surprise to see Wealthsimple exiting the UK market. Unless you’ve got your full focus on the UK, it’s going to be hard to cut it, and I would expect Wealthsimple to be followed by others in the coming weeks and months, as the pecking order is more firmly established.”
Joshua Gerstler, financial planner at Borehamwood-based The Orchard Practice, added: “Some of these apps are a great way to get people started with investing, especially when they are only looking at small amounts and their affairs are relatively simple. However, there really is no substitute for face-to-face, highly qualified and regulated financial advice.
“Having your own financial planner, who really understands you, listens to what you say, and to the things you are not saying is priceless, and you cannot get that from an app.”