A reader asks: Hi. InvestEngined’s ‘temporary’ block on new managed pensions is causing concern because it is has not been temporary at all, plus when you ask them to explain the situation they give the same generic boilerplate text they’ve been told to give for the past 6 months which does not adequately explain the delay at all.
Can you get to the bottom of the tue situation and give us the answers they they refuse to give us ordinary investors?
Many thanks,
Our response: It’s a real shame that InvestEngine have paused its managed ETF portfolio service, especially as I’ve been looking forward to reviewing it ever since I interviewed Andrew Prosser about it.
After your question, I did ask InvestEngine why they have paused it, and after a few unanswered emails, Adam Lees, Head of marketing, eventually told me:
“We expect the relaunch to be in the new year and are taking the time to get this right. Our priority product since their launch has been our DIY portfolios and subsequently our pension product, so most of our resource has been focused on these areas hence our recent launch of Hargreaves transfers with more providers to follow. We now service nearly £1.4bn across 120,000 DIY portfolios, 7x our Managed business. We appreciate the interest in our Managed portfolios but we want to make sure we get it right and provide the long-term investing platform that will serve users needs for many years ahead and rival our DIY proposition.”
I’m not overly surprised by this because InvestEngine has been on a massive customer grab at the moment. They have done well onboarding a huge amount of customers from Vanguard after they introduced fees for smaller accounts, as it’s now cheaper to own a small amount of Vanguard ETFs on InvestEngine rather than direct with Vanguard.
InvestEngine are also in the process of signing up lots of new customers from Hargreaves Lansdown, where it is quite expensive to buy and sell ETFs (currently £11.95 – £5.95 per trade).
However, it does seem odd that the managed account service has been paused for so long, particularly when it is one of the only ways InvestEngine makes money, which was something we also discussed when we interviewed InvestEngine.
As a start-up founded in 2019 InvestEngine seem to be following the growth first, profits second path.
Growing a customer base for free by adopting the freemium model then cross-selling a paid-for service is quite normal these days. But you do need to be mindful of it when choosing a long-term investing platform.
Whilst ETFs are held in nominee accounts and are segregated in the event of InvestEngine’s business failing, the inconvenience of moving to another platform would be a pain.
I hope InvestEngine succeeds in producing a good managed ETF portfolio service, but the danger with these is that they do very well in a bull market, but as with everything else, don’t look great when the market turns.
We have reported about this before after Andy Bell the founder or AJ Bell warned on unprofitable fintech investment platforms.
Richard is the founder of the Good Money Guide (formerly Good Broker Guide), one of the original investment comparison sites established in 2015. With a career spanning two decades as a broker, he brings extensive expertise and knowledge to the financial landscape.
Having worked as a broker at Investors Intelligence and a multi-asset derivatives broker at MF Global (Man Financial), Richard has acquired substantial experience in the industry. His career began as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson), following internships on the NYMEX oil trading floor in New York and London IPE in 2001 and 2000.
Richard’s contributions and expertise have been recognized by respected publications such as The Sunday Times, BusinessInsider, Yahoo Finance, BusinessNews.org.uk, Master Investor, Wealth Briefing, iNews, and The FT, among many others.
Under Richard’s leadership, the Good Money Guide has evolved into a valuable destination for comprehensive information and expert guidance, specialising in trading, investment, and currency exchange. His commitment to delivering high-quality insights has solidified the Good Money Guide’s standing as a well-respected resource for both customers and industry colleagues.
To contact Richard, please see his Invesdaq profile.
