Fund manager M&G has struck up a partnership with a leading digital wealth manager to create a product that will resonate with millennial and GenZ investors.
M&G partnering with Moneyfarm
M&G has partnered with Moneyfarm the pan European digital wealth manager, which was founded in Italy back in 2012, and launched in the UK four years later, thanks to venture capital backing from the likes of Allianz X, Cabot Square Capital and United Ventures.
In those nine years, Moneyfarm has amassed 80,000 clients and Assets Under Administration, or AUA, of £2.20 billion.
However, in common with many other digital and Robo advisors, Moneyfarm has yet to turn a profit and in its most recently published results, which cover the period to the end of December 2020, it reported a loss of £11.70 million.
What services will Moneyfarm provide for M&G?
MoneyFarm will help M&G to create a D2C or direct to consumer Robo advisor platform, under the banner of M&G Wealth, which provides personalised financial advice and offers a wide range of M&G and Prudential investment products, and funds, to both investment advisors and individual clients.
As part of this process, M&G has taken a minority stake in Moneyfarm, by participating in a £44.10 million funding round, which was also backed by existing shareholder Poste Italiane, with whom Moneyfarm already has a joint venture business.
The fundraising is said to value Moneyfarm at between £300 and £350 million and takes the total funding raised by the business, since 2012, to £139.0 million.
The M&G digital platform will initially be launched in the UK, but the deal between the two parties includes the option for M&G to explore the launch of similar services in Europe.
Why has M&G partnered with Moneyfarm?
M&G has struck the deal with Moneyfarm to stay competitive and to create a product that will appeal to younger investors and wealthy individuals.
A cohort who expect to be able to invest and manage their money online, through the use of modern technology and money management techniques.
This is just the latest deal in the space and the ink on M&G’s press release was scarcely dry before UBS announced that it was paying $1.40 billion (£1.03 billion) to acquire US Robo Advisor Wealthfront, which manages $27.0 for 470,000 clients in North America.
ABDN paid £1.50 billion for Interactive Investor at the end of last year and JP Morgan Asset Management spent a reported £700 million on digital wealth manager Nutmeg in June 2021.
It remains to be seen if these acquisitions and joint ventures will generate additional business, or whether they will just act as retention tools, for the parties involved.
For the moment, however, it seems that the larger, traditional, and dare one say, incumbent fund and wealth managers, don’t want to be left behind and they are happy to “ pay to play” in the growing online and D2C markets.