A year after Its launch, Moneyfarm is beating a swift retreat from its German operations to concentrate on its existing UK and Italian businesses.
Just a year after its launch in Germany, MoneyFarm is shutting its operations there and concentrate on its existing UK and Italian operations. The news comes on the back of disappointing financial figures which have forced the company to tighten its belt.
Robo advisor MoneyFarm had high hopes when it expanded into Germany in 2019 and rolled out a new product for local customers in partnership with Allianz. A year later, it announced it had bought German robo adviser Vaamo.
However, such spending came at a price. It recently announced losses of £13million despite strong revenue growth over the past year. High investment in growth, as well as unspecified losses due to the pandemic, had weighed on performance.
Clients in Germany will now be handed to Fidelity as soon as an alternative offer has been put in place with the provider. The group’s FIL Fund Bank had already been working with MoneyFarm and continues to manage its customer accounts in Germany with the transition to Fidelity’s robo offer.
According to online wealth manager Moneyfarm the move is part of its process of “simplifying its business and operating model in order to take advantage of the increasing growth opportunities in the markets where critical mass has already been achieved (Italy and the UK) and to invest primarily in its European B2B business, also against the background of uncertain times.”
The firm added that “in close consultation with its shareholders, Moneyfarm therefore made the decision to withdraw from the German market.”
A spokesperson from Allianz a major shareholder Moneyfarm said it remains committed to Moneyfarm. “Allianz fully supports Moneyfarm’s decision. We continue to assess the prospects for Moneyfarm’s two core markets as positive.”
Before 2018 Allianz’s asset management subsidiary held a 10.4% stake. It has not revealed how much of the fund it now owns, but insists it has no plans to change its stake.
Despite the disappointing profits results, the robo adviser raised £26 million from backers including Italian insurance giant Poste Italiane and Allianz. It has passed the £1bn in assets under management mark and saw its assets nearly double in 2019. Despite headwinds from COVID-19, the firm still has good prospects for growth.