Moneyfarm is a digital wealth manager that aims to make personal investing simple and accessible. It was launched initially in Italy in 2012 by Italian bankers Paolo Galvani and Giovanni Dapra and entered the UK in 2016 and has big-name financial backers such as Allianz Global Investors, Cabot Square Capital, United Ventures and Poste Italiane.
In this review we:
- Give our ratings based on their nearest peers
- Tell you what we think of them after testing them with real money
- Highlight the key costs, facts and figures of their accounts
Research & Analysis
Moneyfarm would rather be known as a digital wealth manager rather than a robo-advisor. Fair enough really, as the portfolios are put together by investment managers, rather than automatically. The automation, as it where, is fine-tuning your portfolio to match your risk/reward choices.
- Easy to use
- Low fees
- Diverse portfolios
- High minimum investment
Moneyfarm Expert Review
Moneyfarm has built an investor base of 50,000 users who have invested more than £1 billion through its platform, making it one of the largest digital wealth managers in Europe.
Investors complete a questionnaire and choose a risk strategy based on their response, letting Moneyfarm build and manage a portfolio of exchange traded funds in a stocks and shares ISA, pension or general investment account.
Moneyfarm offers three products, a stocks and shares ISA, a pension and a general investment account.
You can invest up to £20,000 of your ISA allowance into a Moneyfarm stocks and shares ISA each month or make transfers from other products within the tax wrapper.
Retirement savers can transfer or start a new pension with Moneyfarm or you can have a general investment account.
Investing with Moneyfarm
Before investing in any products, users must discover their investor profile. You do this by completing a questionnaire that assesses your attitude to risk and allocates the most suitable model portfolio based on the responses.
Investors can sign up to Moneyfarm either on its website or through its iPhone or Android app.
Whether you use the web or the app, you will need to sign up with your email and create a password. Once signed in, you will need to create your investor profile by answering questions covering issues such as your income, your reason for investing and your attitude to and understanding of risk, especially when it comes to ETFs. It will also explore your investing experience and capacity for loss.
Moneyfarm will allocate you an investor profile and portfolio based on your responses. These range from 1 for lower risk to 7 for the highest risk product. You can then either book an appointment to speak with an investment consultant on the phone or choose a stocks and shares, general investment or pension account yourself.
Funds can be added to your account either through the website or the smartphone app and both will let you view portfolio information, monitor performance, add new products and make withdrawals. You can also forecast what your returns may be in the future based on your level of investment and risk profile.
The website and the app have the same features. The only difference is that you can’t access Moneyfarm’s investing guides through the app, although it does feature its blogs, some of which could contain useful guidance.
Moneyfarm Charges and Fees
The more you invest with Moneyfarm, the lower the charges.
The fee structure is the same for all three of its products.
Investors pay 0.75% on the first £10,000, 0.6% on the next £10,000 to £50,000, 0.5% on the next £50,000 to £100,000 and 0.35% on anything above £100,000.
For example, if you invested £210,000 with Moneyfarm, you would pay 0.75% up to £10,000, 0.6% on the next £40,000. 0.5% on the next £50,000 and 0.35% on the remaining £110,000.
There are also fund fees for the ETFs that are 0.20% on average.
Moneyfarm General Investment Account
Moneyfarm’s General Investment Account lets you choose a risk rated portfolio and invest as much as you like.
This could be a useful account for if you have maximised your ISA and pension allowances.
Unlike a pension, there are no restrictions on withdrawals plus you could set up different portfolios for separate goals all with different risk levels.
The minimum investment is £1,500 but Moneyfarm suggests starting with £2,500 as this helps diversify your funds better. The platform also recommends setting up a monthly direct debit of at least £100 if you are starting with an investment below £5,000.
The fees for a general investment account, ISA and pension are all the same. It all depends how much you invest.
There is a calculator on the Moneyfarm website that will tell you the cost of investing based on how much you are willing to commit.
A £10,000 investment would have a 0.75% management fee plus you would need to pay a 0.20% fund fee and there is a charge of up to 0.09% to reflect the market spread, which is the different between the selling and buying price. This would give you an annual fee of £1.04% or £8.67 per month.
Transferring ISAs to Moneyfarm
You can transfer both a cash ISA and stocks and shares ISA to Moneyfarm.
It won’t charge you to transfer money in or out, however there may be a fee to exit your old platform.
You can transfer as many ISAs as you want and it can take up to 30 days so make sure you start the process in good time before the end of the tax yaer.
Moneyfarm is regulated by the Financial Conduct Authority as a digital wealth manager, also known as a robo-adviser.
This gives it permissions to advise, arrange and manage investments.
Unlike a traditional financial adviser, everything is managed online or you can speak with its investment consultants on the phone.
Its main competitors are other robo-advisers such as Nutmeg, Wealthsimple and Wealthify (read our Wealthify review).
All offer risk-adjusted low-cost managed portfolios of ETFs or passive funds.
Moneyfarm versus Nutmeg
Nutmeg launched in the UK in 2011 to give investors a low-cost alternative to wealth management.
It has been around for longer than Moneyfarm so has built up a larger client base of more than 80,000 investors and has more than £2 billion of assets under management in the UK.
Both platforms have a similar approach, providing risk-rated portfolios of ETFs that are regularly monitored and rebalanced.
However, the initial setup is slightly different.
Nutmeg doesn’t have a risk questionnaire but asks investors about their goals and investment timeframes and they can then choose from one of 10 model portfolios that get riskier as you go up by each the number.
Like Moneyfarm, Nutmeg offers a stocks and shares ISA, a general investment account and a pension.
It also offers a Lifetime ISA and a Junior ISA, which you can’t currently get with Moneyfarm.
There is more portfolio choice with Nutmeg. Investors can choose from fully managed, smart alpha, fixed allocation and socially responsible portfolios.
These are regularly monitored and rebalanced if necessary, by Nutmeg’s investment team but there are no investment consultants to chat through your strategy with on the phone, which you do get with Moneyfarm.
Nutmeg’s fees are 0.75% up to £100,000 and 0.35% beyond on its fully managed, smart alpha and socially responsible portfolios.
The fee for its fixed allocation portfolios are lower at 0.45% up to £100,000 and 0.25% beyond as they are only checked once a year.
There are also fund costs, starting at 0.14% on average for the smart alpha portfolio, 0.19% for its fully managed and fixed allocation products and 0.32% for socially responsible portfolios.
Nutmeg also charges a spread of 0.05% on average.
In contrast, Moneyfarm charges 0.75% on the first £10,000, 0.6% on the next £10,000 to £50,000, 0.5% on the next £50,000 to £100,000 and 0.35% on anything above £100,000.
There are also fund fees for the ETFs that are 0.20% on average and a typical market spread of 0.09%.
The price difference would depend on the level of investment and underlying fund fees but £10,000 invested in Nutmeg’s fully managed portfolios, which are more similar to Moneyfarm’s offering, would cost £100.
This compares with £104 using Moneyfarm’s portfolios.
The annual cost of Nutmeg’s fixed allocation portfolios would be cheaper at £69 per year, while its socially responsible portfolios would cost £112 a year.
Both have similar features, letting you transfer old ISAs or pensions, monitor and forecast performance and keep track of everything either on a website or through an app.
Nutmeg’s minimum investment is lower than Moneyfarm at £100 for its Lifetime ISA, £500 for the ISA or general investment pot and £500 for its pension.
Users of both platforms get regular research plus portfolio updates and economic outlooks.
Nutmeg offers more portfolio choice but Moneyfarm’s products may end up more tailored to an investor’s needs as it has a risk questionnaire and investment consultants who can help choose the most suitable strategy.
Moneyfarm versus Wealthsimple
Wealthsimple first started in Canada and launched in the UK in 2017, making it a relative newcomer.
More than 1.5 million people use Wealthsimple globally and it manages more than £5 billion on behalf of investors.
Like Moneyfarm, you can open a stocks and shares ISA, a pension or general investment account.
Its approach is more similar to Nutmeg than Moneyfarm.
Users first answer questions about their financial goals and a portfolio of low cost tracker funds is suggested
Wealthsimple also offers a Junior ISA.
It doesn’t have a minimum investment, unlike its rivals but the level of service and pricing differs depending how much you invest.
Investors depositing up to £100,000 pay a 0.7% fee. They get a matched portfolio, access to investment advice and automatic rebalancing.
If you invest more than £100,000, the fee drops to 0.5% and you get investment planning support.
Those depositing more than £500,000 pay the 0.5% fees but get a dedicated investment adviser and ongoing portfolio monitoring.
Once you get passed £100,000, Moneyfarm may be cheaper depending on the underlying fund fees.
It charges 0.75% on the first £10,000, 0.6% on the next £10,000 to £50,000 and 0.5% on the next £50,000, compared with 0.7% by Wealthsimple.
The Moneyfarm fee above £100,000 is 0.35%, which is lower than the 0.5% that Wealthsimple charges.
There are also fund fees for Moneyfarm’s ETFs that are 0.20% on average and a typical market spread of 0.09%.
Typical fund charges are 0.2%.
Wealthsimple will even pay your transfer fees on more than £5,000 that you move to the platform if another charges you for exiting.
Investors have a choice between conservative, balanced and growth portfolios.
There are three portfolio options within each category that get more risky by adding more equities.
For example, its conservative portfolio has a 15% to 35% equity allocation and its growth portfolio is between 80% and 100%.
It also offers a socially responsible investment portfolio with the same fees but higher fund charges ranging from 0.22% to 0.32%.
Wealthsimple provides more choice than Moneyfarm but you have to invest more to get dedicated investment guidance and there is no risk questionnaire.
Moneyfarm v Wealthify
UK-based robo-wealth manager Wealthify was launched in Cardiff in 2014 and received financial backing from insurer Aviva in October 2017.
It is now a wholly owned subsidiary of Aviva but operates independently.
Similar to Moneyfarm, it offers risk-rated portfolios of ETFs and passive funds that are regularly monitored.
Investors can open a general investment account, ISA and pension and do both ISA and pension transfers, which is the same choice as on Moneyfarm.
However, Wealthify also offers an ethical investment account and a Junior ISA.
Wealthify offers a simple fee structure compared with Moneyfarm of 0.60% regardless of how much is invested.
Its average fund fees are 0.16% or 0.56% for its ethical investments.
Wealthify’s approach is more similar to Nutmeg and Wealthsimple.
Unlike Moneyfarm, there is no investment quiz and you have to set your own risk level to choose one of its 10 portfolios.
Wealthify has a low minimum investment of just £1, compared with £1,500 with Moneyfarm, but you need £50 to start its Sipp.
However, it doesn’t offer financial advice, which Moneyfarm can provide
Moneyfarm and Allianz
Moneyfarm has financial backing from Allianz, which is one of the largest insurance companies in the world.
It has also received funding from Posteitaliane, Cabot Square Capital and United Ventures.
Such high-profile support is important as it helps the company grow and ensures they have sufficient capital to keep operating, which is also a regulatory requirement.