Wealthify Review

What is Wealthify?

Founded in 2014 Wealthify is a Cardiff-based robo-advisor. Robo-advisors keep costs down by using algorithms and automation to minimise human interaction in order to keep costs down for customers. Wealthify also invests your money in ETFs so that ongoing costs are kept to a minimum.

In 2017 Aviva began investing in Wealthify and in 2020 it completely took over the firm. However, Wealthify is still run as a company separate from the rest of the Aviva brand.

Wealthify offers all the investment products you would expect from a much larger firm including general investment accounts, Stocks and Shares ISAs, Junior ISAs, pensions and a range of ethical investments.

If you are considering investing via a robo-advisor you’ve probably heard of Wealthify. Here you can find out more about what Wealthify offers and how it compares to other robo-advisors.

Investing with Wealthify

When you invest with Wealthify first of all you choose what product you want to invest through. This could be a general account, an ISA or a pension.

You then tell them how much risk you want to take with your investments choosing from: Cautious, Tentative, Confident, Ambitious and Adventurous. An algorithm will then match your answers with a ready-made portfolio of investments that is best suited to you.

Your money will be spread across a range of assets including cash, shares, government bonds, property and corporate bonds.

After that the Wealthify investment team keeps an eye on your portfolio and will make adjustments to ensure it remains in line with your risk profile.

You can access your Wealthify account via a computer or the Wealthify app.

Wealthify Charges and Fees

You can open an account with as little as £1, unless it is a SIPP where you have to deposit at least £50.

Your fees are split in two. There is an annual management fee of 0.6% and then the costs of your investments. Because Wealthify invests largely in ETFs your investment costs are fairly low with an average of 0.16% for Wealthify’s original plans and 0.56% for an ethical portfolio. So, if you invest £20,000 in an original portfolio you can expect to pay around £12.67 a month in fees, opt for an ethical portfolio and the costs rise to £19.33 a month.

Wealthify’s fees compare favourably with its competitors. Nutmeg charges a management fee of 0.75%, falling to 0.35% if you invest more than £100,000. Wealthsimple charges 0.70% falling to 0.50% for portfolios worth more than £100,000. So, for smaller portfolios Wealthify’s 0.6% fee is attractive.

Wealthify's General Investment account

The Wealthify General Investment account is a simple option where you can deposit money and then invest it in your portfolio. You can open an account with as little as £1 and there is no maximum limit.

Open a General Investment Account and you can choose between an Original Plan or an Ethical Plan. You then choose your risk level, and your money is invested accordingly.

You’ll pay a 0.6% annual management fee and then an additional cost on top of that for your investments. This second cost is estimated at 0.16% for an original plan rising to 0.56% for ethical investments.

Wealthify Investment ISAs

Wealthify offers Investment ISAs so you can save your money tax efficiently. With an investment ISA you can deposit up to £20,000 a year – assuming you aren’t using up any of your ISA allowance elsewhere. Your investment can then grow free from income tax, dividend tax or capital gains tax.

You can also transfer an existing ISA into a Wealthify ISA.

The Wealthify Investment ISA works in much the same way as Wealthify’s General Investment Account. Once you’ve opened your account and deposited your money it can be invested in an original or ethical portfolio and you can choose how much risk you take with your investments. Wealthify will then choose your investments and monitor them for you.

Fees are the same as for the General Investment Account. You’ll pay a 0.6% annual management fee then investments costs averaging 0.16% on top of that, or 0.56% if you opt for an ethical portfolio.

Wealthify Junior ISA

Children aged up to 18 can have a Junior ISA. Much like the Stocks and Shares ISA mentioned above money held in a Junior ISA is protected from income tax, dividend tax and capital gains tax. The difference is the money cannot be access until the child turns 18 and the annual allowance is lower at £9,000 a year.

You can open a Junior ISA with Wealthify, but only if they don’t already have an investment Junior ISA elsewhere. Children can hold one cash Junior ISA and one investment Junior ISA at a time. If they already have an investment Junior ISA, you can transfer it to Wealthify.

The fees on the Wealthify Junior ISA are a 0.6% annual management charge and an average investment cost of 0.16% for an original plan rising to 0.56% for an ethical plan.

Wealthify Pensions

If you are wanting to save for retirement you can do that via a Wealthify Pension, also known as a Wealthify SIPP. This can be opened with as little as £50, or you can transfer an existing pension to Wealthify.

You will get tax relief automatically added to your Wealthify pension whenever you make a contribution. You get an automatic 25% top-up to reflect the basic rate of income tax that you have paid on that money.

As this is a SIPP rather than a workplace pension your employer can’t make contributions to it.

When you set up a Wealthify pension you’ll need to answer some questions about your expected retirement age, how much you plan to invest and what risk you are willing to take with your investments. Wealthify will then show you an estimate of how much your pension may be worth when you retire. You can fiddle with your investment style and amounts in order to see how it could affect your eventual pension pot.

You can then see a breakdown of how your money may be invested by asset, region and individual funds.

You’ll pay an annual management charge of 0.6% plus average investment costs of 0.14% or 0.55% if you opt for an ethical portfolio.

Wealthify Original Plans

Once you have decided what product you want the next thing is choosing what investments you want in it. You have a choice between the Wealthify Original Plan and Wealthify Ethical Investing.

With the Wealthify Original Plan your money will be invested in a range of funds. These funds contain a variety of assets including government bonds, shares, commodities and commercial property. By investing in this way your money is spread across different assets rather than focussed on one thing. This is called diversification and means you are spreading your risk as, if one asset was to fall substantially in value your losses would be reduced as you aren’t heavily invested in one thing.

The mix of assets in your Original Plan will depend on what risk level you have opted for. The more risk you are prepared to take the more of your money will be invested in more volatile assets. If you have opted for a low-risk portfolio you will have more money in fairly stable assets such as bonds.

Wealthify’s Original Plan has average annual costs of 0.16%. In contrast, Nutmeg – another robo-advisor – has average investment costs of 0.19% for its fully managed portfolio.

Wealthify Ethical Investing

With Wealthify Ethical Investing you can place your money with companies that have a positive impact on society and the environment. Ethical funds tend to avoid companies and sectors such as tobacco, gambling and weapons and firms that may contribute to deforestation or have unfair labour practices.

The Wealthify Ethical Investing plan uses mutual funds and exchange-traded funds (ETFs) to build a portfolio of shares and bonds that meet Wealthify’s ethical standards.

There are five different ethical portfolios to choose from depending on your attitude to risk. The cautious plan is largely invested in bonds while at the other end of the scale the majority of the adventurous plan is invested in shares.

The average investment cost for the Wealthify Ethical Investing plan is 0.56% per year. This is expensive when compared with Nutmeg’s Socially Responsible portfolio that has average investment costs of 0.32%.

Wealthify versus Nutmeg

Wealthify and Nutmeg are probably the two most well-known robo-advisors in the UK, so how do they compare?

When it comes to costs Wealthify and Nutmeg are pretty similar, although Nutmeg may work out cheaper for people with large amounts to invest.

Nutmeg charges an annual management charge of 0.75% for portfolios worth up to £100,000, then it falls to 0.35%. On top of that you’ll pay 0.14% to 0.32% for your investment costs depending on the plan you opt for.

In contrast, Wealthify’s management fee is 0.6% per year with fund fees of 0.16% to 0.56% depending on what you choose.

Both platforms offer general investment accounts, pensions, ISAs and Junior ISAs. The only difference is Nutmeg offers a Lifetime ISA as well as a stocks and shares ISA whereas Wealthify only offers the latter.

When it comes to help making investment decisions Nutmeg offers more research articles and has introduced a personalised financial advice service too. Wealthify is far more pared back with just a selection of guides on its blog.

If you want to compare their investment performance, then over five years Nutmeg’s mid-risk fully managed portfolio has returned 31.8%. In contrast, Wealthify’s most similar portfolio – its Confident Original returned 33.43% over the same period. But remember, past performance is no guarantee of what the future might bring.

Wealthify versus Wealthsimple

If you are comparing Wealthify versus Wealthsimple the place to start is with their product range. Both offer a standard investment account, a pension, a Junior ISA and a stocks and shares ISA.

As for the fees, Wealthsimple has the edge for people with larger portfolios. It charges a 0.7% annual management fee on portfolios worth up to £100,000 then it falls to 0.5%. On top of that you’ll pay average investment charges of 0.2% a year. Wealthify charges a 0.6% management fee on all portfolios regardless of value plus average annual investment charges of 0.16% or 0.56% if you opt for an ethical plan.

Wealthsimple and Wealthify offer similar levels of assistance to people with smaller portfolios. But if your account grows beyond £100,000 Wealthsimple will offer you a financial planning session with an advisor and if your portfolio is worth more than £500,000, you’ll get a dedicated financial advisor you can consult whenever you like.

Wealthify and Aviva

In October 2017 Aviva, one of the UK’s biggest insurance groups, bought a majority stake in Wealthify. Then in June 2020 Wealthify was brought into the Aviva group when the insurer bought the company in its entirety.

Wealthify is still run separately from Aviva but the fact it is owned by such an established company means it has secure funding and access to all of Aviva’s customer base. Both these factors are good news for the firm.

Wealthify Investment Performance

You can find performance data for Wealthify going back five years for every portfolio on their site but here is an overview.

Original Plan 2020 Performance

• Cautious – 2.70%
• Tentative – 3.88%
• Confident – 4.87%
• Ambitious – 5.12%
• Adventurous – 5.06%

Ethical Investing Plan 202 Performance

• Cautious – 4.14%
• Tentative – 6.45%
• Confident – 9.04%
• Ambitious – 11.16%
• Adventurous – 13.43%

Original Plan 2019 Performance

• Cautious – +6.36%
• Tentative – +9.29%
• Confident – +11.89%
• Ambitious – +14.33%
• Adventurous – +17.09%

Ethical Investing Plan 2019 Performance

• Cautious – +7.83%
• Tentative – +9.66%
• Confident – +11.73%
• Ambitious – +14.04%
• Adventurous – +16.63%

Andrew Russell, Wealthify CEO on the importance of compounding and investing as early as you can

Interview date: 1st October 2020

Andrew has recently taken over from the original co-founder and CEO Richard Theo, who stepped down after the acquisition of the robo-advisor by Aviva. I discuss with Andrew the challenges of switching savers to investors, helping people understand the importance of compounding and what he hopes to achieve whilst running Wealthify.

To see what others think of Wealthify you can read Weathify reviews here.

Andy, thanks for joining us. Why did you take the role of CEO at Wealthify? 

Thank you, Richard. When Aviva completed the purchase of Wealthify in June, the CEO position became available and I was asked to apply for the role by the team at Aviva where I’ve worked for the last 12 years.

I’ve spent my entire working life in retail banking and retail investments, and have worked in various leadership roles within Aviva for the last 12 years as well. From a career perspective, it was a natural fit and an exciting opportunity. I’m passionate about digital innovation and helping people and businesses grow, so coming into Wealthify sounded like a really good fit. 

I’ve not been disappointed at all, it’s been great fun so far. We had a good transition from Richard Theo, the founder and original CEO, to myself during the transaction. The team have been very welcoming and there’s a very common purpose that you feel throughout the business. There’s a lot of passion behind what they do as a team. We’re a small team who are very committed to helping people and enabling them to grow their money as well. That really comes through from when you meet the team, and it was great to walk into that. My job is to protect that culture and help it flourish.

How big is the Wealthify team now and where are you based?

There are 40 now, 35 when I joined a few months ago, so we’ve grown already. Our Head Office is in Cardiff but we’ve got a smattering of people dotted about. We’ve got someone in Edinburgh, a couple in Bristol, but the vast majority are Cardiff-based.

What do you hope to accomplish now that you’ve taken over the leadership of Wealthify? 

Ultimately, we’re looking to help and inspire anyone to build their future wealth. The word “anyone” is particularly important to our purpose. We’re a really inclusive bunch and genuinely want to help as many people as we can. Whether that be new investors looking to build their confidence, or savers that could be better served by moving some of their long-term savings into investments. 

We’ve been around since 2016 - we’ve built a really cool customer interface and we’ve got a really strong culture within the organisation with the drive to help people, so we get a lot of positive customer feedback as a result. With that kind of product offering and really good people-orientated culture, our purpose-driven strategy is aiming to help as many people as we can to build their future wealth.

Has it been a particular challenge for Wealthify to convert people to taking a bit more risk and invest instead of saving?

I think that’s not just a challenge for Wealthify, but for the industry as a whole. It’s very difficult for people to take that first step into investing. It’s an unknown, it’s a new concept that they’ve got to get their head around, but there’s a big societal need for it. Currently, with such low interest rates on savings products, people are walking past their own money really as they are missing out on that opportunity for greater fund growth. 

I don’t think it’s just a Wealthify thing; the investment industry in general needs to do more to educate and help people take that step out of saving accounts into investment.

Why should someone who’s looking to invest online in a pre-made online risk-based portfolio go with Wealthify, rather than one of your competitors?

It is a competitive marketplace, so it’s a very good question, and it’s growing so there’s more people to compete for. 

I think the niche that we’ve carved for ourselves as Wealthify has been accessibility and affordability. We have a very smooth, really easy to use customer journey, via app or via web. 

Five times more people use our app than the website; we see a lot of growth in mobile interaction for us as a company, and we get a lot of strong feedback from how smooth our customer journey is as a result. 

We’ve got a really strong culture within our tech development team. We can get feedback from our customers into our frontline dev team, and onto our app in no time at all, getting that direct flow through.

Affordability is an integral point, particularly given we’ve just talked about moving savers to investors. You can access our portfolios from as little as £1; lots of our peers don’t do that. We also have some of the lowest fees in the market, particularly for customers with smaller pots, again this is so we can help as many people as we can move from saving to investing. 

Having walked into the company only a few months ago, that culture within the team of wanting to help, really comes through in our customer feedback as well. We get a lot of strong customer advocacy around our level of automation and how easy we are to do business with, but then when people do make contact with us, we hear how easy those human interactions are and how well we look after them. As a result, our Trustpilot score is industry-leading due to our people-focused culture. 

Those three things, the affordability, accessibility and advocacy have really underpinned our success so far, and we’re looking to utilise them a lot more to continue our growth in the future.

I’m a massive fan of Starling Bank and other challenger banks like Monzo. You can open an account now in less than five minutes, and because of the adoption of open banking, they can tell you that they’ve received the money quicker than old school banks can tell you that the money’s left their account. That’s the new pace that we’re operating in, and the investment services that we provide need to be as good, if not better, than what the challenger banks have done.

That’s kind of the culture we have. That’s what we’re trying to create as a company. I think we’ve had a really good start to establish ourselves in that vein, and we want to do lots more to keep pushing that forwards.

Are you seeing a big shift in ESG and sustainable investments?

Yes, in short. In our Original investment portfolio we have a broad range of customers, with an average age in the low 30s, so we attract quite a lot of millennials. But we’re also seeing a big push towards our Ethical portfolios, with £1 out of every £4 of new AUM flowing into an Ethical investment plan.  Our ethical fund is growing a lot more than our original funds currently.

I think that’s because people expect more from their investment company. They want to know how their money is invested and they want to make sure that good is being done in the world with their investments.

There’s a surprising array of views on ethical investments as well. Some people just want to pass a bar and want to know that their money is used for good. Then there’s others that want more visibility of where their money’s invested to make sure that there is absolutely no chance that their money can be used for anything other than good. 

I love the types of questions we get here, such as, why are you investing in US government bonds? Are they truly ethical investments or not? I think that’s a great question to be asking the investment universe, and it’s not only helping to ensure that investment money is being used for good and helping the world, but it’s also then helping people change their investment thought process as well.

What we tend to see from our ethical customers is once they’ve passed the minimum returns bar, they’re less interested in the risk-return reward and more interested in how ethical their plan really is. That is something I think we can explore more going forward.

What’s the one bit of advice you could give to people to make them better investors?

I think it’s really important that everyone understands how quickly and how surprisingly money grows, through the power of compounding. 

Whether you’re getting a low return from your traditional savings accounts, such as your 0.01% interest rates, or whether you have a high annual management charge on your current investments account, you need to know these things can make a significant difference in how much your funds can grow over time. 

Those little amounts really add up over time and make a lot of difference for people, particularly those who don’t have much money to invest in the first place.

It’s important you don’t walk past that fact that this money’s yours. You wouldn’t walk past your money if you dropped it on the street. You wouldn’t go into a supermarket or clothes shopping and buy the exact same clothes for three times as much. People sometimes do that when investing because it feels somehow more intangible, it’s somehow therefore easier to accept a higher rate. 

But it’s not, it’s your money; you should look at how quickly that amount adds up. Understand the power of compounding and use it for your benefit.

Why do you think people haven’t quite grasped the concept of compounding yet?

I think we’re making good headways into it and the onset of robo-advisors is a good sign of that, and the industry and FCA are helping create scenarios where it’s easier for people to invest. 

But I also think we’ve relied too much historically on the easy answer that we just need to educate people. There are lots of educated people out there, financially savvy people, that still don’t make the decision to move from savings to investments when it might be right for them. It’s a bigger thing than just education. 

Accessibility is a big part of that. We need to make that switch as easy as possible to encourage people to move from savings to investments. Simple things, like offering ethical investments where you’re actually doing good can make a big difference. Wherever we can engage people in investments over savings, wherever we can educate, wherever we can make it accessible, all that needs to come together with the new technology that we’re developing as an industry to make it as smooth a transition as possible. 

When it’s easy and when we can start making clearer the power of compounding and the money that people are walking past, I think it’ll start having a ripple effect. 

As more people start talking about investing and power of compounding, it’ll start growing virally, encouraging more people to move from savings to investments. There’ll be a shift. And that’s when we need to make sure we’ve got the products there to help people to invest effectively.

Do you think people understand that there are risks involved in investing as well as the rewards?

I think that’s also probably a sensible reason why some people aren’t moving from savings to investments, because they correctly see risk, and then choose to say no, that’s not for me. 

However, it is not a yes/no decision for risk, but more of a risk-return appetite, and I think that’s a wider discussion we need to have.  We all take risks every day. You cross the road, you’re taking risks. It’s just that road crossing is a known risk, and I think getting people to accept risk exists in a savings or investment portfolio is probably step one, and then we work through whereabouts do you want to land on that risk return spectrum.

Do you think they should teach financial management and investing more in school?

Completely.  And if it doesn’t get introduced in schools, then we should look at how we can introduce it into things like gaming. You get all these awesome games now like Roblox and Minecraft that are ultimately about house building and construction, encouraging kids to develop things like solving logic problems. 

You can build some cool gamification to educate around the risk-return trade off, getting people used to making those types of decisions. There’s lots of good we can do, leveraging our digital advancements and capabilities. We just haven’t linked up enough yet as an industry, to help make a difference.

Another big thing is that we don’t talk about wealth enough as a nation, and it’s almost become a dirty word. Like it’s just reserved for rich people.

Looking after the health of your wealth should be important to everyone. Getting more people looking at how we can change our mind-sets to become more ‘wealthy’ in the future is very important. It’s not a dirty word; it’s not only for rich people. It’s how we’re going to be able to live our lives in the future, and I think just talking about it more will help. And the sooner we start talking about it, then we’ll start exploring as a society how we can actually do better in the future.

Excellent. Well thank you very much for your time. Are there any exciting updates that we’re going to see in the near future for Wealthify? Anything we should be keeping an eye out for?

Yes, lots. The main focus during the transition of ownership has been ensuring a smooth handover, which has all gone really well. Wealthify’s purpose is unchanged - we’re still here to help inspire anyone to build their future wealth by being accessible and affordable. So all those great principles that we’ve been built on are continuing. 

And now we’re looking at what more can we do to grow. We’ve got lots of ambition for how big and how quickly we want to grow, and so we’re working through our plans to facilitate that. In particular, we’re focused on helping as many savers to become investors as we can and building the confidence of newer investors. 

In the near term, we’ll be perfecting our current product sets and we’re currently working on open banking. We recognise that for quite a cool digital app that’s very instant, our payments are taking too long, so open banking will improve things like that. 

We want to make sure that our customer journey is as smooth and instant as possible, and then we can then start scaling on that seamless offering, opening us up to wider opportunities in the future.

Andrew Russell is CEO of robo-advisor Wealthify