Moneyfarm Review

Moneyfarm Review: Intelligent and Affordable Investing

For UK or Italian residents who are interested in using robo advisors to manage their investment portfolios, Moneyfarm is an option to consider.

Moneyfarm is one of the few robo advisors who combine the automated advancements of financial technology with a human touch. Financial consultants are available if required to help with the process of building a portfolio or answering specific questions related to a client’s individual needs.

Moneyfarm seeks to help investors meet their investment goals through the use of three specific actions: building a globally diversified portfolio, keeping fees and management costs as low as possible, and by automatic rebalancing of the portfolio to manage risk.

Here is a synopsis of Moneyfarm’s business before we get into more detail on their approach:

• Assets Under Management: Moneyfarm does not release its assets under management

• Minimum Deposit Amount: There is no minimum level of investment to open an account with Moneyfarm. Investors can start from £1 and top up as funds become available. They do suggest that clients invest at least £1500 in order to have an optimally balanced portfolio.

• Portfolio and Asset Allocation Details: Moneyfarm uses Modern Portfolio Theory and the efficient portfolio model to build portfolios for clients. They use exchange traded funds to create an investment portfolio that helps investors meet their objectives with the right balance of risk and potential reward.

• Fees: Moneyfarm’s pricing model uses a tiered pricing model, where the more clients invest, the lower the fee percentage becomes. Fees range from 0.70% to 0.40%, depending on how much is invested with them.

• Account Types Available: Moneyfarm has three account type options: General Investment Accounts (taxable), Stocks and Shares Individual Savings Account, and a Self Invested Personal Pension (SIPP).

Moneyfarm’s Minimum Deposit Requirements

Moneyfarm allows clients to sign up with no minimum initial deposit required. However, in order to fully utilise their services, and to get a portfolio that is diversified and balanced, they recommend that clients invest at least £1,500. At that investment level, clients will get a portfolio that balances the risk and more likely matches the investor’s profile.

Moneyfarm’s Portfolio and Asset Allocation Details

Moneyfarm’s portfolios are built to give investors the right amount of risk based on their investment profile. For example, if they are a very conservative investor with a short time frame to retirement, then the portfolio will be much more risk adverse than someone with twenty plus years to retirement and has a higher risk tolerance.

Portfolios are built using Modern Portfolio Theory, and can contain a number of different asset classes, all being delivered via low cost exchange traded funds. Portfolios can have up to fourteen funds spread across multiple assets including equities, bonds, and commodities that covering several geographical areas (UK, Europe, US, emerging markets, etc.), currencies (Pound, Dollar, etc.) and sectors (banking, healthcare, energy, etc.).

An example portfolio for someone with more than £50,000 invested and a very high-risk tolerance could look exactly like this portfolio, as presented on their investment overview page:

This portfolio is aggressively tilted towards equities, but is spread out globally to ensure that the investor is exposed to the global stock market as opposed to just their own home country.

Moneyfarm’s Fees and Additional Pricing

• 0.7% on anything up to £20,000 
  
• 0.6% on anything from £20,000 to £100,000 
  
• 0.5% on anything from £100,000 to £500,000 
  
• 0.4 on anything over £500,000
  

The impact of the lower fees compared to traditional wealth managers is significant, especially when portfolio values exceed £1,000,000. For many investors that may seem like a lot of money, however with the right investment strategy and low fees, it can happen quicker than you think. Here is a screenshot from a tool Moneyfarm has on their website to show the fee differences when compared to traditional brokers:

On a £1,000,000 investment, there is a savings of £1538.33 per month, which is money that can go towards building additional wealth rather than a broker’s pocket.

Moneyfarm’s Account Types Available

Moneyfarm has the standard account types available for U.K. investors:

• General Investment Accounts

• Individual Savings Accounts (ISA)

• Self Invested Pension Plans (SIPP)

Clients can have one of each of these accounts with Moneyfarm.

How to Get Started with Moneyfarm

To get started with Moneyfarm, potential clients can either call the company directly or sign-up online. With the online sign-up process, clients are taking through an online questionnaire that determines their investment goals, risk profile, and investment time horizon. That information is then used to build the right portfolio. It is pertinent to mention here that investing with Moneyfarm can't be an alternative to managed forex accounts. 

Once the account is funded, then Moneyfarm gets to work investing the money according to plan and the robo advisor monitors the asset allocation to ensure it remains balanced. This ensures that the risk profile for the portfolio remains consistent and the investor is not exposed to any additional risk they do not need or cannot handle.

The Bottom Line

Overall, for U.K. and Italian investors, Moneyfarm is a robo advisor that delivers a well researched portfolio at low cost that can help grow a retirement account to its maximum level.