Investec today announced its decision to close its online discretionary investment management business, Click and Invest, following two years of losses; the company’s annual results revealed that its robo arm lost £12.8m in the year to the end of March 2019, having lost £13.5m in the previous year.
Combined with a write-down of £6m on the capitalised value of its software development, total losses for Click and Invest top £30m in two years; in announcing the closure, the company said it will seek to use Click and Invest’s technology in other parts of the business.
Chief Executive, Jane Warren, has written to clients announcing that the platform would be immediately closed to new business and that the company would begin the process of moving existing investments elsewhere over the next 90 days.
All management fees have been suspended and clients will be offered to sell their investments or transfer them to another provider without charge.
The company’s statement read: ‘Investec Click & Invest launched just under two years ago, and we are extremely proud of the service we have provided and the consistently positive feedback we have received from clients.
‘However, the reality has been that the appetite for investment services such as ours remains low and the market itself is growing at a much slower rate than expected.
‘We fully appreciate that this announcement will be of real sadness to both clients and staff of Investec Click & Invest.
‘Our prime concerns from this point are to minimise disruption for clients and ensure that employees are treated with respect and fairness.’
the appetite for investment services such as ours remains low and the market itself is growing at a much slower rate than expected
The demise of Click & Invest follows hard on the heels of UBS’ Smart Wealth proposition and seems to further evidence the potentially ruinous cost of client acquisition.
Unlike many of the start ups that are focussed on ‘democratising investment’ with low minimum investments and low cost baskets of ETF, both Investec and UBS positioned themselves as lower cost alternatives to their respective premium wealth management and private banking operations.
Neither scrimped on marketing with very high-profile advertising, marketing and sponsorship campaigns aimed squarely at the consumer; Click & Invest reduced its minimum investment from £10,000 to £2500 in order to bolster its mass-market appeal, but apparently to no avail.
The fact that the company’s losses are in the ball park of those posted by robo trailblazer Nutmeg will no doubt concern those that have existential concerns about the fledgling sector.
However, there is apparently no shortage of investors willing to back the start-ups with InvestEngine having launched this week, and Wombat waiting in the wings; would that we’d had the foresight to TM a clutch of quirky names and nabbed the URLs a while ago.
A look at the returns achieved by early investors in Uber may explain the willingness for punters to give it a crack – post IPO, Mike Walsh has seen his $5k ‘tickle’ turn into just short of $25m; he’ll probably rue the fact that he wasn’t ballsy enough to match Garett Camp who has just seen his $220k swell to a mind-boggling $1.1bn.
will no doubt concern those that have existential concerns about the fledgling sector
However, it’s not just speculators, some very high profile investors have been lured in – Charles Dunstone and Nigel Wray both backed Nutmeg – and Goldman Sachs is increasingly active in the space.
However, as yet none has really cracked it when it comes down to client recruitment and if, as is widely reported, the robos require £10bn AUM to turn a profit, there is a very long way to go; Nutmeg is leading the charge and has just gone past the £1.5bn mark.
The smart money seems to be on those that can deliver B2B propositions and thereby access very large numbers of customers without losing their shirts; banks and institutions are conspicuously engaged, but etailers and tech companies with access to big data may be drooling at the prospect.
It is likely that some firms will be incorporated into bigger, traditional, providers who wish to access their technology; an example is that of Aviva acquiring a majority stake in Wealthify in October 2017.
If it intends to redeploy Click & Invest technology elsewhere in the business, Investec certainly qualifies as a bigger, traditional provider; its total assets under management in its wealth and investment currently stands at £55.1bn albeit a 1.7% year on year decrease attributed to adverse market and currency movements.
Investec also reconfirmed its intention to float the UK asset management business on the stock exchange and demerge it from the rest of the Investec group in the second half of this year.
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