Just eighteen months after Muckle announced that robo advisor UBS SmartWealth was live in the UK – ‘Smartwealth digital investment platform live in the UK as UBS eyes new audience’ – it has been announced that it will no longer be open to new clients.
The platform sought to leverage UBS’ massive wealth management capability delivering regulated and real-time advice online, placing investors into pre-packaged portfolios based on a user’s financial situation and a series of questions on risk backed by behavioural economics.
Despite head of SmartWealth Shane William’s confident stance at teh Robo-investing 2017 conference, and bold claims of complete digitalisation of its proposition at the time many did not see this as a natural territory for UBS
Unlike some of the robo advisors that have set out to ‘democratise investing’ with minimum investments from just £1, with a minimum investment of £15,000 SmartWealth was designed to appeal to a ‘mass affluent’ audience, with investable assets of between £100,000 and £2m, thereby tucking in under its private bank.
Many questioned the wisdom of this relatively high threshold when most of the start ups were setting out to woo millennials and those new to investing.
SmartWealth did come with some unique features such as the ability to blend passives with smart beta ETFs and actively managed funds; whilst competitive, it would never have passed as ‘cheap’ – charging 0.25% management fee on funds less than £100,000 plus up to 0.9% for passive investments and 1.75% for active funds, although human help was on hand.
high cost of entry and ongoing charges that put it toward the top of the direct-to-consumer league table in terms of cost
The relatively high cost of entry and ongoing charges that put it toward the top of the direct-to-consumer league table in terms of cost are likely to have played a part in its recent decision.
SmartWealth was effectively established as a robo advisor within a bank and attracted much attention for its agility and speed to market; a claimed point of differentiation was that it used technology to ‘make better investment decisions rather than cut costs’.
Its plan was to establish its concept in the UK and then roll SmartWealth out to other countries.
However, a note posted recently on the Swiss bank’s website says that while existing clients can still log into the service, it would not be accepting any new customers.
A UBS spokeswoman said that after an assessment the decision was made to close to the service in the UK, saying that the company believes the ‘near-term potential’ of the business is limited.
She added: ‘We are pleased, however, to have entered into an agreement to sell the intellectual property relating to UBS SmartWealth to SigFig – a financial technology firm that we have an equity stake in and with whom we’ve been working for two years in the US.’
Robbie Constance of law firm DWF wrote on LinkedIn that ‘the next generation engagement play’ from UBS made good sense but this was ‘farewell’ for SmartWealth; Mr Williams’ profile announces him as Head of Client Technology at US quant house AQR.