The rich and the march of the robots

Apr

2016

A new online wealth manager will help people reach their financial goals with the help of algorithms, not the actual management.

People who have lots of money but no time are usually searching the places to invest finances with the help of wealth managers. They meet and discuss the financial goals the person has, and the manager seeks suitable investment options. The whole asset worth achieved with the help of wealth managers is way over £565 billion only in the UK.

However, we need to move forward, and the development of technologies couldn’t avoid the wealth management sphere. Now there’s a possibility to get guidance for half the price and a couple of clicks. The system called Netwealth creates low-maintenance portfolios for its clients, based on the financial goals of every one of them. The co-founder of the project, Tom Salter, said that he has never had a strong option to choose as the charges were too high everywhere.

Netwealth is one of a rising number of companies using the internet to challenge what is seen as a predominantly old-school sector. We look at how it compares with other options.

How does Netwealth work?
You fill in an online questionnaire revealing why you’re investing and how much you need to make. It then uses algorithms to assess the level of risk you need to take for the time limit that you have. For instance, investing to make money for school fees in ten years’ time would require a cautious approach, because you do not have time to ride out the ups and downs of the stock market. The system will recognise that you require a higher proportion of steadier assets, such as gilts and bonds, in your portfolio. Alternatively, someone in their thirties investing for retirement can take greater risk by investing more in equities, which have historically outperformed fixed-income investments and cash in the long term.

The system builds a portfolio to fit your risk profile, with the assets picked by a central investment team. You invest a lump sum or drip-feed money each month into your “wrapper” of choice; this could be a general investment account, Isa, Junior Isa or self-invested personal pension.