BLOG: Wealthify joins platform revolution for millennial investors
In the recent Budget, the Government acknowledged the huge savings and pensions gap. People are living longer, which is creating a huge burden on the state and on corporations offering final salary pensions. Companies are now looking to reduce their pension liabilities by offering defined contribution schemes as an alternative. This will potentially leave savers with big shortfalls as the onus to provide income in retirement will fall on them.
At the same time, savers are demanding more for less. They want digitally enhanced services at low cost. This means access to their savings and investments on their phones and tablets and the ability to transfer money on the go. Consumers also want to self-invest, but have instant access to advice when they need it. On top of this they want transparency over the cost and performance of their portfolios.
They don’t just want this, they expect it. This is leading to new entrants in the fintech space and a move to passive investing in products such as exchange traded funds. As a firm helping to build infrastructure for a new breed of investment platforms, we are seeing exciting developments for young and inexperienced savers and investors.
One such service is ‘Wealthify’. It can be signed-up to in minutes, and offers both first-time and experienced investors easy-to-understand access to global stock market portfolios. Personal investment plans are aligned to an individual’s attitude to risk and monitored and managed every day. The process is paperless and without face-to-face meetings avoiding the cost and complexity associated with traditional investing services.
Opportunity to transform UK investment market
Wealthify was created by entrepreneurs, investment and technology experts, who saw an opportunity in the UK investment market. Using advances in digital technology to simplify the investment process, the firm has created an intuitive and accessible service for investors regardless of wealth or investment experience.
The new platform also tackles a number of issues for the investment world. The first is around asset reach. Unfortunately, despite the Retail Distribution Review (RDR), there still remains a bias to traditional investment funds. For example, passive or tracker vehicles, such as ETFs that offer cheap and easy access to global financial markets, have yet to catch fire.
The Wealthify platform combines passive investment strategies with proven theory, smart algorithms and a team of investment experts. This creates cost efficiencies that are passed onto customers through lower fees. There is a maximum fee of 0.7% per year, which reduces as customers invest more.
The second is around robo advice. A lot of investors fear entrusting their entire savings to robo advice, where a robot adviser obtains information and financial data to create and implement investment portfolios. Wealthify’s human oversight can assuage those who fear the robot investing revolution.
This new generation of investing platforms are also seeking to tap into the social media-driven world of millennials. Investors can earn further fee discounts by encouraging family and friends to start investing through Wealthify ‘Circles’ – a way to make investing more social. Wealthify is also a completely online service that can be accessed across a full-range of desktop, tablet and mobile devices.
Can social media encourage a better savings culture?
Circles is particularly interesting. Encouraging a better culture of saving is vital for millennials who will not be beneficiaries of gold-plated defined benefits. This is compounded by dismal household savings statistics.
ONS research shows that Britain has one of the poorest household saving ratios across Europe at 4.4. This is alarming when you consider France’s ratio is 15.89.
We are already seeing how social media can influence behaviour across a number of areas including charity-giving, exercise and restaurant discounting. Saving and investing incentives via social media is in its infancy but represents a golden opportunity to engage with millennials and positively influence their savings journeys.
In a post-RDR, digital world, the financial services industry has a unique opportunity to improve investor access and use education to foster a better savings culture. We are at the beginning of a saving and investing revolution for millennial investors.
Helen Oxley is head of business development at Winterflood Business Services