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Wealthify is democratising investing by making it effortless and affordable – so that everyone can access the higher returns that are possible by investing.
With most investment services customers have to pick their own investments. With Wealthify, customers simply tell us how much money they want to invest, their ambition for growth (appetite for risk) and Wealthify builds them a personal investment plan, containing a diversified mix of investments.
Our team of investment experts, with the help of some smart software algorithms, manage customers’ plans 24/7 and make all the investing decisions, to ensure that their money is working as hard as possible and delivering the best returns. Customers can top-up or withdraw money at any time, without notice or charge.
It’s a fully digital, beautifully designed service, available online, on mobile and on tablet. Sign-up in ten minutes, with no paperwork or face-to-face meetings at www.wealthify.com.
Wealthify's mission is to change 1 million savers into investors within a decade. Today, due to the complexity of investing and the knowledge and time required, the vast majority of savers do not invest. Wealthify aim to empower those savers to become investors and to enhance their wealth (i.e. Wealthify them) as a result.
With interest rates at historic lows, the options for a cash saver are terrible. Inflation is outpacing savings interest, meaning that the average saver is actually losing money in real terms. At the same time, global stock markets continue to deliver great performance, when considered over the longer-term. For example, the MSCI World Net Index returned an average 8.89% per annum over the past 5 years.
Wealthify also appeals to existing investors who are frustrated with the performance of their own DIY investing strategies. Some recognise that they don't have the expertise, but more often people realise that they don't have the time to monitor their investments and make prompt decisions.
Substantial accomplishments to date
Since founding the company and starting work in Mid-2014 we have:
• Built our own front and back-end systems from scratch, which automate the whole investment process end-to-end (no mean feat!).
• Applied for and received full regulatory approval from the FCA.
• Launched our service to the public on 6th April 2016.
• Acquired over 1000 customers.
• Delivered what is felt to be a great investment performance (although we’re prohibited from quoting performance figures here).
• Expanded our team to 11 full-time, bright, driven and successful individuals.
• Generated significant positive publicity and reviews, including coverage in Daily Telegraph, Financial Times, Daily Mirror, The Sun, CNBC, Share Radio. Google "Wealthify" to see more.
Wealthify charges customers a simple annual fee that covers everything. Fees start at 0.7%, reducing to 0.5% the more you invest. Fees are automatically deducted monthly (one twelfth of the annual fee) from customers’ plans.
Customers are typically investing between £250 and £50,000 with us.
On average, we expect to recover the cost of acquiring each customer from their first 3 years of fees. Thereafter we hope to make a 70% gross profit margin on the fees we earn from each customer.
Our business model is not about acquiring large amounts of money from customers in the first 2 years, it’s about acquiring large numbers of customers, irrespective of their investment amount. We aim to deliver those customers: great investment performance; great customer experience; and a greater confidence in investing. When we achieve that, we know that those customers will remain with us to invest more money – not least driven by the need to use their ISA allowance each year.
Use of proceeds
We will use the funds to continue the development of the proposition to offer additional products including Junior ISAs, Flexible ISAs, Joint Accounts and Self-Invested Pension Plans (SIPPs).
The funds will also be used to significantly expand our marketing activity so that we can accelerate our customer acquisition and build our brand awareness. See the “Reaching the market” section for details of how we will do this.
We will also consider expansion into overseas markets in our third year, but should we do so, we would require additional funding at that time.
Cash ISA Subscribers - Around 13M people a year invest in an ISA of which currently around 80% choose a Cash ISA as opposed to a Stocks and Shares ISA (aka Investment ISA). That's about 11M people a year who invest in a Cash ISA who are prospects for Wealthify, because they could be expecting more from their money.
Cash - £700bn is held in cash savings accounts in the UK earning tiny interest rates and we aim to convince consumers to invest a proportion of this cash with Wealthify.
Existing Investors - DIY investors who use an online trading platform, or who hold money in a Stocks and Shares ISA. We expect to persuade a small but increasing share of these customers to shift to Wealthify, driven by recognition that having a trusted third party make the decisions is better than DIY investing.
Characteristics of target market
This market has become known as "Robo-advice" or "Robo-investing". The term “Robo” reflects that fact that most services use a high degree of software and automation, but possibly also that most services prefer passive investment strategies, which can be managed using automation at low cost.
The concept of Robo-advice originated in the USA about eight years ago when services such as Wealthfront and Betterment were launched. These two companies now manage approximately $7 billion, and the US Robo market is now valued around $60bn. One study by A.T.Kearney predicts that money managed globally by Robo-advice services will rise to $2.2tn by 2020.
Although Wealthify falls under the Robo-advice heading, it offers its service on a non-advised basis. We make no recommendations to our customers and we do not offer them advice. This means that our business has a lower risk of mis-selling to customers and has lower operating costs, due to not needing to charge for customer-facing advisers.
The founders and team at Wealthify have considerable experience of digital marketing and we intend to leverage this expertise to bring to bear online marketing to acquire customers. The strategy includes use of SEO, PPC, social media, affiliation, email marketing & online display advertising.
In addition, the CEO has extensive business relationships with websites in the UK that already attract high volumes of financial services traffic. We seek to leverage these relationships to acquire high volumes of customers on favourable terms.
We have already conducted a successful public relations campaign since launch, gaining significant coverage in the national media. We intend to continue this successful approach and expect to gain increasing coverage in the personal finance sections of the mass-media in coming months and years, as Robo-advice becomes more well-known.
As trust in our brand and awareness of Robo-advice grows amongst consumers, the company will also consider above-the-line marketing strategies, so long as a low average cost of acquisition can be maintained.
Wealthify has a single, clear proposition which stands ahead of the competition, based on its simplicity and its focus on the mass-market. Competitors are mostly targeting affluent customers and fighting each other to win them.
There will be numerous new entrants to the Robo-advice sector. However, the market is large and expanding and we believe that the market will accommodate competition. The breadth of propositions and companies will drive the education and awareness required to support rapid expansion.
Wealthify has a number of USPs that will enable it to acquire and retain customers more effectively than competitors:
• The simplicity and ease-of-use we have delivered through the design of the proposition, and in particular its elegance on the mobile platform, positions us to lead the market.
• We offer the lowest minimum investment amount of £250 for a fully diversified investment plan.
• We have built in a social engagement mechanism, known as Wealthify Circles, which allows customers to introduce friends and acquaintances for a shared reduction in fees.
• Automation and Scalability: we have engineered our systems from day one to cope with mass-market volume. No paperwork or face-to-face meetings required.
We recognise that trust, reputation and performance will be paramount to our continued competitive success and we are working tirelessly to ensure success on all these fronts.
Our competition will consist of new entrants and incumbents. We believe that incumbents are not driven to push Robo-advice because it undermines existing revenue streams and they have a wide array of services amongst which their Robo-advice offering gets lost. The key opportunity for Robo-advice is the mass-market, expanding the market for investing. We believe the leader will be a single-purpose brand that establishes itself as the go-to name for British consumers.