Robo-adviser removes charges for under-18s

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Discretionary fund manager ETFmatic has claimed to set “a new industry standard” by not charging any fees to customers under 18 on its new robo-advice platform.

The platform was launched in June in Europe and the UK and is available online and via a mobile app at 0.5 per cent annual fees.

However, from last week the firm has begun offering a Young Investor account which will not charge the “ridiculous fees” of other most traditional wealth managers, the firm says.

ETFmatic co-founder and chief executive Luis Rivera tells Money Marketing the decision to offer free charges for younger investors is “to make people understand investments.”

He says: “Our team averages 1.6 kids per employee, so ‘saving for your kids education’ has become a common example when we try to explain the impact of fees over long periods of time.

“Thanks to our platform we can manage additional accounts with very little overhead, and by committing not to charge for children’s accounts we reward our customers when they save on their behalf.”

The account needs to be opened by a parent or custodian with a minimum investment of £100 or €100, the same as other accounts on the platform.

Customers will pay the underlying ETF fees, typically around 0.1 or 0.2 per cent, but no fees will be charged to design and manage the portfolios until they turn 18.

Rivera says: “We feel our competitors are the funds that charge 2 per cent. People just want simple access to the market removing layers and layers of unnecessary intermediation.

“In terms of marketing, we’d rather offer a discount to the next generation to help them achieve their goals than advertise on the Tube.”