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Robo firms struggle to enter auto-enrolment market

Online wealth managers have struggled to enter the UK auto-enrolment market because of high costs and legislation and are now looking elsewhere for opportunities.

Moneyfarm chief financial officer Paolo Savini Nicci tells Money Marketing the firm has no plans to get involved in auto-enrolment, because of a “crowded” marketplace, relatively low account values and high costs.

Savini Nicci says: “The same can be said of corporate pensions. It is something dominated by the big asset managers and is not an area of focus for Moneyfarm.”

He adds: “What is important for individuals as they go through their career is to keep track of their pensions and associated costs. A lot of products that individuals receive through auto-enrolment can be more expensive than some Sipps, so transferring as you leave an employer could work well, both in terms of having everything in one place and the cost impact you’d see over time.”

Moneyfarm is expected to launch a Sipp on the Embark platform by the end of the year.

The Italian wealth manager has also recently partnered with Uber and will allow its partner-drivers to access pension and ISA products at a discounted price.

Scalable Capital co-founder Adam French says auto-enrolment legislation has made it difficult for robo-advisers to enter the market in the UK.

He says: “The [auto-enrolment] legislation wasn’t exactly written in a way that made it easy for new pension providers to get involved in that market and now everyone has partnered up with a pension provider. It doesn’t feel as if new decisions are going be made quickly in that space.

He adds: “But elsewhere in Europe they haven’t done [auto-enrolment] yet. It is not set in stone they are going to do it but given the pension landscape globally regarding pension gaps and the need to be saving more, it’s a good opportunity for us to make sure we share a better legislation for our clients and it is not just about the old asset management companies getting involved.”

French also hints at the upcoming cross-boarder Pan-European Personal Pension Product as “another huge opportunity” outside the UK for the generation of digital wealth managers.

The Pepp, which will be portable across EU member states, was unveiled by the European Commission in June and proposals are currently being discussed in the European Parliament and Council.

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