UBS unplugs robo-advice due to ‘limited’ potential

UBS IS closing its robo-advice service – which touted access to the investment bank’s analytical resources – just over a year after it launched, due to the “limited” potential of the offering.

The online-only Smartwealth service offered automated investment advice to those with more than £15,000 to invest, targeting the mass affluent.

It has been closed to new clients with immediate effect, and existing

‘Not many people will have woken up with £15,000 they had been saving until a robo-adviser came along’

clients will be refunded. This could lead to them being shunted out of the market despite having recently invested, although it is understood they will have 60 days to find an alternative.

The newly formed robo-advice sector has proved notoriously tough, with even the longest-running services struggling to turn a profit. Nutmeg, which targets the lower end of the market, is making huge losses despite having gathered more than £1bn in assets.

It is not known how many customers, or what level of assets, Smartwealth had gathered. A spokesman for UBS said while it was “satisfied with the initial commercial progress” of Smartwealth, it believes the “near-term potential is limited”.

“[Closing the service] will allow us to invest further in other client-facing improvements,” they added.

Competitors to Smartwealth included Investec’s Click & Invest, which also targets the mass-affluent market, and a host of start-up robo-advisers.

The closure, which had the financial backing of an investment giant, raises questions about other robo-advisers.

Mark Polson, of consultancy the lang cat, said: “It’s an awfully tough place to make money.

“Investors are very well served by online investing facilities in Britain, and not many people will have woken up with £15,000 they had been saving until a robo-adviser such as this came along to help them.”

The intellectual property relating to the Smartwealth service is being sold to American financial technology firm Sigfig, to which a number of staff will transfer. UBS would not confirm whether there would be job losses.

Simon Rogerson, chief executive of specialist investment firm Octopus, said: “People don’t trust technology to diagnose their financial planning needs, and want human interaction.”