Wealthify Review: 2 Years’ GENUINE Experience

In this Wealthify review let me tell you about the first investing app I used and why I moved on from it. However, I still have an old ISA with Wealthify which has weathered both Brexit and Coronavirus with some interesting results.

I first joined Wealthify after seeing lots of advertising on London’s transport network. I had finished university and had started my first graduate job. As I’ve been a ruthless saver throughout my life I knew my funds were going to grow quickly – for the simple reason that I make sure my monthly expenses are below my income. Thankfully I had worked through my degree and was debt free.

I had no intention of falling into “lifestyle creep” and letting those expenses climb just because I was no employed on a small salary and fully intended to build up a nest egg as soon as possible to give me more choices in the future.

On the tube both Wealthify and Nutmeg dominated financial advertising and hit home with a very Milennial vibe. I can’t say for sure what made me go for Wealthify rather than Nutmeg – I think I just prefered the blue.

Your Questions Answered

Is Wealthify any good?

If you want to put away your spare cash each month and have it invested for you in a manager that fits your risk preferences, then Wealthify is very good. It’s not so good if you want to have more control over your investments.

Is Wealthify a good investment?

Wealthify isn’t an investment in itself but instead chooses investments for you. In general Wealthify is very good at managing risks and returns. That means you probably won’t make big gains with Wealthify but should grow at a rate roughly equal to the market and at least beat inflation hopefully.

Is it a good time to invest in the stock market?

Only you can decide if investing is right for your situation. However many people do put off investing because they read the news about economic problems. I have been investing throughout Brexit and Coronavirus, just as I have also bought stocks when they are at all time highs.

Over the long term the market goes up at a fairly constant rate even if you include episodes of boom and bust, while cash devalues over time thanks to inflation. High markets do tend to crash but crashes typically recover fairly quickly.

That means that in a lot of cases there is no ideal time to invest in the stock market but if you stay invested for the long term it is likely you will make money.

Wealthify Review

ISA or GIA?

The first page when you start is a choice of account types – Stocks and Shares ISA, General Investment Account, Junior ISA and Self Invested Personal Pension. They follow a classic ecommerce trick of putting their most valuable product on the left of the screen so you feel more inclined to go for the ISA than the GIA.

Stocks and Shares ISAs are a very competitive market because they offer renewing business to the broker. A GIA you don’t have to commit to and can play around with while you can only have one Stocks and Shares ISA each tax year and most people aim to use up as much of their £20,000 tax free allowance as possible.

ISAs are therefore a fantastic product for brokers as they therefore have committed customers trying to invest large amounts of money to fill the tax wrapper. At the end of the tax year you can choose to transfer your ISA but in reality most people won’t bother. So for Wealthify an ISA signup means a potentially higher value account that will probably stay with them year after year.

There’s nothing wrong with this placement and it is logical from a business standpoint, but it is probably a good idea for customers to start with a General Investment Account with any broker before committing money. Remember you can only open one stocks and shares ISA each year, so make sure you choose well for your investment.

Of course if you are going for the Junior ISA the same rule applies – you may want to try other brokers for your money first. But a robo-advisor like Wealthify could be a good solution for a Junior ISA because it has such a low minimum investment, low fees and doesn’t require much monitoring.

Wealthify Performance Calculator

When you sign up there is a very satisfying calculator that takes you through the basic Wealthify performance estimates. In other words, tell it how much you plan to invest and on what risk level and it will give you a range of likely outcomes.

This is purely academic as Wealthify correctly makes it clear that there is no guarantee of returns with any investment and predicting them is very difficult. But what I really like about the Wealthify performance tool is it shows very clearly and simply what may happen if markets perform well, if they perform worse and – the most likely scenario – and average in the middle.

You can click through the five different risk levels and easily see the losses and gains of a potential investment amplified with each higher level of risk. This also clearly demonstrates the compounding effect of long term investing as you can set the duration your investment is held and see the money grow significantly with time.

Once you’re in you can set up a direct debit so money enters your account regularly. In general it is a good idea to commit to investing a regular amount of money but make sure you are able to fulfil the investment amount every month. If you forget about it then you could easily end up incurring overdraft fees.

Also don’t be concerned if you see “Winterflood” taking money from your bank – this confused me for a bit but represents Winterflood Securities which are part of Wealthify.

Once you’re in you will be presented with Wealthify’s beautiful performance panel. Both on desktop and in the app, Wealthify is beautiful. The only issue is there really isn’t much to do with it.

The whole point a robo advisor like Wealthify is it is passive and does the investment work for you. At first your holding once transfered will all be in cash, which is boring. But come back in a few days and you should start to see transactions appearing. Robo-advisers work by taking your investment and splitting it across a broad range of investments based on your risk level.

Don’t assume Wealthify is working to some set formula. They have experienced portfolio managers at the top level who make tweaks that affect every investment plan. At times of significant volatility I get an email from Wealthify telling me they have made changes to mitigate some of the downside risk.

Why I Moved On

I joined Wealthify with a few hundred pounds in my ISA and didn’t have the funds to put more in before the tax year ended. Not long after I came into some money and had to decide how to invest it. Now here’s something most Wealthify reviews won’t tell you…

I didn’t continue with Wealthify for a simple reason and the same reason I no longer use any robo advisor.

Wealthify is an excellent tool for passive investing. If you don’t want to deal with managing your portfolio yourself and don’t want to go through a traditional wealth manager (who normally require high minimum portfolio values) and just want a piggy bank that invests for you, Wealthify is excellent.

But for me I wanted more control of my investments. I’m not alone at all in being part of a large community of young people who are actively interested in finance and investing and want the experience of picking individual stocks and seeing how they perform.

Even on the most ambitious risk level, with Wealthify and most robo advisors your investment is still split across some highly-diversified ETFs. That’s great for weathering storms and helping you sleep at night. But even knowing what I know now after more than two years of active investing, I look at my portfolio and see it is still what I would call low risk.

Wealthify spreads you across ETFs covering a range of stocks, bonds, property and cash. The more aggressive portfolios are simply weighted more towards the riskier assets like stocks. For the purposes of this review I would say that’s a good thing as most new investors are rightly concerned about safety.

So for my new investment ISA I went with Freetrade (review) – because I love the experience of actively learning about companies and putting money behind my intuition. For instance, during the Coronavirus pandemic I had thankfully cashed in a lot of my stocks on Freetrade. When the markets fell I was able to buy in and make a significant return as they recovered in a short time frame. On the other hand, Wealthify de-risked my account. So I didn’t lose much but also didn’t gain much – which again is exactly what you want for hands-free investing.

It’s high risk and – unlike Wealthify – takes a lot of time but for me it’s something I genuinely love. But then I did start this investment blog. and so my review is certainly not representative of non-finance geeks.

If you want to set and forget your finances Wealthify is great. The Junior ISA is a perfect example of an account where you want to invest money for the long term and have the risk managed for you (once you have set your preference)

Customer Support

One of the great things about Wealthify is while they are owned by Aviva they still very much resemble a small startup – small meaning friendly rather than overstretched and so their customer service is great.

At one point the team reached out for a PR request to hear customers’ Wealthify reviews. When I contacted Wealthify customer support separately some months later they still remembered me. Queries are answered very quickly and there’s a constant live chat feature.

The live chat also makes it clear that Wealthify does not give financial advice. This is a regulatory issue common in lots of financial services so don’t expect any guidance on the right investment strategy for you, or any other investing questions that could be regarded as financial advice.

If you have looked into many fintech apps you’ll have probably found them mostly based around Old Street – Silicon Roundabout – but Wealthify are actually based in Cardiff.

Wealthify Performance

Be very careful when searching for reviews of investment apps, funds and tools and looking at returns, especially if it is framed as financial advice. Even professional fund managers struggle to beat the market consistently and robo-advisors are unlikely to be different.

Yes, Wealthify does publish regular updates on the average performance of its accounts which may help when comparing robo advisors. However, that is only a snapshot and while it is likely the upside and downside risk will be monitored closely the actual returns can still vary considerably from year to year, despite what Wealthify reviews may say.

I have said before that I want to invest actively and hands-on with a fair amount of risk but a chance of higher returns and losses.

Therefore it is interesting when I look back at my investment plan in my investment ISA from when I first started using Wealthify. This is my ISA which used the “Confident” level of three out of five.

At the time of publication I have made 10.4% over the period from October 2018 to July 2020. That’s about 20 months, so roughly two and a half years. A very rough guess puts Wealthify’s performance at about 6% per year.

That’s actually better than I was expecting for a medium risk setting. Now let’s not forget that at the time of writing we are emerging from one of the worst economic crashes in history due to the Coronavirus pandemic. Most of the dip has recovered, but its fair to say that Wealthify ensured my dip was not as deep as it could have been had I been invested in riskier assets.

Wealthify fees

In general robo advisors tend to have very reasonable fees. That’s because they don’t take much management compared to a single wealth advisor monitoring your portfolio. They also tend to occupy the lower end of the market and so have low minimum account balances.

Nevertheless they do still charge a small management fee. Then there are individual transaction fees when assets in your portfolio are bought and sold. Finally because robo advisors tend to rely on Exchange Traded Funds these funds themselves have a very small fee.

If I said a fee more than 1% is probably too expensive you may laugh. However, this can definitely be considered expensive. That’s 1% every year whether you make money or not. As we’ve covered, I only made 10% in nearly two years and so a 1% fee would be nearly 10% of my gains. What’s more is fees compound – so as your portfolio grows in size so does the amount you pay. If you had £100,000 under management in your investment portfolio then a 1% fee would be £1000 a year.

Wealthify is comfortably below 1% and charges 0.6% as their fee and estimates other costs at 0.22% per year. So overall they are pretty cheap. But they are not that cheap.

ETF costs on their own tend to have very low ongoing costs. An iShares FTSE 100 ETF – just the sort of fund Wealthify may invest in – has an ongoing charge of just 0.07%.

But having said that, you still need a broker in order to access that fund, and brokers can be expensive. Personally I would buy an ETF directly through Freetrade and not incur any broker costs, but again no management fee means no management, which means I have to manage it.

So to conclude this review, I think Wealthify is great for the exact type of customer it targets – low minimum investment, low ongoing fees and no need to monitor an investment. That’s combined with great customer service, and a beautiful app that makes investing easy with an account on your phone. Your investment money is in safe hands and while an investment is unlikely to fly it’s unlikely to tank either, so you can sleep easy with your account tuned to your risk profile.

Stewart Vickers
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