Whether or not online discretionary management firms, the so-called “robo-advisers”, can challenge and disrupt the traditional wealth management sector in the UK has been a subject of much debate in recent years.
There have been a plethora of such firms that have launched, but the latest data released by PAM suggests that only two are close to challenging the more established wealth management organisations, at least in terms of their respective growth rates.
Both Nutmeg and Scalable Capital appear in the PAM Top 10 ranking for growth in client assets under management (AUM) and client accounts as at the end of 2017.
Indeed one of these two firms take the top spot in the rankings for percentage growth in client accounts over one three and five years.
At the end of 2017, Scalable Capital had 7,892 client accounts, up 719 percent in just one year – the highest growth rate in percentage terms. Nutmeg was ranked fourth, with 101 percent growth.
This compares with 138 percent growth for Bowmore Asset Management, which was ranked second. Third was Canaccord Genuity Wealth Management with a 127 percent increase and fifth was Tideway Wealth Management with 100 percent.
Over three years, Nutmeg was ranked first, with a 533 percent increase in client accounts. The rest of the top five are traditional firms, namely Tavistock Wealth (434 percent), Kleinwort Hambros (322 percent), Stonehage Fleming Investment Management (220 percent) and Tilney (177 percent). Moreover, a number of these firms grew their numbers as a result of mergers, or acquisitions.
Nutmeg also topped the ranking over five years. Its growth of 2,796 percent was more than double the 1,110 percent achieved by Thomas Miller Investments, which came in second. Again, Nutmeg was the only non-traditional firm in the ranking. Mountstone Partners was third with 850 percent, Albert E Sharp fourth with 697 percent and Tilney fifth with 552 percent.
Looking at percentage growth of assets under management (AUM), Scalable Capital again was top over one year, with 718 percent growth to £221 million. Nutmeg fell outside the top 10 on this metric and was ranked seventh, with growth of 91 percent to £1.1 billion.
The rest of the top five were Artorius Wealth Management (270 percent), Dolfin (250 percent), Five Wealth (150 percent) , Monmouth Capital and Tideway Wealth Management (both 100 percent).
Over three years Nutmeg was ranked fourth, with 523 percent growth in AUM. In first place over three years was Artorius Wealth Management with 1,667 percent growth. Second was Dolfin and third Tavistock Wealth with 1,519 percent and 540 percent respectively. Greyfriars Asset Management completed the top five with 344 percent.
Nutmeg was ranked third over five years with a growth rate of 1,018 percent. Only Dolfin and Tavistock Wealth outperformed it with respective growth rates of 2,005 percent and 1,602 percent. Beauclerc Group and Hurley Partners came fourth and fifth with 726 percent and 676 percent.
However, neither Nutmeg nor Scalable Capital (nor any other pure “robo advice" firm for that matter) appeared in the PAM Top 10 rankings for total AUM growth.
The two firms did rank in the top 40 managers by number of client accounts, with Nutmeg in eighth place and Scalable Capital in 35th place. However, neither appeared in the Top 40 managers by AUM.
So, the data seems to suggest that while both Nutmeg and Scalable Capital have recorded impressive growth rates to challenge a number of the incumbent firms in the sector, they are perhaps picking up rather smaller mandates than established firms.
If the two can increase their appeal in the high net worth market, or increase their share of wallet amongst high net worth clients who use them, then perhaps the fears of some traditional wealth managers of the rise of the robots will move from science fiction to wealth management reality.