Moneyfarm Eases Investment Risks With Efficient Compliance


Wealth management has always been a thing for the rich with enough money to invest. It’s one of the reasons the rich keep getting richer while the rest are barely getting by. But the disruptive effects of technology are getting to the financial sector.

Independent wealth managers are leveraging technology to provide middle-income users and those who are not part of the ultrawealthy with wealth management services. Moneyfarm is one of the companies doing this. With over 80,000 active investors, the FCA-regulated firm has £2.2 billion in assets under management.

Deciding what to invest in can be challenging especially given the multitude of options available and the need to balance risk and reward. This is a major reason people opt for wealth managers and investment advisors. But the fees can discourage new investors who barely have enough to invest.

With Moneyfarm streamlining its investment options, it’s easy for users to determine the right product based on its purpose. Four products are available: Stocks and Shares ISA, Private Pension (SIPP), General Investment Account, and Junior ISA.

The firm uses a blended approach where investment advisors and advanced technology work together. The accuracy and efficiency of technology combined with the expertise and experience of investment consultants. This enables Moneyfarm to provide exceptional services including cryptocurrency taxation in the UK at lower costs than traditional wealth management.

Dealing With Investment Risks

However, the ease that digital finance also comes with risks. People can easily lose their money to unverified projects promising amazing returns. Even verified projects could be risky. As an FCA-regulated firm, Moneyfarm operates by the law and must comply with all standards.

This limits the risks significantly, but the firm integrates risk management into its operations. Before using Moneyfarm, whether the mobile app or website, the user will need to first fill out a questionnaire about the risks they’re willing to take. After that, the firm also assesses the ability of the client to take on the risk.

Using these two assessments, the firm determines the user’s risk appetite and recommends the best portfolio. Each investor has a different risk appetite. But it’s sometimes hard for people to ascertain how much risk they’re willing to take. By ascertaining it in a simple way, Moneyfarm ensures no user takes on more than they can.

The firm has seven risk-weighted portfolios and ESG portfolios. All of its portfolios invest in exchange-traded funds that are carefully assessed and constantly monitored. Here, investments are about the long-term results instead of short-term profits. So, the investment consultants are constantly monitoring the market and making the necessary changes to the portfolio.

Unlike other digital wealth managers becoming part of more established traditional investment companies, Moneyfirm remains an independent digital asset manager with partnerships involving other financial institutions. These partnerships currently account for 10% of its business and offer Moneyfarm the opportunity to gain industry expertise and experience.

The partners include M&G, Allianz Asset Management, United Ventures, Poste Italiane, and Cabot Square Capital. These major investors all offer funding and technical support.9