Where did the FX industry’s interest in robo-advisors go? The banks are now at it full swing

Wealthify, a newcomer with ads on the tube in London, has swept in and is about to offer robo advisory services to 5 million customers of a British bank. It should have been an FX company.

A few years ago, when some of the more astute FX brokerages were looking at how to engage clients that would ordinarily seek managed accounts with wealth managers – something they should certainly be doing once again – robo-advisors became a point of interest.

With the exception of some of the large multi-asset FX brokerages such as Swissquote, the token interest soon went by the wayside and mention of rob0-advisory services gradually slipped from the agenda within most companies, with standard self-directed spot FX continuing to take precedence.

Perhaps this was a hasty decision, especially given that today, the need for multi-asset trading environments has increased tremendously, and the wealth management companies are looking at the OTC electronic trading sector as an aligned read-across, which gives FX brokers an excellent opportunity to do what they should have done years ago, that being go down the hedge fund and wealth management route.

Today, a further allusion to the need to look at robo-advisory service has arisen, as British bank TSB, formerly known as Trustee Savings Bank, a retail banking institution that had been part of the Lloyds Banking Group for many years, is partnering with Wealthify – a British firm that has trendy advertisements all over London’s Underground train network, to offer robo investments to its retail banking clients.

TSB’s five million customers can follow a link within the TSB app or internet banking to start investing in a general account, investment ISA or Junior ISA via the robo-adviser.

They will have a choice of five investment approaches based on needs and risk, ranging from ‘cautious’ to ‘adventurous’, and users will also have the option to invest ethically, and can start from £1.

Revenue from a management fee of 0.60% will be split equally between Wealthify and TSB.

Pella Frost, director of everyday banking products at TSB, says: “Our partnership with Wealthify further strengthens our digital banking offer, offers more ways to make money work harder for our customers and will help build their money confidence.”

This is a classic revenue share model, something which FX brokers use all the time for absolutely everything, and is a ready made batch of UK based loyal customers who will easily be onboarded, and will not be likely to quit after a few months, and do not require armies of telesales people trying to call ‘leads’ and churn business in far flung and irrelevant banana republics.

This is the way forward, and it could easily have been an FX firm that had partnered with TSB. Wealthify has only been in existence for five minutes, yet IG Markets has been around for over 40 years, for example.

Banks and major investment houses are willing to work with these newcomers, as are venture capital investors.

The apathy among the FX business is the only aspect holding back approaching client bases such as this and elevating the entire intellectual property of retail brokerages. That needs to change.


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