Scalable Capital Review - The right UK investment for you?

Scalable Capital Review


In this Scalable Capital review, we take a closer look at this fast growing digital wealth manager, to help you decide if they are the right UK robo-advisor for you. We look at Scalable’s fees, how they invest your money, the different types of investment products they offer, and we’ll also consider their past performance. Finally, we examine how Scalable Capital compare to some other popular UK robo-advisors in the sector by looking at their competitors such as Nutmeg* and Wealthsimple*, one of which we’ve managed to secure a special ‘new investor sign up offer’ for! 

Who are Scalable Capital?

The past few years have seen robo-advice really take off in the UK, with various platforms entering the market all vying for your investment. Today we look more closely at Scalable Capital.

Scalable Capital started life in 2015 in Germany, before coming to the UK in 2016. The company aim to bring investment management services to a wider group of investors, by bringing down the costs and fees involved with this kind of service. Scalable do this by investing your money in low cost ETFs (Exchange Traded Funds) and they also use intelligent risk management technology to help invest your money in a way that suits your personal attitude to risk. Scalable offer a general investment account, but they also offer a Stocks and Shares ISA. They recently received financial backing from one of the biggest investment firms in the world, BlackRock. 

Scalable Capital’s Fees

As a potential investor, I would imagine one of the big things attracting you to a platform like Scalable Capital is the low fees they offer for a managed investment service when compared with those charged by typical wealth managers. The Scalable Capital fee structure is simple and straightforward. Scalable charge a fixed fee of 0.75% per year no matter how much money you invest. The ETFs in which Scalable invest also carry an annual charge of around 0.25% and this is in addition to Scalable’s own fees, bringing the total cost of investment to around 1% per annum.

Scalable Capital’s fees include your investment management, account management and all trading or custodian fees. As we can see, Scalable’s fees are low when compared to those charged by typical wealth managers and also compared to those charged by other investments such as mutual funds. There are cheaper robo-advisors in this sector, however, so you will need to make a decision as to which robo-advisor you feel will give you the best performance when balanced with the fees that they charge. There are no withdrawal or exit fees with Scalable and you are not locked into the investment and so can withdraw your investment at any time free of charge.

Is There a Minimum Investment?

Yes, the minimum amount you can invest with Scalable Capital at the time of writing this review is £10,000. This is quite a high minimum investment compared to some other UK robo-advisors such as Moneyfarm* or Nutmeg*. Scalable state on their website that they feel that they need at least £10,000 to be able to adequately invest your money across different asset classes in order to effectively balance your portfolio, and they feel that it is not possible to do this with smaller amounts at this time. There is no upper limit to the amount of money you can invest.

You might be wondering at this point what might happen if you want to withdraw some of your investment after a period of time? The answer is that – as there is no lock in with Scalable – you are able to make partial or full withdrawals at any time but your balance must stay above £10,000. Partial withdrawals that would take your balance below £10,000 would not be allowed and if you wanted to take the balance below £10,000 then you would have to withdraw the full amount of your investment.

The Scalable Capital Stocks and Shares ISA

With Scalable’s Stocks and Shares ISA you are able to enjoy all of the benefits of their service in a tax-efficient way, with no income or capital gains tax to pay on deposits up to your ISA allowance. You can make use of your full ISA allowance of £20,000 (2017/18) if you want to, or you can split the allowance by putting some of it in a Cash ISA and then investing the rest with Scalable. With their Stocks and Shares ISA offering, Scalable Capital will take care of everything related to your investments for the same annual fee of 0.75% (+ average 0.25% ETF fee) we outlined earlier in this review. You can manage your account online or via their mobile apps and they say that they’ll continually monitor and tweak your investments to help you reach your investment goals.

One thing you need to know before choosing the Scalable Capital Stocks and Shares ISA is that you can’t pick your own individual shares with this kind of ISA. If you want to pick your own specific investments then you might want to look at a DIY Stocks and Shares ISA from a company like Hargreaves Lansdown* instead.

Scalable Capital’s Past Performance

Before putting your money into any investment, you will want to know as much as possible about its past performance. Scalable Capital are very transparent on their website in this area, clearly detailing the performance of their various available risk tailored funds since June of 2016. There are several graphs you can look at on their ‘past performance’ page and these graphs are also explained in writing.

Is Your Money Safe With Scalable Capital?

As well as past performance, any potential investor with Scalable Capital will want to know whether their money is going to be safe and protected with the company. Scalable is regulated by the Financial Conduct Authority (FCA) and so your money may be protected by the Financial Services Compensation Scheme for up to £50,000. With Scalable, your money is also kept in a separate bank account which will be set up for you on your behalf when you invest with Scalable Capital. When it comes to your investments, these are kept separate from the banks own assets and your assets are never lent to third parties or mixed with Scalable’s own assets. 

Do Scalable Capital Offer a Pension or SIPP?

Unlike Moneyfarm* and Nutmeg*, Scalable Capital do not offer a pension or SIPP at present, but there are plans to add this in the near future. If you are interested in taking out a SIPP with Scalable in future, then you can submit your email address on their website and they will keep you up to date with how this is progressing. As with the Stocks and Shares ISA, it’s worth remembering that you can’t choose your own individual investments with Scalable. So, if you’re wanting to do this through a SIPP then the Hargreaves Lansdown SIPP* might be a better alternative.

Scalable Capital Alternatives

As we mentioned at the start of this post, there are some alternatives to Scalable Capital in the UK robo-advice market that you might want to look at if you can’t afford Scalable’s £10,000 minimum investment, or you just want to do your homework before taking the leap and investing.

One UK alternative to Scalable Capital is WealthSimple*. Unlike Scalable, Wealthsimple don’t have a minimum investment amount. They’re fees are also less than Scalable’s, at 0.7% plus ETF costs for investments of up to £100,000 and dropping to 0.5% for investments over this amount. Not only this, but we’ve also managed to secure a special new investor offer for Money Bulldog readers where you can get your first £5000 of investments managed free of charge for the first year if you sign up for a Wealthsimple account* using one of the links in this post! 

Alternatively, you could opt for Nutmeg*. Nutmeg allow investment from £5000 when investing a one-off lump sum or £500 if you are willing to pay further £100 a month into your account in regular instalments.

Are Scalable Capital Right For You?

We hope that this Scalable Capital Review has been helpful and that you now have a well rounded view of what Scalable have to offer, and how they work. If you’re still unsure as to whether the company are the right investment option for you, then here are a few summarising points to consider.

If you would like to pick your own shares and select your own investments then you might be better off going for a Stocks and Shares ISA or General Investment Account from a company like Hargreaves Lansdown* instead, as Scalable do all of the investing on your behalf based on your attitude to risk. But if you want a truly hands off investment, with the potential for steady growth and the ability to take a little more risk but in a managed way, then Scalable could be a great option for those with more than £10,000 to invest. Be sure to do your research, though, and don’t forget to check out other robo-advisors to ensure you pick the right one for you.

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