Moneyfarm Review

Anyone who wants to grow their wealth but is too nervous to make their own decisions could benefit from this sort of service. Even those who are sceptical about using algorithms can tap into the free human consultants. It’s friendly and easy to use and can provide some useful insights, especially if you are unsure which account would be best for you or would like an analysis of your external investments, including allocation and risk.

One of the advantages of this service is how simple and easy it is to use; however, this can quickly become a disadvantage when you can’t quite access the information you want or find there is a lack of interactive experiences. So you do need to be comfortable handing over the reins here. That being said, the expansion of services to share dealing is paving the way for more experienced investors, albeit with a way to go before this could be considered a comprehensive platform for all types of investors.

This is not the cheapest way to invest (if you are very cost conscious then have a look at my InvestEngine review), but this is a suitable option for beginners and those with very limited investment experience.

Moneyfarm is a robo-advisory service. So, if you are looking for a minimum-effort way of getting matched to a portfolio that is suited to your risk profile and investment goals, then this is an option.

It’s worth noting that the minimum investment amount for Moneyfarm is £500, which is higher than a lot of similar platforms.

General investment account (GIA)

You can access both the managed portfolios and share investing from the GIA without limitations. It’s free to open an account and, once open, you will incur a yearly custody fee of 0.35% for share investing. This account also provides access to investment consultants.

Stocks and shares ISA

You get all the usual tax benefits by investing via the Sometimes called an investment ISA, a stocks and shares ISA is an individual savings account that allows you to invest in shares, unit trusts, investment funds, and bonds. You will not need to pay tax on any income or capital gains earned on investments within an ISAstocks and shares ISA but what makes the Moneyfarm ISA stand out from a lot of the competition is that it’s flexible.

What does this mean? Well, simply put, it means that you can deposit and withdraw your money from your ISA as many times as you like without affecting your ISA allowance for that year. Ordinarily, every deposit you make into your ISA would count towards your allowance (currently £20,000 for the 2023/24 tax year), regardless of whether you have also withdrawn from the account.

However, with a flexible ISA, each time you withdraw, that amount gets credited back to your allowance.

This isn’t an advantage for everyone, and with investments, it is always advisable to leave your money invested for a minimum of five years. However, there are circumstances where this can be a significant bonus.

Read more about ISAs

Junior stocks and shares ISA

The Junior ISAs (Individual Savings Accounts) (JISAs) are tax-free savings accounts for children under the age of 18. Only a parent can open a JISA but anyone can contribute. You can choose to save for your children through either a cash Junior ISA where you will earn interest on any cash in the account, or a stocks and shares Junior ISA where you will invest your child’s savings on their behalfJunior ISA also provides access to Moneyfarm investment options and human advisors, but it is otherwise unremarkable. You can save up to £9,000 a year into this account, which your child will then be able to access when they turn 18.

It’s a decent option, and if you held your other accounts here, I can see how the convenience of having them all under one roof would be appealing. However, I still think the Hargreaves Lansdown Junior ISA is the best stand-alone product out there.

Cash ISA

Moneyfarm now offers a cash ISA. It has a boosted rate of 3.87% AER (variable), falling to 3.67% AER after 12 months. That’s far from the top rate available, as you can see on our Best Cash ISA page).

It’s a If an ISA is flexible, you’re able to withdraw money and pay it back in, without it counting twice within your annual ISA allowance. It must be repaid within the same tax year it’s withdrawn to be eligible, however.Flexible ISA which is a bonus, but to maintain the bonus rate, you’ll also need to keep at least £500 in your account.

One other detail which may matter to you – Moneyfarm, like several other providers, uses qualifying money market funds (QMMFs) for their cash ISAs. That means that unlike those providers that put your savings into a bank account, Moneyfarm places your deposits into funds that could technically lose money. It’s a very low risk, but you may feel that’s not what you want when you’re opting for the more secure option of a cash ISA.

Pension

The Moneyfarm Pension comes with all the usual tax benefits of saving into a pension product. You will have access to a range of investment options to help your money grow towards your retirement, but this is pretty normal for a A self-invested personal pension (SIPP) is a type of private pension that allows you to control the specific investments that make up your pension fundself-invested personal pension (SIPP). However, where the Moneyfarm SIPP does differ is in its access to expert guidance. This can be useful for retirement planning and knowing when to reduce your risk without sacrificing too much in potential investment gains.

While it is free to transfer your existing pensions into the Moneyfarm pension, you should first check for any exit fees your current provider may charge. There is also a free pension drawdown service when the time comes to retire. The pension calculator is one of the best I have come across, helping you define your monthly contribution amounts in order to hit your retirement targets.

The other thing to note is that it is possible for your employer to contribute to your Moneyfarm pension. You simply submit a form to register your employer, and Moneyfarm takes care of the rest.

So how does the Moneyfarm Pension fund perform when compared to industry peers? There are better performing pensions available as our independent analysis has revealed. Feel free to toggle between different cumulative years to get a picture of how historical returns stack up.

What is interesting here is that Moneyfarm is relatively expensive for actively managed portfolios but is the most cost-effective option when you look at passive portfolios. Therefore, we need to establish if the actively managed portfolio is worth the extra cost.

Below is what you can expect to pay at Moneyfarm as a percentage of your total investment:

Passive vs. actively managed – is it worth the extra cost?

Given the difference in fees between the two management styles, you would hope that the actively managed portfolio would outperform the passively managed (fixed allocation) portfolios enough to warrant the extra cost.

Sadly, the data on the fixed allocation portfolios was only available for 2023 so the research we conducted cannot be considered scientific. However, we did perform the analysis for that year assuming a £250k investment, net of fees, and found that the fixed allocation portfolios actually outperformed the actively managed portfolios for the lower risk portfolios, with the more adventurous portfolios pulling slightly ahead when actively managed.

As previously mentioned, 1 year of data cannot be considered conclusive; however, we will continue to monitor these portfolios at Investing Insiders for clarification on this subject.

In addition to the management fees, you will to take into consideration:

• Annual average investment fund fee: 0.2%
• Annual average effect of market spread: 0.10%

These charges are to be expected on any platform and therefore shouldn’t affect your decision to invest with Moneyfarm.

Please note: all published fees are correct at the time of publishing. However, we suggest checking Moneyfarm’s website for the most up-to-date figures.

For the portfolio you are matched with, there is some limited detail available. This includes:

• Asset breakdown: you can view what your portfolio is composed of and the percentage of composition; however, what’s missing is a picture of the actual assets that make up your portfolio. Some investors looking for a completely hands-off approach may find this satisfactory, however, I would certainly be more comfortable with a complete overview of my assets.
• Performance: including expected performance and past performance.

The amount of research available here is very sparse; however, this is a service for people who are looking for a completely hands-off approach and are therefore unlikely to get stuck into reams of research material.

This is a long-established platform that is constantly updating and improving its service. The recent acquisition of Profile Pensions and expansion into direct share access would suggest that the platform is financially secure.

In terms of regulation, Moneyfarm is authorised and regulated by the Financial Conduct Authority, in addition to offering cover up to the value of £85,000 from the Financial Services Compensation Scheme. This provides protection for investors should anything happen to the platform.

Account security
Again, all the appropriate measures have been taken to ensure your account is secure. Biometric ID is available on the app so you don’t have to remember passwords. This is supported with a PIN. I have no issues with safety here.

This is another area that is currently a little thin on the ground. There is a guide section that is fairly comprehensive (13 articles under ‘A Guide to Investing’ as an example) with further guides on topics that include financial markets, exchange-traded funds (ETFs), and financial planning.

There are also some helpful articles, including those relating to financial markets, investments, ISAs, pensions, behavioural economics, and financial planning.

What’s missing is any kind of interactive education. Courses, webinars, and videos are all lacking and I checked for any good content on YouTube only to draw a blank. Being a platform that is suited for beginners, I would have liked to see more in this section.

No complaints from me when it comes to customer support – I found this to be an excellent service, especially the live chat which I tested on several occasions and always got an immediate response.

It’s important to remember that Moneyfarm also offers access to human investment consultants. This is a service that sets them apart from similar platforms and I was impressed when I tested it. You can book your consultation directly via the app, selecting a date and time to suit you. You get plenty of reminders, and the consultant was extremely prompt. These sessions are designed to help you invest as efficiently as possible and, most importantly, they are completely free.

Opening and closing an account is as simple as you can hope to expect from this type of service. If you’re after the Sometimes called an investment ISA, a stocks and shares ISA is an individual savings account that allows you to invest in shares, unit trusts, investment funds, and bonds. You will not need to pay tax on any income or capital gains earned on investments within an ISAISA then have your National Insurance Number to hand.

You will be walked through a series of questions that are designed to identify your risk profile so you can be matched with a suitable portfolio. This doesn’t take long and the questions are very simple.

You will also have the option to create a preview portfolio before you commit to any investment. Moneyfarm will help ascertain how much your initial investment should be and your ongoing commitment to a monthly contribution.

Have a question about Moneyfarm that we haven’t covered? Ask it here and we will get back to you as soon as possible!

This review is the result of my first-hand experience as an account holder at Moneyfarm and in no way represents financial advice.

If you’re looking for the best robo advisor, then head to my review of all the leading robo advisors, where I dissect each one and pitch them directly against each other to establish which one is offering the best service and, most importantly, which one would have made your money grow the most in the last 5 years, taking into account portfolio performance and fees.