After Investec recently took the decision to withdraw its robo-adviser Invest & Click from the market after the venture lost £32m, Tom Ellis assesses how profitably the so-called 'robo-advice' sector as a whole is shaping up.
Philip K. Dick's poignant 1968 sci-fi classic Do Androids Dream of Electric Sheep? was famously the inspiration for the Blade Runner films. If he was writing today, however, might Dick instead be wondering if robo-advisers dream of ever turning a profit?
A substantial rummage through the accounts of those inhabiting the UK robo-adviser space has revealed it is clearly a market still very much in its infancy - although that excuse may wear thin for investors and backers before long.
While turnover and profit/loss figures are not available for all of the market's robo firms, the accounts that are available paint a grey landscape. Not one of the firms I looked at posted a profit in their latest available financial accounts.
In fact, since the dawn of the robo-advisers, they have collectively lost more than £114m.
An astonishing sum in itself, it does not include the money spent by UBS on its proposition, nor the money spent by Standard Life Aberdeen's advice arm 1825 or NatWest, or indeed some of the smaller, organic firms that do not post profit/loss accounts at Companies House.
Note: To avoid confusion, when reading 'robo-adviser' in this article please also read 'online discretionary wealth manager', 'digital investment manager', 'digital wealth manager' or any other concoction of words marketing teams have thought up. Indeed, a robo-adviser may not actually offer regulated financial advice - through robots or otherwise.
Investec's fallen venture aside, two of the nine firms that had publicly available accounts posted losses of more than £10m in their latest financial year.
Nutmeg was £12.15m in the red in 2017 and Moneyfarm lost £13.93m over the same period.
These are big losses for companies that are by no means giants - they had respective annual revenues of £4.56m and £1.01m.
By no means giants - but by no means new players either. Nutmeg, which is considered the pioneer in the UK market, was established in 2011 and has been relentlessly trying to acquire scale ever since.