Last week we heard news of the latest, though undoubtedly not the last, acquisition of a sprightly young fintech by a cash-and-customer-rich sugar daddy – this time the fintech being robo-adviser Moola, and the daddy being benefits firm JLT. The stated rationale, which you’ve probably deduced from the identities of the firms, is that everyone’ll win from the introduction of Moola onto JLT’s Benpal (terrible name!) benefits platform. Employees get a new savings and investment option, Moola gets a cheap source of lots of new customers, JLT gets an incremental business stream and I suppose if I was being cynical I’d say that if employees can be steered into Moola rather than increasing their pension contributions, employers might get a welcome reduction in their contribution-matching bill.
What’s not at all clear to me is whether all this is going to work, and if so on what kind of scale. It comes down – as it has in quite a few other recent blogs – to the question about the level of appetite that exists out there among the public at large for simple, accessible, fairly low-cost investment schemes. As my regular reader knows very well, I’ve always been massively sceptical about this – and my scepticism hits new heights in the context of an employee benefits platform, where the option most people really should take. increasing their pension contributions, is right there under their noses alongside the non-pension option.
What I think the acquisition does tell us is that up to now, Moola has been struggling to recruit customers at an affordable cost. (In fact, we knew this already, partly because all robo-advisers are struggling to recruit customers at affordable cost, but also because Moola rather gave the game away with a desperate-looking promotion back in the Spring, offering new investors a whopping 10% cashback after a year. Canny investment hobbyists immediately took to the message boards encouraging each other to buy in for exactly 366 days and then promptly walk away to grab the best offer on the market in Spring 2019.) But whether appearing as an option on JLT’s Benpal platform will really change their customer acquisition prospects can’t yet be clear.
Wearing my ever-present sceptical hat, I’d say those prospects aren’t great. As for whether the parties to the deal would agree with me, I don’t suppose we’ll ever know – or at least, not unless or until JLT chooses to tell us what they paid.