Moneyfarm Pension Review [Fees Compared]

by | Nov 21, 2023 | SIPP Reviews

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Moneyfarm offers a simple, well-priced pension platform with a variety of investment choices managed by experts.

While you don’t get as much freedom to create your own portfolio of funds and shares that you do with some other SIPP providers, their ready-made and actively managed portfolios are excellent for less confident investors, or for those who want a more ‘hands-off’ option for saving for their retirement.

And compared to other ready-made and actively managed SIPP portfolios such as Nutmeg, they’re very competitively priced.

In this Moneyfarm pension review, we compare Moneyfarm’s fees to the other options out there, look at the investment options in more detail, and analyse the reviews and general security of their pension.

Key Takeaways

  • Moneyfarm is a reputable digital wealth manager with over 90,000 users.
  • Regulated by the UK Financial Conduct Authority.
  • Investment choices include actively managed portfolios, fixed allocation, and socially responsible options.
  • We think the Moneyfarm SIPP is an accessible, well-priced pension investment solution.
  • User experiences are generally positive.
  • Moneyfarm’s fee structure is competitive, starting at 0.75% and reducing to 0.25% for larger portfolios

What is the Moneyfarm SIPP and How Does It Work?

Moneyfarm’s SIPP is a robo-advice pension, meaning that your investments are tailored to you and your risk portfolio based on a questionnaire, and then created and managed by experts on your behalf.

The service is less comprehensive than full financial advice from an IFA, who will typically evaluate your wider finances from retirement planning to cash flow management etc. – but, it’s also much cheaper.

It gives investors peace of mind knowing their investments are being looked after by professionals, but for a much smaller fee.

For perspective, most financial advisors will charge between 0.5% and 1% per year against your pension, plus you’ll pay a platform charge to whatever provider they recommend you hold your SIPP with. But with Moneyfarm, you pay as little as 0.35% for both the platform charge and the investment advice service combined.

The advice you receive is obviously limited to just investment management, but you can also speak to Moneyfarm’s consultants for free for general advice on broader retirement questions, such as drawdown options and pension consolidation etc.

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Investment Options

Here are the main investment options you can choose within a Moneyfarm SIPP:

  1. Active management
  2. Fixed allocation
  3. ESG (Ethical Investing)

Let’s break down the options in more detail:

Active management

  1. Create Your Investor Profile: The service starts by understanding your investment goals and preferences. Using smart technology, you answer a few questions about yourself, your goals, and your attitude towards investing. This process generates an investor profile that can be adjusted as your goals or circumstances change, either online, in-app, or with the help of an investment consultant.
  2. Get Matched with Your Perfect Portfolio: Based on your investor profile, you are then matched with a globally diversified portfolio. These portfolios contain a mix of handpicked, cost-efficient ETFs (Exchange Traded Funds), chosen for quality and reliability.
  3. Expert at Your Side: After funding your portfolio, the service’s technology and investment committee manage your investments. This includes strategic adjustments and regular rebalancing for actively managed portfolios. This approach aims to capitalise on market opportunities while aligning with your risk level.
  4. Fees: Charges start from 0.75%, and reduce down to 0.35% for values over £500k.

Fixed allocation

The fixed allocation portfolio works in the same as the above in terms of the questionnaire and allocation to a specific portfolio.

However, the fixed allocation portfolio is a passive investment approach with less frequent rebalancing, in contrast to the more dynamic and active management of the actively managed portfolios.

And because of this, the fees are cheaper, starting at 0.45% and reducing to 0.25% for portfolios over £500k.

Here’s a more detailed comparison:

  1. Expert Construction: This aspect is the same for both options. Each portfolio type is expertly constructed by an experienced investment team.
  2. Cost: A key difference here is that fixed allocation portfolios are a lower-cost solution. This is mainly because they require only one rebalance per year, compared to the more frequent rebalancing in actively managed portfolios.
  3. Investment Approach: The fixed allocation option follows a passive, hands-off approach, allowing investments to move with market trends. In contrast, actively managed portfolios involve hands-on management and adjustments to actively respond to market changes and opportunities.

ESG – Ethical Investing

Within both the actively managed and fixed allocation portfolios, you can choose to invest in an ESG portfolio that supports ethical investing:

These are socially responsible portfolios that prioritise long-term thinking and focus on environmental, social, and corporate governance (ESG) factors.

In a nutshell, these portfolios support forward-thinking initiatives like companies switching to renewable energy and promoting diversity at the board level.

Using MSCI data, Moneyfarm ensures their ESG portfolios include funds invested in impactful companies and comply with various standards, including for example carbon emissions, the United Nations Global Compact, and labour laws.

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The Role of Moneyfarm’s Investment Consultants

A big selling point for the Moneyfarm pension is that investors of have access to personal investment consultants who provide regulated advice and assist with investment selections, portfolio performance, retirement planning, and pension consolidation.

This feature offers exceptional value to clients, as these consultants are qualified to adapt portfolios to changing circumstances while maintaining a low-cost management strategy.

Comparing Moneyfarm Pension Fees and Charges

As an investor looking to maximise returns on your pension investments, it is crucial to take the fees and charges of various platforms into consideration.

Moneyfarm’s pension is more expensive than SIPPs where you have to pick your own investments yourself – but that’s because of the investment advice you get with the service.

They also can be cheaper than other Robo-advisor services like Nutmeg, depending on how much you invest.

First, here’s a summary of how the fees are calculated for actively managed investment portfolios:

  1. For the first £10,000 invested, the annual management fee is 0.75%.
  2. For investments between £10,000 and £20,000, the annual fee drops to 0.70%.
  3. For investments between £20,000 and £50,000, the annual fee is 0.65%.
  4. For investments between £50,000 and £100,000, the annual fee is 0.60%.
  5. For investments between £100,000 and £250,000, the annual fee is 0.45%.
  6. For investments between £250,000 and £500,000, the annual fee is 0.40%.
  7. And for investments over £500,000, the annual fee is an even lower 0.35%.

And for passive portfolios, it’s slightly cheaper. Here’s a summary:

  1. For the first £100,000 invested, the annual management fee is 0.45%.
  2. For investments between £100,000 and £250,000, the annual fee drops to 0.35%.
  3. For investments between £250,000 and £50,000, the annual fee is 0.30%.
  4. And for investments over £500,000, the annual fee is an even lower 0.25%.

Finally, use our calculator below to compare Moneyfarm’s fees and charges to other SIPP options, based on your estimated portfolio value. Note this assumes the actively managed portfolio, not the passive:

In addition to Moneyfarm SIPP’s annual fees, investors should also be aware of the underlying ETF fees. While Moneyfarm does not charge additional fees for their managed portfolios, the underlying ETFs they invest in carry average expenses of 0.20% per year.

These charges are passed onto customers and deducted automatically from their portfolios.

ETFs are generally cheaper than managed funds and investment trusts, so they’re generally considered a cost-effective asset class. All investments, other than direct shares and a few others, come with some kind of underlying fee, and these are automatically deducted from the performance of your investments.

And while you’re here, don’t forget to check out our full comparison of the best SIPP accounts.

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Customer Experience: What Do Investors Say About The Moneyfarm Pension?

Moneyfarm SIPP customer reviews reflect an overall positive investor experience.

Users frequently commend the platform for its straightforward setup, transparent fees, and the unique advantage of access to a personal investment advisor.

This feature sets Moneyfarm SIPP apart from other digital investment platforms, as it offers not only low-cost management, but the option of personalised human oversight.

Despite its minimum investment requirement and occasional service delays during peak times, Moneyfarm SIPP has managed to garner appreciation for its strong performance history, regulated advice, and the security it provides as part of a large and reputable platform.

With over 125,000 customers and £3.5 billion in managed funds, Moneyfarm instils trust in its investors.

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What is Moneyfarm SIPP and how does it differ from other pension investment options?

Moneyfarm SIPP is a technologically-driven pension investment product offered by digital wealth management platform Moneyfarm.

It simplifies pension investments by offering a passive investment approach with diversified portfolios tailored to individual risk tolerance. With its personal investment consultants, low fees, and easy-to-use platform, it stands out from traditional pension investment options.

How does Moneyfarm SIPP manage risk in my portfolio?

Moneyfarm SIPP utilises a risk-based asset allocation model, including Value at Risk (VaR) methodology to estimate potential losses.

They construct portfolios with a broad spectrum of assets, including stocks, bonds, and cash, aiming to achieve cost-effectiveness and risk mitigation.

Strategic asset allocation (SAA) establishes a long-term investment framework, while tactical asset allocation (TAA) adapts the SAA based on short-term market dynamics.

Can I access personalised advice for my Moneyfarm SIPP?

Yes, Moneyfarm SIPP offers access to personal investment consultants for guidance on investment selection, portfolio performance, retirement planning, and pension consolidation.

These consultants are qualified to provide regulated advice, delivering the benefit of a low-cost management platform with the option of personalised human oversight.

What are the fees associated with a Moneyfarm SIPP?

Moneyfarm SIPP’s fee structure starts at 0.75% for the first £10,000 and decreases with higher investment amounts.

Additional charges may apply from underlying ETF fees, averaging at 0.20% per year, which are passed onto customers and automatically deducted. The platform is designed for cost-effectiveness, allowing investors to retain a higher percentage of their returns as investments increase.

Are there any notable drawbacks or limitations to the Moneyfarm SIPP?

The minimum investment requirement for the Moneyfarm SIPP is £500, which might be a barrier for some investors. Additionally, while user experience generally receives praise, there are reports of occasional slow app performance and customer service delays during peak times. However, the overall experience remains positive, with strong investment performance, regulated advice, and the security of a reputable platform.

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About The Author

Sam Hodgson

Sam Hodgson

Head of Digital

Sam is our Head of Digital, overseeing all of our editorial and marketing strategies.

He has over a decade of pension industry experience, previously working & writing for the likes of HSBC and Hargreaves Lansdown.

His goal is to empower “non-financey” people to have confidence in making their own financial decisions, particularly on pensions and retirement planning.


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