11 November, 2016

Moneyfarm ISA Review 2016

At a time when saving rates are next to nothing and markets are fluctuating in light of major global socio-political decisions, an alternative investment mechanism that provides yield with a degree of stability is much sought after. MoneyFarm can help you maximise returns without having any active involvement in the investing process. By giving fiduciary control to a Digital Wealth Manager, you can watch as your portfolio works your money, and what’s more, you can earn some of the best returns on the market through a tax-efficient stocks and shares ISA – the MoneyFarm ISA.

Digital Wealth Manager (or robo-adviser), MoneyFarm, helps you generate wealth without having to lift a finger (almost…). Here we’ll show you how can start earning through a MoneyFarm ISA, sheltering returns from the tax man.

Open a MoneyFarm ISA

Here we’ll lay out the steps to opening and investing in a MoneyFarm stocks and shares ISA.

  1. Register account: Input email address and password to log your account with MoneyFarm. Simple.
  2. Create a trial portfolio: This is an opportunity for you to create a trial portfolio where you can see what it would be like to have a MoneyFarm portfolio, before adding any funds to your account. This comes with no obligations and allows you to test the interface of the portfolio dashboard. Note: you will only be able to select the General investment account to test at this stage.
  3. Add personal details: Here you will be asked for your personal details and identity documents for AML checks. Each user is assessed on an individual basis, therefore might be asked to submit supporting document such as ID and proof of address.
  4. Complete risk profile questionnaire: You will be asked questions regarding your risk appetite, investing experience and financial circumstances to risk determine your risk tolerance and identify your investor profile. It’s important to be honest and open in this section to ensure you are allocated the most suitable investor profile.
  5. Complete account set up: To finalise the process you will be asked to accept the T&C’s and wait for a confirmation email confirming your account activation. This will usually be received within one working day.
  6. Portfolio creation: Once your account has been activated, you will create your real portfolio in-line with your investor profile, you can choose either a Stocks & Shares ISA or a General investment account. Once you have selected an account type you will be asked how much you’d like to invest, how long you want to invest for and if you would like to fine tune your risk level further.
  7. Example: Create MoneyFarm stocks and shares ISA portfolio. On your dashboard, you will see a button that says ‘Create Portfolio’. When you click this you are presented with the option of creating a General Investment Account or a Stocks and Shares ISA. To create an ISA, select the latter. It looks like this:

You can either transfer your existing ISA funds to this portfolio, or create a new ISA portfolio altogether.If you start your MoneyFarm ISA from scratch, this is what the dashboard will look like:

You will be asked to define four additional parameters: Your initial investment amount; monthly contribution amount; time horizon; and your risk preference. All this information together with your investor profile will define the asset allocation of your portfolio. The risk level of your portfolio does not necessarily have to match the overall risk denoted by your investor profile. Once you have defined these parameters you can save your portfolio.

If you are opening a General investment account you can hold multiple portfolios at multiple risk levels.

8. Add funds

Once your portfolio is created you can then add funds. Simply select add funds, choose either a one-time or monthly payment option and define the amount. You then have to enter your bank details and choose either ‘add funds via an online transfer’ or a ‘bank transfer’. Generally, a bank transfer is quicker for ad hoc payments, however online transfers are convenient for setting up regular contributions. To review timeline you can visit the MoneyFarm FAQ section under ‘Funding your account’.

Benefits of a MoneyFarm ISA

Whether a seasoned investor or a first-timer, the MoneyFarm stocks and shares ISA is a great way to start your investing career or boost your portfolio with the added benefit of tax-relief on your investment!


You can gain tax-relief on money held in an ISA up to the £15,240 annual subscription limit or on any amount of money transferred from any existing ISA that you have. With respect to the MoneyFarm ISA, you will not be taxed on any capital gains or income earned. These rules apply to all ISA types.

Low-cost alternative

MoneyFarm offers a low-cost solution to the often expensive IFA and traditional method of investing. Where IFAs tend to charge fees in the region 2-3% AUM annually, MoneyFarm charges a tiered management fee of up to a maximum effective rate of 0.54%, depending on the amount you invest. The effective management fee on an ISA investment of £15,240 will be 0.21%. You can view their full pricing structure here. There will always be an underlying ETF cost of average 0.25%.

*MoneyFarm waives its own management fees on money invested up to £10,000, so you can invest £10,000 free of charge.

Discretionary investment management

Investing can be time-consuming and traditionally requires you have a fairly strong knowledge of asset classes. Moreover, the decisions are largely down to you. An IFA will make recommendations, but you ultimately hold the reigns. With MoneyFarm, your investment is managed by their team of experienced professionals who allocate your portfolio and rebalance it for you periodically.


The robo-advice age is upon us and digital wealth managers like MoneyFarm are proving that algorithmic, discretionary investment management is the future. What’s more, investors can earn yield with tax-efficiency by opening a MoneyFarm ISA product and investing in the risk-allocated ETF portfolios on offer.