Why are financial wellbeing provider Neyber and investment platform Smarterly going into partnership?
We are both fintech businesses on a mission to transform the UK workforce from a nation of borrowers into a nation of savers. Neyber started life as a payroll lending business with a salary deduction model that helps employees get out of debt. Smarterly’s workplace Isa uses the same payroll deduction model to make it easy for employees to start saving for life events that matter to them. Neyber already has over 250 employer customers that want to be able to help employees save in a flexible product.
Why launch a workplace Isa now?
Isas are incredibly popular, with around 10 million people a year putting almost £70bn in, mostly into cash Isas. The direction of travel of government policy is in favour of Isas, with the Isa allowance increasing from £15,240 to £20,000 last year, while the lifetime and annual pension allowances have fallen drastically in recent years.
Meanwhile the pension landscape is changing, with an increasing number of people capping out their pension contributions and turning to Isa instead. Employers see that people of all ages, in all income groups, need savings other than those for retirement. Saving for retirement is important, but what about all the other life events in the intervening 40 years? That is why we are launching a Junior Isa, General Investment Account, Lifetime Isa and Cash Isa, as well.
Workplace Isas have failed to take off in the past. Why is it different this time?
The Neyber / Smarterly tie-up is different because, unlike previous attempts to introduce workplace Isas, the process is made simple, the investment proposition is robust and the charges are market-beating. Smarterly is endorsed by the employer, something we know employees take a high level of comfort from. Savings come direct from salary, and users get institutional pricing levels at around 50 per cent of the market average cost of investment platform saving.
Are employers offering to match contributions into the workplace Isa?
Yes, we are definitely getting employers asking us what they can do for employees for whom pension is not a top priority. For example, Samsung has a generous pension scheme but it will allow employees to direct some of the matching employer contributions into the workplace Isa, provided, of course, the pension contributions stay above the auto-enrolment minimum.
We are also getting some employers looking at whether they will match Isa contributions for high earners who have used up their annual or lifetime pension allowance.
How does Smarterly differ from other robo investment propositions on the market?
We have designed the technology around an Amazon-style user experience. We present four different risk-rated portfolios, each offering three possible outcomes – ‘most likely’, ‘good’ and ‘bad’. Users can then compare different portfolios and the likely outcomes they can get from them, and they can see that the risk they are taking with stocks and shares may not be as great as they think it is. No other robo proposition is able to do this.
Furthermore, our unique SmarterCare monitoring tool does daily checks to see if the portfolio is on target and to see whether it needs to be rebalanced.
How does workplace saving sit within a financial wellbeing strategy?
It became clear to Neyber that employers wanted more than a product – they want a strategy for financial wellbeing that will link into physical and mental wellbeing.
That’s why Neyber set up its Financial Wellbeing Hub, which wraps education around the products, through gamification tools and monthly newsletters, so employees are encouraged to engage with their money matters.
The Hub is personalised so that users get an experience that reflects their needs, to help them build their financial knowledge, confidence and resilience. This frees them up to focus on the things that are important to them, rather than spending time and emotional energy stressing about debt.
What level of employee take-up does the Financial Wellbeing Hub generate?
We see 20 to 30 per cent of employees going to the Hub. There is a clear correlation between those looking to borrow and those creating profiles within the hub, but some people do sign up just for the information.
Is it right to offer employees the option to borrow money and save at the same time?
It is not our role to offer financial advice. We do see people with debt who are also making Isa contributions. We give these individuals information on paying down debt, but ultimately it is their decision to decide what they want to use.