Moneyfarm has sent a letter to investors telling them that its management fees have increased.

However, this is accompanied by an increase in the fee-free allowance for existing customers to £12,000.

The firm also told clients that it will be expanding its team and product offering in the near future to make sure that it has 'the best tools to manage your money'. 

Previously, Moneyfarm managed the first £10,000 for free, not including the 0.3% underlying fund cost. Under the new model, for those investing up to £20,000, the firm will charge 0.7%. This will be tiered to 0.6% for up to £100,000, 0.5% up to £500,000 and 0.4% thereafter.

In its previous pricing model, the firm charged 0.6% for those investing between £10,000 to £100,000, 0.4% for up to £1 million and 0% after £1 million.  

Moneyfarm stressed that as it values existing customers and is ‘aware that one of the reasons for signing up was because we offered 0% management fees on anything up to £10,000’, by increasing the allowance by £2,000 it is ‘ensuring that our customers are in the same or a better position than they are today’.

The company, led by CEO Giovanni Dapra (pictured), added: ‘Moneyfarm continues to be a competitive option in the investment landscape. We have worked to ensure your investment will never be more than 1% when you combine the underlying fund cost and the management fee.

‘This is less than half of what some of the discretionary wealth managers charge.’