Scalable Capital review: read this before you start

Pros and cons of using Scalable Capital

The story of Scalable Capital

Scalable Capital was founded in 2014 by Erik Podzuweit, Florian Prucker, Patrick Pöschl, and Adam French. Scaleable is headquartered in Munich, Germany. Scalable Capital has become one of Europe's leading digital investment platforms, managing €16 billion and serving 600k customers. They have also been able to raise a significant amount from venture capitalists in order to grow the business.

Scalable Capital offers a bunch of different products under their brand. Its services include a "robo-advisor" (although not yet available in Italy), a digital platform for automated investment management, and a broker platform that allows for direct trading and investment in stocks, ETFs, and even cryptocurrencies. In this review, we'll focus on the broker platform.

Fees

Fee structure

When you register for a free account, Scalable Capital has some of the cheapest trades on the market.

They have a subscription model

There really isn't a free lunch when it comes to investing. In order for Scalable to generate more revenue, they have different subscription tiers, on top of the free account. Similar to BUX which has a monthly subscription, Scalable Capital offers two paid options:

There's no real major difference between both plans except for the fact that you can get interest on uninvested cash with the Prime+ plan. Also note that, in a similar vein to low-cost brokers like Trade Republic, Scalable Capital generates revenue from ETF providers to promote their ETFs through its platform. These inducements are a core part of their business model.

Fees for ETFs

There are over 2,300 ETFs available through their platform. Scalable Capital is one of the cheapest options for European investors. For instance, buying €1,000 of the popular ETF IWDA by iShares, that tracks the MSCI World index, would cost only €0.99. This makes it an attractive proposition for putting your savings to work.

Convenience of Scalable Capital

Automated savings plans (PAC)

Scalable Capital was one of the first providers to offer automating ETF saving plans through their platform. You can start investing from €1 which makes it very accessible to start your PAC. You can choose to adjust the amount as you wish and there's a lot of flexibility with the dates. Note that you still have to choose your own ETFs to build your savings plan.

Interest on uninvested cash

At the time of writing, Scalable Capital offers interest on your uninvested cash which is 4% per year. You can get this rate up to €1m for the first four months as a new customer. Then it's down to 2.6% on €100,000.

Fractional shares

A popular investment strategy is euro-cost averaging, where you invest periodically instead of investing large lump sums in one go. You invest at fixed times, for instance every month, regardless of how the markets are performing. Most people are paid monthly, so it makes sense for their investments to follow the same pattern. A big benefit of using Scalable Capital is that you're able to buy fractions of shares. This means you can buy parts of an expensive ETF or stock. This is useful if you have lower amounts to invest periodically.

Customer support

Scalable Capital has many negative reviews on TrustPilot, with an average rating of 2.3 out of 5. They offer a live chat which has mixed results. It seems like they tried to automate their support using some chatbot AI. They offer a phone number and email service if you have any questions. They replied fairly promptly to our requests but we've heard from other users that it can up to 2 weeks to get a response.

🇮🇹 Declaratory regime

As an Italian investor, you'll receive an annual tax report from Scalable Capital. They do not have a branch in Italy so you'll have to manually take care of the taxes. They put the administrative burden on you as an investor. They do provide all the information once a year and you'll have to declare your income, capital gains as well as the IVAFE (wealth tax).

Setting up an account

Let's dig into the details of opening an account with Scalable Capital.

Time to open an account

As they are already used by thousands of Europeans every day, Scalable Capital offers a smooth experience to create your account. You'll need a valid ID or Passport. You need to be tax resident for the country where you're signing up from. Do make sure you have your TIN (tax number) as it will be requested. Some customers have complained about problems when opening an account as well as depositing money on their account for the first time. Note that they redeem €1 when you link your bank account to your Scalable Capital account. You can usually start investing your money within a day.

Create an account on web and mobile

You can choose to create an account through either the web or mobile. Both options are well built and easy to get set up.

Ease of use: 3/5

If you're looking to only invest in ETFs, Scalable Capital is a really easy app to use. There are quite a few complaints at the slow deposit times and withdrawal process for funds. You can trade via two German stock exchanges: gettex (the Munich stock exchange) and XETRA (the Frankfurt stock exchange). They say they offer both in order to reduce the cost for you as a customer, but it also confuses the interface. Because of these complications, we rated Scalable Capital's ease of use a 3 out of 5!

Children accounts and joint accounts

You can't create a joint or children account. You are only able to open an account for yourself at Scalable Capital.

Is Scalable Capital safe?

Who is the regulator?

Scalable Capital is supervised by BaFin, the German regulator.

Have they had any issues with the regulator?

There have not been any reported issues with BaFin for Scalable Capital.

How much of your assets are protected by the investor protection scheme?

Your assets are protected by the standard €20,000 European investor protection scheme.

Is your cash protected by the deposit guarantee scheme?

Yes, your money is protected by the German €100,000 deposit guarantee scheme of German Banks (Entschädigungseinrichtung deutscher Banken - EdB). Note that Scalable Capital works with their partner bank Baader Bank AG.

Does Scalable Capital do securities lending?

Fortunately Scalable Capital does not lend your securities.

Does Scalable Capital do payment for order flow?

Yes, it does through the gettex exchange.

Payment for order flow (PFOF) is a controversial business model because it can lead to worse prices for your trades than with other brokers, meaning lower prices when selling and higher prices when buying. The reason is that gettex pays Scalable Capital for orders that it routes through the exchange. This creates a conflict of interest between you and Scalable Capital.

This is why the European Union has decided to ban payment for order flow from 2026 onwards. Until then, member states can allow PFOF but only for clients in that member state. So Scalable Capital can earn money through PFOF for its German clients until 2026, but not for its Italian clients for instance.

Easier than a broker: Curvo

Brokers push you to trade and to pick individual companies to invest in. Rather than picking individual stocks such as Amazon or Tesla, index funds are a way to buy the whole market, across all sectors and regions of the world. Essentially, you own a small portion of thousands of companies throughout the world. Instead of betting on a particular company, you are placing a bet on the global economy.

Rather than having to pick the right stocks or ETFs among the thousands available through a broker like Scalable Capital, you invest in a portfolio that is tailored to you and your goals. These portfolios are composed of globally diversified index funds, meaning you earn a piece of the growth of the global economy, and they're best suited to make the most of your savings long term. And they're secure, as they're managed by NNEK, a Dutch investment firm under supervision of the regulator in the Netherlands (AFM).

We believe that investing is an important tool for our generation to improve our financial well-being and to prepare for our future. We are building Curvo to fulfil that vision, by making good investing easy and accessible to all:

• Diversified portfolio set up for you: The best portfolio for you is built by NNEK based on your time horizon and financial goals. Simply answer a short questionnaire and you’ll get everything set up for you.
• Automated savings plans: Through Curvo’s app you can set up a monthly contribution from €50. That means that money is automatically invested for you in your portfolio. Put your savings on autopilot!
• Fractional shares: All the money you send towards your portfolio is fully invested by NNEK. No cash is left on the side.
• Sustainable investments: Your investments focus on one guiding principle: don’t invest in companies that are considered destructive to the planet. This means that sectors like non-renewable energy, vice products, weapons and controversial companies are all excluded.
• Project yourself into the future: Through Curvo you can see how much your portfolio is expected to be worth in the future. You can answer questions like “how will increasing my monthly contribution by €50, €100 or €200 affect my long-term savings?” to give a concrete idea for the “future you”.

Learn more on how it compares to investing through a broker.

Summary

Scalable Capital has grown hugely in the last couple of years as they expanded outside of Germany. Serving over 600,000 customers, they have established themselves as one of the cheapest options for investors. However cost is not the only factor to take in consideration when you're putting your savings to work. You should also consider that they operate with a frowned-upon business model and don't handle the taxes for you as an Italian investor which is an extra admin headache you don't necessarily need.

Questions you may have

How much do you earn with Scalable Capital?

Scalable offers interest on the uninvested cash which is 4% per year. You can get this rate up to €1m for the first four months when you sign up as a new customer. It's then down to 2.6% on a maximum of €100k.

What happens if Scalable Capital fails?

Your investments are secure as they are held by the custodian which is a separate entity. In the event of bankruptcy of the custodian bank, you have a claim to your securities. These do not fall into bankruptcy proceedings and are therefore protected. Essentially, it means your investments are secure. Scalable Capital is not authorised to take ownership of your assets.