Compare the different Robo Advisor providers
|Robo Advisor||What can you invest in?||How much does it cost?||More Info|
|Nutmeg set up in 2011 and with 80,000 customers the firm is said to be Europes’ largest digital fund manager the firm uses technology to build diversified portfolios for clients with ISA’s, pension plans, or general investment accounts.||Nutmeg investment fees are charged on a sliding scale based on portfolio value/ style and start from 0.75% per annum on £100k or less.|| Visit Nutmeg |
|Wealthify Another firm founded in 2014, Wealthify offers access to ISA’s pensions ethical, and general investment accounts.||Wealthify fees are charged on tye size of your investment £10,000 will attract charges or around £6.83 per month according to Wealthify’s fee calculator.||Wealthify Reviews|
|Moneybox was founded in 2014 the award-winning firm has 400,00 customers. The business makes saving and investing easy by rounding up your debit card purchases and putting the extra money to work.||Moneybox operates on a subscription fee basis £1 per month with platform fees of 0.45% per and fund management fees of up to 0.30% annum on top.|| Moneybox Reviews |
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|Scalable Capital has been in business since 2014 and aims to democratise wealth through the use of technology the firm has 60,000 customers many of whom are in tech or engineering. UK customers can invest in ISAs and pensions as well as general investing accounts.||Scalable Capita fees are scalable charges +0.91% per annum though there are additional fees for ETF investment of 0.16% pa.||Scalable Capital Reviews|
|Money Farm founded in Italy in 2012 it moved to the UK in 2015 with 40,000 customers the firm offers access to ISA’s pensions and general investment accounts and monthly saving schemes.||MoneyFarm offer access to human and Robo advisors and have a sliding fee scale (starting at 0.75%) based on the size of your investment.|| Moneyfarm Reviews |
|Wealthsimple 2014 was clearly a good year for Robo advisors because that’s when Wealthsimple was created as well. A Canadian business they launched in the UK in 2017 and have offices in New York and Toronto with 175,000 customers they offer socially responsible and sharia-compliant investment accounts.||Wealthsimple allows you to invest monthly and fees start at 0.90% but are reduce on investments larger than £100k & £500k respectively.|| Wealthsimple Reviews |
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What is a Robo advisor?
A Robo Adviser is an automated financial adviser, a piece of intelligent software that is capable of making decisions based on the information and goals that clients present to it.
The Robo Adviser works in the same way that a human IFA or broker does, but rather than using their training and experience to guide the end clients, the software uses a series of rule-based algorithms to make investment recommendations and decisions.
Robo Advisers have been around since 2008. However, advances in AI, machine learning, and natural language processing mean that they are a more practical proposition in 2020 than they were 12 years ago.
What can you invest in with a robo advisor?
The product range that you can invest in using a Robo Adviser should be the same as if you were dealing with a human and the investment will be structured to meet your needs and suitability requirements in the same way.
When you invest using a robot you are allowing the robot to make the stock selection and asset allocation decisions and to build your portfolio based on factors such as your risk appetite, age, and desired outcomes.
Robo advisor Scalable Capital builds its client portfolios by allocating to low-cost ETFs, whilst rival Nutmeg offers fixed allocations to a range of funds based on risk appetite, which are then regularly rebalanced based on the price performance of the underlying assets.
How much does it cost to invest with a robo advisor?
Costs vary as they do with human advisors and factors such as the size of your investment and the style of funds invested in will all play a part in determining the cost. That said if you think of a ballpark figure either side of +1% per annum you will in the right neighbourhood.
How much do you need to invest in a Robo Advisor?
The minimum investment will vary between providers but there are products out there that allow investments from as little as £1000.00 and one or two that have no minimums at all. Though you will need some sort of critical mass to get the best out of the service.
What's the difference between a Robo Advisor and a wealth manager or IFA?
The obvious difference is that Robo Advisors are not human however they are an alternative or extension to the services provided by IFA’s and wealth managers rather than direct competitors to them. Though that might change in the future as automated systems become more intelligent and autonomous.Pros and cons of a Robo advisor
Pros of robo advisors 👍
Cons of robo advisors 👎
|Lower fees||No human interaction|
|24/7 coverage||Driven and bound by algos not experience and know-how|
|Quicker decision making||Only as good as its programming or training sets|
Who are Robo Advisors appropriate for?
Robo advisors are potentially appropriate for everyone who is looking to save and invest though ultimately they will probably find favor with millennial and gen Z investors who are more comfortable with the use of technology in finance.
Are you guaranteed to make money with a Robo Advisor?
No there are no guarantees that the robot will be any more or any less successful than its human counterparts. AI-based and Algorithmic strategies employed by large hedge funds have had a chequered performance history so lat least for now there is not an obvious secret recipe for success just because you are using software rather than human beings to invest through.
How do Robo Advisors make money?
In the same way that more traditional advisors and fund managers do. That is through their fee structure and the volume of money under management. Of course, robots don’t demand a salary or bonus don’t take holidays and can scale very quickly as AUM or assets under management, grow. Thus providing the fund manager or advisory business deploying the robot with clear economies of scale.