Compare Top Robo-Advisors In The UK
We have narrowed down and reviewed some of the best robo-advisors in the UK that make it cheaper and easier to invest for your future. Use our robo-advisor reviews and guides to decide which robo-advisor is best for you.
Best Robo-Advisor 2021
✔️ Simple to use
✔️ Low cost
✔️ FSCS protected
Nutmeg wins best robo-advisor in the UK as they offer an easy to open, low-cost, FCA-regulated investment account with different risk/reward pre-built portfolios.
What are Robo-Advisors?
Robo advisors are digital investment platforms that help you build a long-term investment portfolio by matching your investment objectives with relevant premade ETF portfolios or funds and can be cheaper than wealth managers as the process is automated.
Robo Advisers have been around since 2008, but as technology plays an ever bigger part in our day to day lives it’s not surprising to find that it is also playing a bigger role in the world of investing and trading, and we are now starting to see the rise of the Robo Advisor.
Robo advisors currently operating in the UK are:
- Lifetime ISA
- Junior ISA
- Minimum: £100
Fees & Costs
- Fixed: 0.45%
- Managed: 0.75%
- Ethical: 0.75%
- Exit Fee: £0
Nutmeg’s Robo-Advisor Review
Nutmeg has performed well against its peers overall. Potential and existing investors can explore the full range of returns on its website but in summary:
Fully managed investment style invested on a risk level of seven out of 10, Nutmeg delivered an annualised return of 6.6% between 30 September 2012 and 28 February 2021. This was against its peers’ return of 6.5%. For the five years to 8 Feb 2021, it returned 7.1%, matching its peers.
Dialling up the risk to 10, the fully managed style returned 8.8% annualised between 30 September 2012 and 28 February 2021, beating peers by 1.1%. Over the five years it was 9.5% versus 8.7% from peers.
Moving down the risk spectrum to a three out of 10, Nutmeg underperformed its peers. Between 30 September 2012 and 28 February 2021, it returned 3.2% versus 3.4% from its peers. Over the five years to 28 February annualised return was 2.8% against 3.6% from peers.
- 9 Funds
- Minimum: £500
Fees & Costs
- Upto £10,000 – 0.75%
- £50k to £50k – 0.6%
- £50k to £100k – 0.5%
- Over £100,000 – 0.35%
Moneyfarm Robo-Advisor Review
Moneyfarm will recommend a selection of its seven risk-rated model portfolios based on your investor profile.
Users create their investor profile by completing an online questionnaire that assesses your understanding of investing and appetite for risk and losses.
There are six investor profiles that could be assigned to you. These range from the most cautious, which is known as steady steady, to the least risk-averse investors, known as pioneering.
The other profiles are focused, driven, exploring and adventurous.
Moneyfarm will recommended its most suitable portfolios based on your investor profile.
There is a choice of seven. The first is the most cautious and is mostly invested in government bonds.
The portfolios get more risky as you go up by each number. The idea is that the more risk you take, the better returns you could get.
This is done by upping the allocation to equities and spreading risk from developed to emerging markets.
The main assets you could be investing in with a lower risk strategy are cash, government, developed and emerging market bonds as well as inflation linked bonds.
As you start taking more risk, the portfolios will focus on equities, commodities and real estate. These included developed and emerging markets.
The portfolios are regularly rebalanced by Moneyfarm to reflect its investment team’s economic outlook.
Here is how each Moneyfarm portfolio was allocated as of the start of April 2021.
|Cash & short-term Gov. Bonds||52%||36%||25%||14%||12%||2%||0%|
|Developed Markets Gov. Bonds||22%||18%||13%||9%||9%||12%||7%|
|Inflation Linked Bonds||4%||4%||3%||3%||0%||0%||0%|
|Investment Grade Corporate Bonds||17%||12%||17%||15%||7%||3%||0%|
|High-Yield & Emerging Markets Bonds||3%||9%||9%||8%||8%||9%||8%|
|Developed Markets Equity||0%||19%||31%||40%||53%||63%||72%|
|Emerging Markets Equity||0%||0%||0%||6%||6%||6%||8%|
|Commodities and Real Estate||0%||0%||0%||3%||3%||3%||3%|
Other platforms such as Nutmeg and Wealthsimple also have passive model portfolios that are regularly monitored.
Nutmeg offers extra choice though with fully managed and smart alpha portfolios that are more actively managed but still use exchange traded funds.
Both Nutmeg, Wealthsimple and Wealthify allso offer socially responsible investment-focused portfolios.
- Junior ISA
- Original Fund
- Ethical Fund
- Minimum: £1
Fees & Costs
- Standard: 0.6%
- Ethical: 0.6%
- Exit Fee: £0
Wealthify Robo-Advisor Review
When you invest with Wealthify first of all you choose what product you want to invest through. This could be a general account, an ISA or a pension.
You then tell them how much risk you want to take with your investments choosing from: Cautious, Tentative, Confident, Ambitious and Adventurous. An algorithm will then match your answers with a ready-made portfolio of investments that is best suited to you. Your money will be spread across a range of assets including cash, shares, government bonds, property and corporate bonds.
After that the Wealthify investment team keeps an eye on your portfolio and will make adjustments to ensure it remains in line with your risk profile. Unlike some robo-advisors, you can also access your Wealthify account via a computer or the Wealthify app.
Robo advisors explained
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.
What can you invest in with a robo advisor?
Robo-advisors allow customers to invest in a small selection of ETFs or funds. These are normally repackaged with friendlier names than the original basic underlying fund.
The product range that you can invest in using a Robo Adviser is not as broad as if you were investing with a human wealth manager. As technology simplifies the choice to the basic risk and ethical options, a broader fund is offered rather than individual investment choices.
How do you invest with a robo-advisor?
To invest with a robo-investor, you will have to pick which funds you like in their portfolio and assign some of your long-term investment portfolio to it.
Robo -advisors are not actually robots, the portfolios have been chosen by investment managers and given risk and geotags so that the choices you input on the website are matched to appropriate investments.
Robo advisor Wealthify 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?
Investing with a robo advisor is cheaper than a traditional wealth manager as the process is automated.
Robo advisor costs are based on the size of your investment portfolio with them. There are generally no dealing fees for when you buy and sell funds within the platform. The current costs for some of the best robo advisors platforms in the UK are:
- Nutmeg – 0.45% to 0.75%
- Wealthify – 0.6%
- Moneyfarm – 0.75%
How much do you need to invest in a Robo Advisor?
The minimum you need to invest with a robo advisor is £1. Here is a breakdown of the minimum investment requirements for the robo-advisors in our panel:
- Nutmeg – £100
- Wealthify – £1
- Moneyfarm – £500
Robo advisor versus wealth managers
The main difference between robo advisors and wealth managers is that with a robo advisor the process is automated. The underlying service is the same, in that both help you invest in funds that track the stock market. The underlying portfolios of those who invest with a robo-advisor and a wealth manager will actually look quite similar.
The difference is that with a robo advisor you do it all online, by inputting your preferences into a website. With a wealth manager you can decide what to invest in via face-to-face meetings, phone calls or video chats.
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|
Robo advisor FAQs:
Who are Robo Advisors appropriate for?
Robo advisors are most appropriate for beginners who are just starting out investing. They provide a quick, cheap and simple way to set up long-term investment accounts like stocks and shares ISAs or private pensions.
Are you guaranteed to make money with a Robo Advisor?
No there are no guarantees that the robo advisors will be any more or any less successful than wealth managers. Most robo-advisor portfolios track the stock market, so if the stock market (FTSE 100) goes up you make money, if it goes down you lose money.
How do Robo Advisors make money?
Robo advisors make money through their fee structure and the volume of money under management.
Are there exit fees with robo advisors?
No, not generally, as one of the main benefits of a robo advisor platform is that you are not locked in.
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