Best Robo-Advisors In The UK January 2023 – Forbes

Best Robo-Advisors In The UK January 2023 – Forbes

The Forbes Advisor editorial team is independent and objective. To help support our reporting work, and to continue our ability to provide this content for free to our readers, we receive payment from the companies that advertise on the Forbes Advisor site. This comes from two main sources.
First, we provide paid placements to advertisers to present their offers. The payments we receive for those placements affects how and where advertisers’ offers appear on the site. This site does not include all companies or products available within the market.
Second, we also include links to advertisers’ offers in some of our articles. These “affiliate links” may generate income for our site when you click on them. The compensation we receive from advertisers does not influence the recommendations or advice our editorial team provides in our articles or otherwise impact any of the editorial content on Forbes Advisor.
While we work hard to provide accurate and up to date information that we think you will find relevant, Forbes Advisor does not and cannot guarantee that any information provided is complete and makes no representations or warranties in connection thereto, nor to the accuracy or applicability thereof.
Updated: Jan 3, 2023, 3:52pm
Individuals face different financial challenges. The way investors go about tackling life’s money goals can vary markedly as well.
At one extreme are people who are happy to go it alone and manage their own finances. There are also those often with significant sums to invest that pay for comprehensive advice from third-party financial professionals who take charge of a client’s assets to achieve a set of goals.
In between come a swath of people who, increasingly, are turning to robo-advice a half-way house between DIY investing and full-blown advice – to meet their financial needs.
Here’s a look at what robo-advisors do, the services they offer, how much they charge and what to look for when choosing one.
Stock market investing involves risk and is not suitable for everyone. The value of investments can fall as well as rise, and your capital is at risk.
Featured Partner Offer
1
eToro
Invest in global and local stocks with ZERO commission

Explore over 2,500 stocks. Buy in bulk, or invest in fractional shares

1
eToro
On eToro’s Website
Your capital is at risk. Other fees apply. For more information, visit etoro.com/trading/fees.
We researched a range of robo-advisors (October 2022) and list our findings below. Our methodology explains how we ranked the advisors and our Frequently Asked Questions section explains how robo-advisors work.
10 options for growth and 3 for income portfolios

0.25%

Growth – 0.23%, Income – 0.37%

10 options for growth and 3 for income portfolios

0.25%

Growth – 0.23%, Income – 0.37%

InvestEngine was founded in 2019 by the co-founder of Gumtree. It has over 10,000 active clients.
Managed portfolios are invested in around 15 ETFs from a choice of over 500 funds. Providers include Vanguard, Invesco and iShares.
Income portfolios currently offer three estimated yield options (2.2%, 4.2% and 5.3%), along with some capital growth while limiting the downside risk.
Accounts can be managed online or via the app, with reports issued quarterly. Advanced tools include one-click rebalancing.
Monthly investing option.
Customer support available seven days a week by social media and email.
Overall, InvestEngine offers a good, all-round service with the lowest fees by some margin. However, it is one of the smaller providers and does not currently offer an ethical investing option.
Growth portfolio:
£10,000: £48
£30,000: £144
£50,000: £240
Income portfolio:
£10,000: £62
£30,000: £186
£50,000: £310
7 options in each of ‘classic’, ‘socially responsible’ and ‘fixed allocation; portfolios

Under £100,000: from 0.60% to 0.75%, Above £100,000: from 0.35% to 0.45%

Classic – 0.29%, socially responsible – 0.30%

7 options in each of ‘classic’, ‘socially responsible’ and ‘fixed allocation; portfolios

Under £100,000: from 0.60% to 0.75%, Above £100,000: from 0.35% to 0.45%

Classic – 0.29%, socially responsible – 0.30%

Originally backed by Italian investors, Moneyfarm launched in the UK in 2016. It has over 90,000 clients and M&G took a minority stake during its recent fundraising.
Clients are assigned a personal investment consultant to assist with any investment queries.
Managed portfolios are typically invested in around 10-15 ETFs from a wide selection of equity, bond and commodities ETFs. Providers include Vanguard and iShares.
Accounts can be managed online or via the app, with reports issued quarterly.
Minimum investment of £500 with the option of monthly investing. Platform fees are not tiered (one fee charged on the whole portfolio).
Customer support available five days a week by social media, email, live chat and phone.
Overall, Moneyfarm delivers an excellent level of customer support in return for charging one of the higher fees. It also offers one of the lower fund fees for ethical investors.
Classic portfolio:
£10,000: £99
£30,000: £282
£50,000: £445
Socially responsible:
£10,000: £100
£30,000: £285
£50,000: £450
5 options in each of ‘original’ and ‘ethical’ portfolios

0.60%

Classic – 0.10% to 0.16%, ethical – 0.38% to 0.92%

5 options in each of ‘original’ and ‘ethical’ portfolios

0.60%

Classic – 0.10% to 0.16%, ethical – 0.38% to 0.92%

Wealthify was founded in 2016 and acquired by Aviva in 2018. It has over 30,000 customers.
Managed portfolios are invested in up to 25 ETFs and funds from a wide selection of equity, bond and other investments. Providers include Vanguard, iShares and Fidelity.
Use of actively-managed funds, as well as ETFs, provides a wider universe of potential ESG investments.
Accounts can be managed online or via the app, with reports issued quarterly.
Minimum investment of £1 with the option of monthly investing.
Customer support available six days a week by email, live chat and phone.
Overall, Wealthify is a good all-rounder with a competitively-priced managed portfolio. It offers a wider choice for ethical investors with access to actively-managed funds, as well as ETFs. However, it lacks the questionnaire approach of the other platforms, thereby limiting the tailoring of portfolios.
Original portfolio:
£10,000: £76
£30,000: £228
£50,000: £380
Ethical:
£10,000: £130
£30,000: £390
£50,000: £650
10 options in each of ‘fully managed’ and ‘socially responsible’ portfolios

Up to £100,000: 0.75%, Over £100,000: 0.35%

Fully managed – 0.27%, ethical – 0.35%

10 options in each of ‘fully managed’ and ‘socially responsible’ portfolios

Up to £100,000: 0.75%, Over £100,000: 0.35%

Fully managed – 0.27%, ethical – 0.35%

Launched in 2012, Nutmeg was acquired by JP Morgan in 2021. It is one of the largest robo-advisers with over 200,000 clients.
Managed portfolios are invested in between 11-30 ETFs and funds from a selection of thousands of equity, bond and other investments. Providers include Vanguard, iShares and Invesco.
Accounts can be managed online or via the app,with reports issued quarterly.
Minimum investment of £500 (£100 for LISA) with the option of monthly investing.
Customer support available five days a week by email, live chat and phone.
Overall, Nutmeg is likely to appeal to investors with portfolios of over £100,000 who benefit from a lower platform fee of 0.35%. It offers a mid-priced ethical portfolio but is the most expensive provider for smaller-value managed portfolios.
Fully-managed portfolio:
£10,000: £102
£30,000: £306
£50,000: £510
Socially responsible:
£10,000: £110
£30,000: £330
£50,000: £550
We applied the following criteria to select our list of best robo-advisors:
We compared different features across various services, applying the greatest weight to the level of fees and the range and types of investments offered.
We also considered other features, including:
We combined research with editorial judgment to arrive at our star ratings.
We calculated provider fees by based on the following assumptions:
Financial advisors provide personalised advice for investors, including tailoring an investment portfolio to their individual circumstances. However, this is an expensive option with initial fees of up to 5% of the portfolio value in question, plus annual ‘monitoring’ fees of up to 3%, according to the financial advisor review site VouchedFor.
In contrast, some investors take a DIY approach to picking their own investments and use a trading platform. Investors typically pay an annual platform fee of 0.25% to 0.45% of their investment, plus trading fees and underlying fund charges for this option.
Robo-advisors are a halfway house option between personalised wealth management and DIY investing. They offer tailored portfolios, while keeping the costs to a minimum through the use of technology where possible.
Services have taken the investment market by storm, with assets under management in the UK rising from £4.5 billion in 2017 to over £24 billion in 2022, according to consultants Statista.
Robo-advisors are digital platforms that use computer algorithms to construct an automated portfolio to fit an investor’s appetite for risk. They aim to create an investment portfolio with minimal human intervention, which reduces the cost of providing the service.
Algorithms are used to understand and predict investor preferences, including appetite for risk and loss, time horizon and financial circumstances. The investor profile is then matched to one of a number of different portfolio options that best meets the investor’s needs.
The investment team behind a robo-advisor regularly reviews the composition of each portfolio and changes the weighting of constituent funds in response to market conditions.
The term ‘robo-advisor’ is used to describe a wide range of platforms offering investors a choice of ready-made portfolios according to their risk profiles and investment objectives.
The ‘pure play’ robo-advisors, such as InvestEngine, Moneyfarm and Nutmeg, require investors to complete detailed questionnaires before matching them to the most appropriate portfolio.
The popularity of robo-advisors, particularly among tech-savvy ‘Gen Z’ investors, has also attracted interest from traditional investment companies. Insurance giant Aviva swallowed up Wealthify in 2018, while banking behemoth JP Morgan bought Nutmeg last year.
Other forms of robo-advice from the likes of Plum, Circa 500, Evestor and Netwealth, offer a choice of ready-made portfolios for investors rather than relying on the use of an in-depth questionnaire to match investors to a portfolio.
These portfolios are categorised according to their level of risk, for example from ‘cautious’ and ‘moderate’ up to ‘adventurous’.
Large investment firms, including Fidelity and Vanguard, offer robo-advisor services in the US, but not the UK.
Robo-advice is targeted at investors who are neither confident enough to pick their own investments, nor want (or can’t afford) to pay for a financial advisor.
As a result, robo-advisers are likely to appeal to investors with smaller portfolios who want to keep fees as low as possible, while leaving an expert to manage their portfolio.
This is particularly true for investors with longer time horizons who want to avoid the value of their portfolio being significantly eroded by fees over a 10 or 20 year period.
They’re also popular with younger investors, who may prefer to manage their investments online rather than in-person.
Featured Partner Offer
1
eToro
Invest in global and local stocks with ZERO commission

Explore over 2,500 stocks. Buy in bulk, or invest in fractional shares

1
eToro
On eToro’s Website
Your capital is at risk. Other fees apply. For more information, visit etoro.com/trading/fees.
As a first step, clients are required to fill in a questionnaire, covering various considerations:
The robo-advisor uses this information to match the client’s profile to the most appropriate portfolio. Robo-advisors typically offer a range of 5 to 10 portfolios within each investing category, principally categorised by risk.
Most portfolios are invested in a basket of 10-25 exchange-traded funds (ETFs). These are passively-managed investments, meaning that they typically track an index, such as the FTSE 100 or commodity prices.
More cautious portfolios are primarily invested in bonds with a small proportion of shares, while more adventurous portfolios are mainly invested in shares across developed and emerging economies.
These portfolios will be monitored on a daily basis by the investment specialists at the robo-advisor to make adjustments to the mix of underlying investments according to market developments.
The robo-advisor will also carry out a formal rebalancing of investors’ portfolios, usually on a quarterly basis. This ensures that the portfolio remains appropriately distributed across different asset types. For example, where one ETF has performed particularly well and represents a disproportionately high percentage of the overall portfolio.
Investors can log onto their account, either online or by an app, to see a real-time valuation of their portfolio. Some providers also offer the option to manually re-balance the portfolio before the formal review period.
Most robo-advisors offer a general investment account, as well as an Individual Savings Account. Some may also offer other tax-efficient wrappers such as a Junior ISA, Lifetime ISA and SIPP.
The benefit of these tax-wrappers is that any gains are free from capital gains tax, while investors do not have to pay income tax on any income or dividends from their portfolio.
There are three main types of fees charged by robo-advisors:
This is an annual fee charged as a percentage of the value of your portfolio. Platform fees can vary significantly, typically ranging from 0.25% to 0.75%.
Platform fees are usually tiered, in other words, you pay a different fee percentage on each ‘slice’ of your portfolio. For example, if you had a portfolio of £25,000, you might pay 0.45% on the first £10,000 and 0.35% on the £15,000 balance.
One of the providers on our list, Moneyfarm, charges a non-tiered fee. In the example above, 0.35% would be charged on the full £25,000. This can be a significant cost-saving for investors with larger portfolios.
These are charged by the fund manager on the underlying funds in your portfolio. One of the reasons that robo-advisors principally invest in ETFs is that they are passively-managed, and, as a result, charge a low fee, typically around 0.1% to 0.2%.
As with shares, ETFs have a ‘buy-sell’ spread, meaning that brokers make a small profit on the trade by charging buyers a slightly higher price than the price received by sellers.
The typical ETF spread is 0.07% to 0.10%. It’s worth noting that this spread can vary according to the number of times that the robo-advisor repositions the portfolio, however, the provider will usually try to keep this within the quoted range.
Many of the major trading platforms, such as Hargreaves Lansdown, AJ Bell and interactive investor, offer investors a choice of ready-made, or ‘model’, portfolios. These portfolios are usually split by growth (with various risk levels), income and ethical investing.
Platform fees are typically lower than for robo-advisors, at 0.25% to 0.45%. However, fund charges for model portfolios can vary significantly, such as 0.2% for an ETF-based growth portfolio, 0.7% for an income portfolio and 1.3% for a fund-based growth portfolio.
Note that model portfolios do not offer the automatic re-balancing option provided by robo-advisors.
While the platform may review and rebalance the composition of the model portfolio on a regular basis, investors would have to manually buy and sell their investments to re-weight their portfolio to replicate this.
Having worked in investment banking for over 20 years, I have turned my skills and experience to writing about all areas of personal finance. My aim is to help people develop the confidence and knowledge to take control of their own finances.

source

Apk Bazar

Leave a Reply

Your email address will not be published. Required fields are marked *