Robo-Advisers based in the UK appeal to many investors, but why?
Generation X and millennials are more dependent on technology than any generation ever before and online wealth management is meeting the technological needs of the 21st century by offering their services digitally without the need of human supervision.
Robo-advice is based on digital platforms rather than human interaction and uses algorithms to provide customers personalised financial planning advice.
Customers often need to do as little as fill out an online survey and the robo-adviser collects information based on the current financial situation of the user and their future financial goals.
Users are then placed on the portfolio which suits their needs the most. The benefit of using robo-advice is that the client gains a portfolio which contains a mix of bonds and shares from varying industries, eliminating the need for human interaction. Robo-advice clients will still maintain an element of risk whilst continuing to try and maximise on their returns.
Which are the key robo-advisers UK?
To start investing with this robo-adviser platform the user needs a minimum of £500 up to £100,000.
Clients are charged 0.75% for a fully managed portfolio and 0.45% on a fixed allocation portfolio.
However clients that invest more than £100,000 are charged 0.35% for a fully managed portfolio and 0.25% for a fixed allocation portfolio.
Nutmeg aims to diversify the user’s portfolio across different types of investments globally. They take care of the rebalancing to stop the risk of the clients portfolio from increasing.
Each portfolio is selected at the chosen risk level of the customer depending on if they would like to be cautious or adventurous. Nutmeg also reinvests the dividends from the assets in the portfolio, increasing chances for growth.
Moneyfarm was founded in 2011 and now operates in both Italy and the UK. Clients can start investing with Moneyfarm with a minimum of £500.
When investing up to £20,000 the fees are 0.7% per year.
From £20,000-100,000 the fee is 0.6% per year, £100,000-500,000 the fee is 0.5% and for anything exceeded £500,000 the fee is 0.4%. They offer simplified advice and discretionary investments to their customers.
The robo-adviser platform includes an advice centre which allows clients to understand their investment profiles and risk appetite, ensuring that they know that their portfolio is built exactly to their needs.
Their investment strategy includes; diversification, keeping costs low and staying on top of market fluctuations by rebalancing the portfolio.
Wealthify requires a minimum of £1, investing in both ETF’s and index funds.
Investments made up to £15,000 has a 0.7% fee and this falls to 0.6% for any investments between £15-50,000.
Their system collects data from across financial global markets in order to spot turbulence and shelter investments from them. Their products include Investment ISA, ISA transfer and ethical investments
This robo-advisor requires a minimum of £10,000 for clients to start investing.
They charge a fee of 0.75% with an added average of 0.25% for fund charges.
The portfolio the robo-advisor creates invests in a variety of assets including equities, government bonds, corporate bonds, commodities, real estate and cash. By law their portfolio is required to be suitable for the client alone and not the interest of the company
Are robo-advisers the future of wealth management?
Robo-advisers appear to be popular as their required investment figure is low compared to wealth management companies in the UK.
The cost for robo-advisers are low and they provide a service for customers on a 24/7 basis. However they cannot provide customers with regulated financial advice therefore it lacks the bespoke service that wealth management offers its clients.