Featured Partner Offers
1
Moneyfarm
Access to dedicated investment consultants
Lower platform fee for larger portfolios and low fund charges on ethical portfolio
Regular rebalancing (3-5 times a year)
1
Moneyfarm
On Moneyfarm’s Website
2
eToro
Invest in global and local stocks with ZERO commission
Explore over 4,000 stocks. Buy in bulk, or invest in fractional shares
2
eToro
On eToro’s Website
Your capital is at risk. Other fees apply. For more information, visit etoro.com/trading/fees.
Who are the best robo-advisors?
We researched a range of robo-advisors and have listed our findings below. Our methodology explains how we ranked the advisors and our Frequently Asked Questions section explains how robo-advisors work.
FEATURED PARTNER OFFER
Best for customer service
Moneyfarm – General Investment Account, ISA, Junior ISA and SIPP
5.0
Our ratings take into account a product's rewards, fees, rates and other category-specific attributes. All ratings are determined solely by our editorial team.
Choice of investments
7 options in each of ‘classic’, ‘socially responsible’ and ‘fixed allocation' portfolios
Platform fees
Under £100,000: from 0.60% to 0.75%, Above £100,000: from 0.35% to 0.45%
Fund fees
Classic – 0.29%, socially responsible – 0.30% (both actively-managed)
On Moneyfarm's Website
Choice of investments
7 options in each of ‘classic’, ‘socially responsible’ and ‘fixed allocation' portfolios
Platform fees
Under £100,000: from 0.60% to 0.75%, Above £100,000: from 0.35% to 0.45%
Fund fees
Classic – 0.29%, socially responsible – 0.30% (both actively-managed)
Why We Picked It
Originally backed by Italian investors, Moneyfarm launched in the UK in 2016. It has over 125,000 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.
Pros & Cons
- Designated investment consultant
- Lower platform fee for larger portfolios
- Regular rebalancing (3-5 times a year)
- Low fund charges on ethical portfolio
- High platform fee for smaller portfolios
- High fund fees on classic portfolio
- High minimum investment of £500
- No LISA account
Typical fees
Classic portfolio (actively-managed):
£10,000: £99
£30,000: £282
£50,000: £445
Socially responsible (actively-managed):
£10,000: £100
£30,000: £285
£50,000: £450
FEATURED PARTNER OFFER
Best low-cost provider
InvestEngine – Personal Account and ISA
5.0
Our ratings take into account a product's rewards, fees, rates and other category-specific attributes. All ratings are determined solely by our editorial team.
Choice of investments
10 options for growth
Platform fees
0.25%
Fund fees
Growth – 0.23%
Choice of investments
10 options for growth
Platform fees
0.25%
Fund fees
Growth – 0.23%
Why We Picked It
InvestEngine was founded in 2019 by the co-founder of Gumtree. It has over 21,000 active clients.
The managed growth portfolio is invested in around 15 ETFs and providers include Vanguard, Invesco and iShares. InvestEngine has withdrawn its managed income portfolio for new customers.
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.
Pros & Cons
- Lowest platform fee
- Low fund charges
- Low minimum investment of £100
- Quarterly rebalancing
- No ethical portfolio
- No income portfolio
- No LISA, JISA or SIPP accounts
- No phone support
Typical fees
Growth portfolio:
£10,000: £48
£30,000: £144
£50,000: £240
FEATURED PARTNER OFFER
Wealthify – General Investment, ISA, Junior ISA and SIpp
4.5
Our ratings take into account a product's rewards, fees, rates and other category-specific attributes. All ratings are determined solely by our editorial team.
Choice of investments
5 options in each of ‘original’ and ‘ethical’ portfolios
Platform fees
0.60%
Fund fees
Average fees: classic – 0.16%, ethical – 0.70%
Choice of investments
5 options in each of ‘original’ and ‘ethical’ portfolios
Platform fees
0.60%
Fund fees
Average fees: classic – 0.16%, ethical – 0.70%
Why We Picked It
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.
Pros & Cons
- One of lower platform fees
- Ethical portfolio option with active funds
- Low minimum investment of £1
- Quarterly rebalancing
- High platform fee for larger portfolios
- High fund charges on ethical portfolio
- No in-depth questionnaire
- No LISA accounts
Typical fees
Original portfolio:
£10,000: £76
£30,000: £228
£50,000: £380
Ethical:
£10,000: £130
£30,000: £390
£50,000: £650
FEATURED PARTNER OFFER
Nutmeg – General Investment, ISA, Junior ISA, Lifetime ISA and SIPP
4.0
Our ratings take into account a product's rewards, fees, rates and other category-specific attributes. All ratings are determined solely by our editorial team.
Choice of investments
10 options in each of ‘fully managed’ and ‘socially responsible’ portfolios
Platform fees
Up to £100,000: 0.75%, Over £100,000: 0.35%
Fund fees
Fully managed – 0.26%, ethical – 0.35%
Choice of investments
10 options in each of ‘fully managed’ and ‘socially responsible’ portfolios
Platform fees
Up to £100,000: 0.75%, Over £100,000: 0.35%
Fund fees
Fully managed – 0.26%, ethical – 0.35%
Why We Picked It
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.
Pros & Cons
- Lower platform fee for larger portfolios
- Ethical portfolio option
- Regular rebalancing (monthly if necessary)
- Offer wide range of account types
- Highest platform fee
- High minimum investment of £500
- Lowest reviews on Trustpilot
Typical fees
Fully-managed portfolio:
£10,000: £101
£30,000: £303
£50,000: £505
Socially responsible:
£10,000: £110
£30,000: £330
£50,000: £550
What’s our methodology?
We applied the following criteria to select our list of best robo-advisors:
- Does the service require clients to complete a questionnaire about their investment goals and financial circ*mstances? Where this isn’t required, we looked at whether the service used automated tools to create a portfolio tailored to a client’s risk profile.
- Does the service provide automated tools such as rebalancing of portfolios?
- Is the robo-advisor authorised by the Financial Conduct Authority?
- Does the robo-advisor have a good rating on consumer review site Trustpilot and a low level of FCA complaints?
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:
- access to ethical investment portfolios
- regularity of re-balancing and client reporting
- level of customer support
- minimum investment amounts
- availability of tax-efficient accounts such as Individual Savings Accounts (ISAs), Lifetime ISA (LISAs), Junior ISAs and Self-Invested Personal Pensions (SIPPs).
We combined research with editorial judgment to arrive at our star ratings.
What assumptions did we use for our fee calculations?
We calculated provider fees by based on the following assumptions:
- value of portfolio: we considered the fees for three different portfolio values: £10,000, £30,000 and £50,000
- platform fees: based on the portfolio values above
- types of portfolio: based on managed portfolios available, including ethical portfolios (where available)
- fund charges: based on the combined average of the fund fees and buy-sell spread costs.
What types of financial advice are available?
Financial advisors provide personalised advice for investors, including tailoring an investment portfolio to their individual circ*mstances. 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.
Where does robo-advice fit in?
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 circ*mstances. 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.
Who offers robo-advice?
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.
Who is robo-advice aimed at?
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 Offers
1
Moneyfarm
Access to dedicated investment consultants
Lower platform fee for larger portfolios and low fund charges on ethical portfolio
Regular rebalancing (3-5 times a year)
1
Moneyfarm
On Moneyfarm’s Website
2
eToro
Invest in global and local stocks with ZERO commission
Explore over 4,000 stocks. Buy in bulk, or invest in fractional shares
2
eToro
On eToro’s Website
Your capital is at risk. Other fees apply. For more information, visit etoro.com/trading/fees.
Frequently Asked Questions (FAQs)
How do robo-advisors work?
As a first step, clients are required to fill in a questionnaire, covering various considerations:
- financial position, including annual income and expenditure, assets and debt
- time horizon/length of time they’d like to invest for and their age
- appetite for risk and losses, including whether they would look to sell investments if their value fell
- desire for guaranteed returns
- experience and expertise in different types of investment products
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.
What type of tax-wrappers are available?
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.
What does a robo-advisor cost?
There are three main types of fees charged by robo-advisors:
Platform fees
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.
Fund fees
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%.
ETF spread fees
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.
What is a model portfolio and how does it differ to robo-advice?
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.
Information provided on Forbes Advisor is for educational purposes only. Your financial situation is unique and the products and services we review may not be right for your circ*mstances. We do not offer financial advice, advisory or brokerage services, nor do we recommend or advise individuals or to buy or sell particular stocks or securities. Performance information may have changed since the time of publication. Past performance is not indicative of future results.
Forbes adheres to strict editorial integrity standards. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by ourpartners.
Jo GrovesForbes Staff
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.
I'm an experienced professional in the field of robo-advisors and investment management, having worked extensively in investment banking for over 20 years. My expertise lies in understanding the intricacies of different robo-advisory platforms, investment strategies, and the broader landscape of financial services. Now, let's delve into the concepts discussed in the provided article.
The article discusses various robo-advisors and their offerings. Here's a breakdown of the key concepts covered:
-
Moneyfarm:
- Features: Dedicated investment consultants, lower platform fee for larger portfolios, low fund charges on ethical portfolio, regular rebalancing (3-5 times a year).
- Platform Fees: Under £100,000: 0.60% to 0.75%, Above £100,000: 0.35% to 0.45%.
- Fund Fees: Classic portfolio – 0.29%, socially responsible – 0.30%.
-
InvestEngine:
- Features: Low-cost provider, 10 options for growth, platform fees 0.25%, low fund charges, quarterly rebalancing.
- Platform Fees: 0.25%.
- Fund Fees: Growth portfolio – 0.23%.
-
Wealthify:
- Features: General Investment, ISA, Junior ISA, and SIPP, 5 options in each of ‘original’ and ‘ethical’ portfolios, platform fees 0.60%, average fund fees classic – 0.16%, ethical – 0.70%.
- Platform Fees: 0.60%.
- Fund Fees: Classic portfolio – 0.16%, ethical portfolio – 0.70%.
-
Nutmeg:
- Features: General Investment, ISA, Junior ISA, Lifetime ISA, and SIPP, platform fees up to £100,000: 0.75%, over £100,000: 0.35%, fund fees fully managed – 0.26%, ethical – 0.35%.
- Platform Fees: Up to £100,000: 0.75%, Over £100,000: 0.35%.
- Fund Fees: Fully managed portfolio – 0.26%, ethical portfolio – 0.35%.
-
Methodology:
- The article explains the criteria used for selecting the best robo-advisors, including completion of questionnaires, automated tools, FCA authorization, Trustpilot ratings, fees, and types of investments offered.
-
Assumptions for Fee Calculations:
- Detailed information on how provider fees were calculated based on portfolio value, platform fees, types of portfolios, and fund charges.
-
Types of Financial Advice:
- Comparison between personalized financial advice, DIY investing, and robo-advisors, highlighting the cost differences and benefits of robo-advisory services.
-
How Robo-Advisors Work:
- Explanation of the robo-advisor process, including client questionnaires, automated portfolio creation, daily monitoring, and quarterly rebalancing.
-
Robo-Advisor Offerings:
- Differentiation between 'pure play' robo-advisors (e.g., InvestEngine, Moneyfarm, Nutmeg) and other forms of robo-advice from various platforms.
-
Target Audience for Robo-Advice:
- Discussion on the target audience for robo-advisors, emphasizing investors with smaller portfolios, tech-savvy individuals, and those seeking a cost-effective investment management solution.
These concepts provide a comprehensive overview of the robo-advisory landscape and factors to consider when choosing a platform. If you have specific questions or if there's a particular aspect you'd like more information on, feel free to ask.
