Choose the best UK Robo Advisor Platform for 2024
Robo advisor platforms provide an efficient and cost-effective way for individuals to manage their investments and plan for their financial futures. They are a great tool for those who don’t know how to go about starting out or don’t necessarily have the financial means to hire a traditional financial advisor, a resource that is often far more expensive.
In this guide, we will help you to understand the following questions – and there’s a helpful list of robo advisor platforms further down the page to help you get started :
- What is a Robo Advisor?
- Why do investors choose them?
- What are the drawbacks?
- Is a Robo Advisor better than a Financial Advisor?
- How to choose the best platform
- Compare Robo Advisor Platforms
What is a Robo Advisor?
A robo advisor is a digital, automated replacement for the human financial advisor. Advanced algorithms designed with market forces and different investment dynamics in mind provide a platform for a more hands-off approach to investing.
Robo advisor platforms typically build investment profiles for individuals based on initial or periodic online questionnaires. These questionnaires explore the investors’ goals, their appetite for risk, and a range of other factors.
Using the information it collects, the robo advisor will suggest an appropriate investment option and commence automated portfolio management. This process may include selecting investments, rebalancing the portfolio, and many other actions a financial advisor might take on your behalf.
Today, robo advisor platforms comprise a significant proportion of the market. By 2023, their market was estimated to be worth more than $7 billion. Today’s largest robo-advisory firms manage hundreds of millions of dollars in assets. Their popularity has grown quickly and they are now a significant force in the industry.
Why do investors choose Robo Advisors?
Robo advisor platforms have a widespread reputation for offering investors a more flexible entry point. Most automated advisors don’t have high minimum asset requirements to start investing with monthly investments of £25-£50 typical within the industry. Likewise, the costs and fees associated with robo advisors are often much lower than those associated with working with a professional. Getting started is simple; even novice investors can build a portfolio with a robo advisor. For those who don’t have the time to monitor the market or keep up on their investments frequently, robo advisor platforms offer a reasonable hands-off solution.
With robo advisors, investors can turn most of the management of their portfolio assets over to the computer. As algorithms continue to improve and systems become more capable of ingesting and analyzing vast volumes of data, robo advisors may also advance and respond to market conditions.
Still, robo advisor platforms have inherent drawbacks that may make them less suitable for experienced investors or high-net-worth individuals.
What are the drawbacks of a Robo Advisor?
While robo-advisors offer an excellent entry path for beginning and intermediate investors, they may not be the most suitable choice for all investors. Individuals with complex investing requirements or an extensive portfolio of assets to manage may find that robo-advisors aren’t as flexible as they require. Investors with a high net worth or a substantial amount to invest often have more personal needs and goals. Current robo-advisors can’t consider these goals at the same level as a human advisor. They can’t offer tailored advice for your goals and personal financial situation. Likewise, they aren’t adept at structuring very complicated portfolios.
Perhaps most concerning to more active investors is that robo-advisors may come up short when the market enters a period of high volatility. With so much more noise in the data, algorithms may not be able to respond accurately or quickly to rapidly shifting conditions.
Is a Robo Advisor better than a financial advisor?
Before the advent of modern robo-advisors, human professionals were the primary source of insight into investment strategies. Today, expert financial advisors continue to play a significant role, particularly for those with specific goals or higher net worths. Human advisors offer personalized insight and guidance, allowing for a more tailored approach to portfolio management.
While robo-advisors provide a level of automation and efficiency, they may not quickly adapt strategies or respond to specific immediate requirements. In contrast, personal financial advisors can work closely with clients to set clear guidelines for investment management and can make rapid adjustments during volatile periods. The human touch in investing offers a more personalized approach that may be particularly valuable in times of uncertainty.
Some individuals are drawn to robo-advisors due to certain limitations associated with traditional financial advisors. Human advisors often charge higher fees compared to their automated counterparts. Additionally, many advisory firms require a minimum asset threshold, which could be tens or even hundreds of thousands of dollars. For high-net-worth individuals (HNWIs), these firms provide experience and guidance tailored to navigating the complexities of current and future markets.
Effectively managing your assets and exploring different investment opportunities can be important steps for your future. Today, robo advisor platforms provide convenience and time-saving solutions, though they may not offer personalized advice or complex financial planning. For beginners and those with limited capital, robo-advisors can be a great starting point. Personalized financial advice remains highly valuable for individuals with higher net worth, bigger goals, or more specific needs
How do I choose the best Robo Advisor platform?
The first port of call for investors looking for the right robo advisor platform is to find one that is committed to operating under the highest standards of business practices, Keeping your money safe should be paramount. Choosing a robo advisor that is regulated in the UK by the FCA or by a similarly well renowned regulator in other territories will ensure that your chosen platform adheres to world class business practices when it comes to protecting your money.
Fees are another, often overlooked factor that investors need to consider. Higher fees will effectively reduce the amount of growth you will see from your robo advisor and over the longer term, this can have a significant impact on the performance of your portfolio. Fees are an inevitable consequence of choosing to invest with a robo advisor platform and will often be more expensive than the fees you would expect if you were to manage your portfolio yourself, The smart investor will compare fees when researching robo advisors.
Performance is the headline act with any robo advisor. A strong performance over 1, 5 and 10 year periods will indicate consistent growth and outperformace against other robo advisors can be an attractive draw. However, investors should be aware that past performance doesn’t necessarily translate into future performance and this shouldn’t be used as a single benchmark when you are choosing your robo advisor platform.
As we highlighted above, robo advisor platforms will build an investment profile for their clients, designed to suit their goals and appetite for risk. These profiles are buit through a series of pre-defined questions that identify things like the length of time of the investment, is it for a pension in 30 years time, or a pot of money for savings in a Stocks and Shares ISA, or perhaps for a child within a Junior ISA. The pre-defined questions will try to understand your attitude to risk and most robo advisor platforms offer a range of portfolios, spread across different levels of risk, designed for the majority of needs. Cautious investors, for example, are likely to be directed towards portfolios with a lower percentage of stocks and shares, and a higher percentage of bonds. For investors with a higher tolerance of risk, a portfolio with a greater percentage of stocks and shares will likely be more appropriate.
For the more environmentally conscious investor, some robo advisor platforms will also offer a ‘Green alternative portfolio’. Performance and fees may differ so investors should understand this as part of their selection.
Finally, deposit and monthly fees vary significantly across robo advisors. As we highlighted above, a typical monthly investment committment of £25-£50 is typical, but some platforms require less, and some require more. Investors can also open an account with a lump sum which can vary significantly. Some robo advisor platforms accept a minimum deposit of £1, while some are upwards of £1,000, with the average being between £100-£500.
Next Steps
We hope that our Robo Advisor platform guide has given you the confidence to start investing. While Robo Advisors are not for everyone, here at The Armchair Trader, we feel they can be a great place to start your investing journey. You can always move your money at a later stage and start investing on your own – just check your exit fees first.
We’ve got a list of Robo Advisor platforms for you to explore below. Some are focused purely on their robo advisory services, while some platforms offer additional flexibility for you to start choosing your own investments over time. Good luck!
Provider | Deposit | Fees | ISAs | Investment Options |
---|---|---|---|---|
IG | £500 initial deposit £50 monthly minimum | £96 platform fee £8.00* per trade | Stocks & Shares ISAs | UK Shares Non-UK Shares Funds ETFs Robo Advisor |
Trade 3+ stocks per month for active trader cost of £3.00 on UK stocks. Clients holding investments will be charged a platform fee of £8 per month which can be offset against a trade over the period. IG's Smart Portfolio's are a low cost option for those who are unsure where to invest their money. | ||||
Hargreaves Lansdown | £100 initial deposit £25 monthly minimum | 0.45% platform fee £11.95* per trade | Stocks & Shares ISAs Junior ISAs Lifetime ISAs | UK Shares Non-UK Shares Funds ETFs Bonds Robo Advisor |
Trade 10+ stocks per month for active trader cost of £8.95 or 20+ at £5.95. Additional charge of up to £45 per annum on stocks and shares. There's no dealing charge for buying or selling funds but you'll pay a holding fee of up to 0.45% per annum. Ready-made portfolios are available for investors that are unsure where to invest their money for an additional fee. | ||||
AJ Bell | £500 initial deposit £25 monthly minimum | 0.25% platform fee £9.95* per trade | Stocks & Shares ISAs Junior ISAs Lifetime ISAs | UK Shares Non-UK Shares Funds ETFs Bonds Robo Advisor |
Trade 10+ stocks per month for active trader cost of £4.95 (reducing to £3.50 from 1st April 24). Additional charge of up to £3.50 per month on stocks and shares. Up to 0.25% platform fee on Funds in addition to £1.50 transaction cost. | ||||
Aviva | £500 initial deposit £25 monthly minimum | 0.40% platform fee £7.50 per trade | Stocks & Shares ISAs Junior ISAs | UK Shares Funds ETFs Robo Advisor |
Platform fee for Shares, ETFs and Investment Trusts of no more than £45 per year. Platform fees reduce on investments over £50,000. Choose from a range of ready-made funds based on your preferred risk level or from Aviva's full range of 2,000 funds. | ||||
Barclays | £50 initial deposit £25 monthly minimum | 0.25% platform fee £6.00 per trade | Stocks & Shares ISAs | UK Shares Non-UK Shares Funds ETFs Bonds Robo Advisor |
0.25% platform fee on investments up to £200,000 and 0.05% on investments above £200,000 | ||||
Bestinvest | £100 initial deposit £90 monthly minimum | 0.4% platform fee £7.50 per trade | Stocks & Shares ISAs Junior ISAs | UK Shares Funds ETFs Robo Advisor |
Platform fees reduce to 0.2% for ISA transfers over £250,000. There are no fees for fund transactions. BestInvest provide four ready made portfolios designed for inexperienced investors. | ||||
Chelsea Financial Services | £1 initial deposit £10 monthly minimum | 0.60% platform fee | Stocks & Shares ISAs Junior ISAs | Funds Robo Advisor |
Investors can choose from 5 EasyISA portfolio's or build their own portfolio from a range of 2,500+ funds | ||||
evestor | £1 initial deposit | 0.53% platform fee | Stocks & Shares ISAs | Funds Robo Advisor |
Clients can choose from three managed portfolios, low medium or high risk | ||||
Halifax | £2000 initial deposit £100 monthly minimum | £12.50 platform fee £12.50 per trade | Stocks & Shares ISAs | UK Shares Non-UK Shares Funds ETFs Bonds Robo Advisor |
£12.50 platform fee for holding an ISA account. Choose from 2,000+ funds or three ready-made portfolio's with a £2,000 lump sum or £100 monthly payment | ||||
Legal & General | £100 initial deposit £20 monthly minimum | 0.61% platform fee | Stocks & Shares ISAs Junior ISAs | Funds Robo Advisor |
Choose from five ready-made funds or create your own portfolio by picking from 40 investment funds | ||||
Moneyfarm | £1 initial deposit | 0.75% platform fee | Stocks & Shares ISAs | Funds Robo Advisor |
Answer a series of questions and Moneyfarm will match your appetite for risk with one of their seven investment portfolios | ||||
Nutmeg | £500 initial deposit | 0.75% platform fee | Stocks & Shares ISAs Junior ISAs Lifetime ISAs | Funds Robo Advisor |
Open an account with £500 and a monthly contribution of your choice. Choose a level of risk you are comfortable with and Nutmeg will manage your portfolio for you | ||||
Scottish Friendly | £100 initial deposit £10 monthly minimum | 1.50% platform fee | Stocks & Shares ISAs Junior ISAs | Funds Robo Advisor |
Choose from 3 Investment ISA products; My Easy Choice, My Choice and My Prime. Investors can assign parts of their investment to separate accounts for specific purposes | ||||
Vanguard | £500 initial deposit £100 monthly minimum | 0.15% platform fee | Stocks & Shares ISAs Junior ISAs | Funds ETFs Robo Advisor |
Our cheapest featured platform with fees capped at £375 per year. However, a limited choice choice of 75 funds available | ||||
Virgin Money | £1 initial deposit | 1% platform fee | Stocks & Shares ISAs | Funds Bonds Robo Advisor |
Clients can choose between 5 investment funds. A sixth Climate Change Fund is available at the higher 1.3% annual fee with minimum deposit of £500 | ||||
Wealthify | £1 initial deposit £1 monthly minimum | 0.60% platform fee | Stocks & Shares ISAs Junior ISAs | Funds Robo Advisor |
No minimum deposit or monthly contribution. Investors have access to 10 funds which includes 5 ethical funds designed to suit your preferred level of risk. | ||||
Willis Owen | £25 initial deposit £25 monthly minimum | 0.40% platform fee £7.50 per trade | Stocks & Shares ISAs Junior ISAs | UK Shares Funds ETFs Robo Advisor |
Trade Shares, ETFs and Investment Trusts for £7.50. Choose from 2,500+ Funds or ready-made portfolios based on 3 levels of risk |