There are more people investing in the UK and around the world than ever, thanks largely to technological advances making it easier. Robo-advisors are a big part of that, as they utilise automated systems and algorithms to invest for customers and grow their wealth. In this article we will analyse the pros and cons of robo-advisors, explain what they are and how they work, and give an overview of the best robo-advisors in the UK.
Best Robo-Advisor in the UK Summary
Moneyfarm
Nutmeg
Wealthify
Table of Contents
Best Robo-Advisor UK Reviewed – At a Glance
Moneyfarm
Founded in Italy in 2011, Moneyfarm have become a popular choice in the UK market largely due to their simple, sliding scale pricing structure and range of investment types. A classic robo-advisor, their automated systems choose the best investment strategy for customers.
Key Features
- ISA, Junior ISA, SIPP and General Investment Accounts
- Standard and ethical investments
- Choose your desired risk level
Costs
- Standard – 1.05% up to £10,000 invested, moving down to 0.65% if over £500,000 invested.
- Ethical – 1.04% up to £10,000 invested, moving down to 0.64% if over £500,000 invested.
Nutmeg
Nutmeg launched in the UK in 2011, and claim to be ‘the largest digital wealth manager in the UK’. They are the largest of the robo-advisor platforms in terms of funds held for customers.
Key Features
- ISA, Junior ISA, SIPP and General Investment Accounts.
- 4 distinct investment styles, focused on ETFs.
- Wide ranging risk levels.
Costs
- Socially Responsible funds range from 0.7% to 1.1% depending on amount invested.
- Standard Funds range from 0.71% to 1.04%, depending on which fund chosen and amount invested.
Wealthify
Wealthify was launched in 2015, and in 2018 was purchased by insurance company Aviva. They offer a simple product with a flat pricing structure.
Key Features
- Flat pricing structure – fees are the same whatever amount invested.
- Owned by insurance giant Aviva.
Costs
- Standard – 0.76% of amount invested per year.
- Ethical – 1.3% of amount invested per year.
What is a Robo-Advisor?
Not that long ago, the world of investment was far harder to get involved with. Most people who wanted to invest would go to a traditional financial advisor or broker. This person or company would speak to the customer to find out their goals for investing, budgets and the level of risk they are willing to take, and then design and investment plan based on this. The advisor would then take as a fee a percentage of the total amount the customer had invested.
A robo-advisor is works in essentially the same way. However, as the name suggests, they use technology to decide on the investment strategy for each customer.
As they are doing the strategy and trading with automation and algorithms, it means that they can be significantly cheaper than a traditional financial advisor, as they do not need to have the dedicated labour force to deal with the customers and do all of the investment plans.
What does a Robo-Advisor do?
A robo-advisor offers a variety of financial products such as ISA or SIPP, that act as a ‘wrapper’ for your investment funds. The customer chooses which one of these they want initially.
Then the robo-advisor will ask a series of questions to understand the customer’s profile. This will consist of whether the customer wants standard or ethical investments, the level of risk they are happy with and more.
Once they have this data, they will build an investment strategy for the customer, and will take care of all of the trading.
What products do Robo-Advisors UK offer?
Generally the standard set of products offered will be similar:
- ISA – all will offer a tax-efficient stocks and shares ISA, plus many offer Junior ISAs.
- SIPP – this stands for Self Invested Personal Pension, and is a tax efficient way to save for retirement.
- General Investment Accounts (GIA) – these are more general investment accounts where money can be invested, but not with the tax benefits of the above wrappers.
Robo-Advisor vs Trading App – which should I choose?
There are several different types of investment platform available to investors.
Trading apps, such as Freetrade, Etoro, Trading 212 have exploded in recent years. These allow customers to trade stocks themselves within the app for a low cost (or even for free).
There are also ‘execution only’ trading platforms such as Hargreaves Lansdown and Interactive Investor. Like with the trading apps, these allow you to trade assets yourself. These usually charge a percentage of the amount you have invested, similar to robo-advisors.
Both of these platform types are ‘active’. This means that you will be making the decisions on which assets to invest in and doing the trades yourself.
Here is where the main difference lies with robo-advisors, as they are ‘passive’ investment platforms. This means that the platform makes the investment decisions and trades for you – you just sit back and let them get on with it.
So – the main decision when deciding between an active platform like a trading app, or a passive one like a robo-advisor is whether you want to be the one making the decisions on investing yourself, or you would rather let the investment professionals at the platform take care of it.
Are Robo-Advisors safe?
Robo-advisors are investment platforms, and all investments have risks. Anyone who wishes to start investing should be very clear that the value of your investment can go down as well as up, and there is always the possibility of losing your entire investment.
Robo-advisors do generally mitigate these risks by generally investing in ETFs and funds, which diversify the investment. In addition, it could be argued that putting your money with a robo-advisor can be safer than doing the investments yourself on a trading app, especially if you are inexperienced, as the traders at the robo-advisors should have far more knowledge.
In terms of regulation, check to see if the robo-advisor is a regulated UK investment company. Most are, and if so, then your funds would be protected under the Financial Services Compensation Scheme (FSCS) up to £85,000 in case of the insolvency of the platform. Bear in mind that amounts over that total would not have a guarantee of protection.
How much does a Robo-Advisor cost?
Robo-advisors will generally charge a percentage of the total amount you have invested, calculated on an annual basis, but usually taken monthly. This amount will be made up of the platform charge from the robo-advisor, plus the fund charge, which will be dependent on which fund your investments are in.
For example, lets assume the following data:
| Amount Invested | £100,000 |
| Platform Fee | 0.25% |
| Fund Fee | 0.75% |
In this case, the total annual percentage fee would be 1%. Therefore the costs to maintain your investments would be:
Annual cost: £1000 (1% of £100,000)
Monthly Cost: £83.33
Of course the hope is that the growth of the investment would be at a level that would increase more than the cost!
Robo-Advisor Fees Comparison
Standard Funds
| Moneyfarm | Wealthify | Nutmeg | Nutmeg | Nutmeg | |
| Amount Invested | Classic | Original | Fully Managed | Smart Alpha | Fixed Allocation |
| £500 | 1.04% | 0.76% | 1.02% | 1.05% | 0.71% |
| £10,000 | 0.99% | 0.76% | 1.02% | 1.05% | 0.71% |
| £20,000 | 0.94% | 0.76% | 1.02% | 1.05% | 0.71% |
| £50,000 | 0.89% | 0.76% | 1.02% | 1.05% | 0.71% |
| £100,000 | 0.74% | 0.76% | 0.62% | 0.65% | 0.51% |
| £250,000 | 0.69% | 0.76% | 0.62% | 0.65% | 0.51% |
| £500,000 | 0.64% | 0.76% | 0.62% | 0.65% | 0.51% |
Socially Conscious Funds
| Amount Invested | Moneyfarm | Wealthify | Nutmeg |
| £500 | 1.05% | 1.30% | 1.10% |
| £10,000 | 1.00% | 1.30% | 1.10% |
| £20,000 | 0.95% | 1.30% | 1.10% |
| £50,000 | 0.90% | 1.30% | 1.10% |
| £100,000 | 0.75% | 1.30% | 0.70% |
| £250,000 | 0.70% | 1.30% | 0.70% |
| £500,000 | 0.65% | 1.30% | 0.70% |
How to choose a Robo-Advisor UK
Before choosing which robo-advisor is for you, it is good to ask yourself several questions:
- What sort of product do I want to do my investment in: ISA, SIPP, or a General Investment Account?
- Do I want to invest in ethical or standard assets?
- What amount do I want to invest initially?
- What amount do I expect to invest on a regular basis, and how much do I think I will have invested in 10, 15 or 20 years?
- What level of risk am I comfortable with?
Once you have answers to these, then you can see which of the robo-advisors will be right for you.
Who are Robo-Advisors for?
Robo-advisors can help many different types of investors. Beginner investors can benefit from using them, as the passive style of investing means you do not have to have a steep learning curve to understand how to invest, then research extensively to decide which assets to invest in.
They can also be useful for more experienced investors, who may wish to take advantage of the lower costs than a traditional financial advisor may charge, and the investment expertise of the platform.
Is a Robo-Advisor for me? Can a Robo-Advisor make me money?
Like any investment platform, it is possible to make money with a robo-advisor. Of course this is not guaranteed, as all investments have a risk. However, robo-advisors exist to help investors grow their wealth, and will publish the results of their fund, usually going back many years, on their websites.
Robo-Advisor Pros & Cons
Pros
- Their use of technology means their costs are lower than traditional financial advisors.
- Pricing is generally easy to understand and transparent.
- You can passively let the platforms do the work and (hopefully) grow your wealth.
Cons
- You cannot choose your own assets to trade like on other types of trading app.
- As all is automated, you generally will not be able to speak to an advisor.
- Some robo-advisors have high minimum investment amounts which could put off smaller beginner investors.
Robo-Advisors Compared
Moneyfarm vs Nutmeg
| Moneyfarm | Nutmeg | |
| Fees | 0.64 % – 1.05% depending on amount | 1%, dropping to 0.65% if £100k invested |
| Minimum Deposit | £500 | GIA, ISA, SIPP – £500. Junior ISA – £100 |
| Products | GIA, ISA, Junior ISA, SIPP | GIA, ISA, Junior ISA, SIPP |
| Risk Levels | Various | 5 or 10 |
Read our full length comparison of Moneyfarm vs Nutmeg
Nutmeg vs Wealthify
| Nutmeg | Wealthify | |
| Fees | 1%, dropping to 0.65% if £100k invested | Standard 0.76%, Ethical 1.3% |
| Minimum Deposit | GIA, ISA, SIPP – £500. Junior ISA – £100 | ISA, GIA, £1, Pensions £50 |
| Products | GIA, ISA, Junior ISA, SIPP | GIA, ISA, Junior ISA, SIPP |
| Risk Levels | 5 or 10 | 5 |
Moneyfarm vs Wealthify
| Moneyfarm | Wealthify | |
| Fees | 0.64 % – 1.05% depending on amount | Standard 0.76%, Ethical 1.3% |
| Minimum Deposit | £500 | ISA, GIA, £1, Pensions £50 |
| Products | GIA, ISA, Junior ISA, SIPP | GIA, ISA, Junior ISA, SIPP |
| Risk Levels | Various | 5 |
Read our full length comparison of Moneyfarm vs Wealthify
Best Robo-Advisor UK FAQ
Do millionaires use robo-advisors?
There is no reason why they would not. Robo-advisors provide an effective way for even millionaires to invest their funds. In addition, several robo-advisors have a sliding scale of costs, where the annual percentage fee is lower the more you have invested, so if you had over £1 million invested, it could be one of the cheapest ways to invest.
Is a robo-advisor good for beginners?
As robo-advisors are a discretionary form of investing i.e. they choose the investments for you and do the trades, they can be a very good way for beginner investors to get started. Learning about investing and what assets to invest in can be complicated and time-consuming, so robo-advisors are a way to kick off without this learning curve.
Are there any free robo-advisors?
The robo-advisor business model is really based on taking a fee of a percentage of the amount you have invested each year to pay for their platform and staff, so there are not any free robo-advisors. However, there are potentially some options to try to replicate the robo-advisor model. One example is eToro, who have their Copy Trader function. This allows you to see and replicate the trades of other, successful traders on their platform. Trading on eToro is free, so whilst you will need to do the trades yourself, you can in a way replicate the robo-advisor experience of having a more experienced trader select your trades for you for no cost.
What is the average return on robo-advisors?
The returns generated by robo-advisors can vary quite significantly depending on the funds invested in and the risk level chosen. As robo-advisors are relatively new companies generally, they do not have decades of results available. However, each robo-advisor will generally have at least 5 years or so of results available on their websites that you can check and compare.
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