The advent of machine learning and cheaper computing power have given rise to a new way to manage your wealth known as robo advisors. Fintech has enabled computer algorithms to do the same job as a human money managers but more cheaply, so here we dig into the question of exactly how cheap robo advisors are and this should help you compare their offerings.
In theory, robo advisors combine the potential to earn above-market returns often promised, but seldom delivered, by traditional active funds while maintaining the low cost of passive funds. The main features of these funds are their transparency, the use of visually pleasing apps to track investment returns on a daily basis and a low investment threshold. Robo investment has gained huge popularity in the US but is only starting to get a foothold in the UK.
Before we look at the robos we need to understand what these companies do and how they fit in the wealth management ecosystem. You need to know four words: advisor, fund, discretionary and advisory.
Here we review the main features and pricing details of the major robo investors. When we talk about a percentage fee it is measured as an annual percentage charge on the amount you invest. For example if you invest £10,000 and the fee is 1% then each year you will be charged £100.
Robo Fund Name
Robo Fund Name
These charges were last updated on March 2020.
Cost is not the only factor to consider. The actual services provided by each robo investor differ widely and it's worth digging deeper into their websites to get a feel for the company ethos as well as their approach to investing before you commit any capital. For example some provide an app for your phone so that you can monitor your investments on the go. Some have a minimum investment, but others allow you to invest as little as £1.
For a more general comparison of active vs. passive vs. robo funds see our article comparing the three here. To get more in-depth insight into robo advisers by hearing the views of the people who build and run two of the largest take a look at the following:
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