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.

  • Advisor: If a company in the UK gives financial advice they have to be (a) authorized to give investment advice by the Financial Conduct Authority and (b) have to know your financial circumstances intimately. That's why the term robo advisor is misleading. These companies have thousands of customers about which they know very little. They are therefore not advisors and if you look at their terms and conditions you'll see a phrase like "we do not give financial advice". If you are interested in getting financial advice we have a separate blog called  How Much Does Financial Advice Costs? 
  • Fund: A fund is a pot of money gathered from you and lots of other investors which is invested on your behalf. Some robos are funds e.g. at Nutmeg a team led by the Chief Investment Officer Shaun Port decides on day to day investments for each fund. Each risk category maps onto a fund, so your performance will be the same as everyone else in your risk category. The "robo" bit is used to tailor your interactions with Nutmeg, not to make the investment decisions. Scalable Capital is not a fund because a computer algorithm generates bespoke trades on your behalf based on your risk profile. Your portfolio and assets will be different from every other customer of Scalable.
  • Discretionary vs Advisory Wealth Management: If your wealth manager handles all the investment decisions i.e. you trust them to do everything, they are a discretionary manager. If they advise you what to buy and sell and leave the buying decision up to you they are an advisory wealth manager. Discretionary makes more money for the manager so this is the business most wealth managers target most strongly. All robos listed here are discretionary.

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

Features

Pricing

  • Minimum investment of £500, (£100 for LISAs and Junior ISAs) provides online updates on your investment and invests in a global portfolio to reduce risk.
  • They offer two types of portfolios:
  • Fully Managed Portfolio where the investment team, aided by quantitative financial models, chooses the amounts invested in a range of low-cost ETFs.
  • Fixed Allocation Portfolio are funds matched to your risk appetite by constructing a portfolio which gets rebalanced automatically in line with fixed proportions of shares and bonds as prices move. The goal is to sacrifice some potential return generated by active management in order to make these funds as cheap as possible.
  • Socially Responsible Portfolio proactively managed with a focus on social responsibility 
  • Fully Managed Portfolio: Up to £100k 0.94% (made up of management fee 0.75% PA, investment cost 0.19%) .  Above £100k the fee falls to 0.54% PA  (made up of management fee 0.35%, investment cost 0.19%)
  • Fixed Allocation Portfolio: up to £100k 0.62% PA (made up of 0.45% management fee &  investment cost of 0.17%)  Above £100k 0.42% PA (made up of 0.25% management fee &  investment cost of 0.17%)
  • Socially Responsible Portfolio up to £100k 1.07% (made up of 0.75% management fee &  investment cost of 0.32%) Above £100k  0.67% (made up of 0.35% management fee &  investment cost of 0.32%)
  • The minimum investment for Scalable is £10,000.
  • Scalable Capital uses low-cost ETFs for building portfolios.
  • The firm's investment principle, backed by research, is that managing risk should improve the performance of your portfolio in the long run.
  • They use a quantitative simulation framework and for each category of risk and current market conditions they generate many plausible future price paths and if more than 5% of those paths end in losses greater than your selected maximum downside risk they adjust your portfolio.
  • The total cost is 0.91% of which 0.16% is ETF cost and 0.75% is management cost
  • The minimum investment for Wealthify is £1.
  • They have five risk categories: cautious, tentative, confident, ambitious and adventurous
  • Asset allocations chosen by their in house team
  • 0.82% made up of 0.6% fee and 0.22% average investments cost
  • The minimum investment for Moneyfarm is £1500.
  • Moneyfarm constructs your portfolio based on the amount of risk you are ready to take.
  • The fund uses a questionnaire to gauge your risk appetite and based on that it sets up your portfolio to maximize the returns based on your risk taking ability.
  • Asset allocations chosen by their in house team
  • £1500 to £10,000 0.95% (made up of management fee 0.75%, average ETF cost of 0.2%)
  • £10,001-£50,000 0.8% (made up of management fee 0.6%, average ETF cost of 0.2%)
  • £50,000-£100,000: 0.7% (made up of management fee 0.5%, average ETF cost of 0.2%)
  • £100,00+: 0.55% (made up of management fee 0.35%, average ETF cost of 0.2%)
  • The minimum lump sum investment is £1,000 and the minimum monthly investment is £100
  • Wealth Horizon uses cheap passive investment funds to construct your portfolio based on your risk taking ability.
  • The fund uses a questionnaire to gauge your risk appetite and based on that it sets up your portfolio to maximize returns based on your risk taking ability.
  • The discretionary portfolio is rebalanced from time to time based on the market situation and you are allowed to change your portfolio based on the change in your risk taking ability


  • Initial investment charge 0.25%
  • Ongoing fee 0.5%
  • Average fund charge: 0.22%
  • Average Platform charge 0.25%
  • Total ongoing charge: 0.97%
  • True Potential Investors allow you to invest as little as £50 and to add more regularly to build your portfolio. It invests in both active and passive funds.
  • It classifies your risk profile and allows you to invest in 10 portfolios which vary from a defensive portfolio providing a low risk, low return strategy to an aggressive portfolio which has higher risk and the possibility of higher returns.
  • Total ongoing cost 1.16%
  • Broken into 0.4% platform fee and 0.76% portfolio fee
Wealthsimple Logo
  • Wealthsimple has no minimum investment.
  • It classifies your risk profile based on an online 12-question risk tolerance questionnaire that takes about 5 minutes to fill in. It allows you to invest in 9 portfolios which are graded conservative, balanced and growth.
  • up to £100k 0.9% (made up of 0.7% fee & 0.2% additional charges)
  • above £100k 0.7% (made up of 0.5% fee & 0.2% additional charges)

Robo Fund Name

Features

Pricing

  • Minimum investment of £500, (£100 for LISAs and Junior ISAs) provides online updates on your investment and invests in a global portfolio to reduce risk.
  • They offer two types of portfolios:
  • Fully Managed Portfolio where the investment team, aided by quantitative financial models, chooses the amounts invested in a range of low-cost ETFs.
  • Fixed Allocation Portfolio are funds matched to your risk appetite by constructing a portfolio which gets rebalanced automatically in line with fixed proportions of shares and bonds as prices move. The goal is to sacrifice some potential return generated by active management in order to make these funds as cheap as possible.
  • Socially Responsible Portfolio proactively managed with a focus on social responsibility 
  • Fully Managed Portfolio: Up to £100k 0.94% (made up of management fee 0.75% PA, investment cost 0.19%) .  Above £100k the fee falls to 0.54% PA  (made up of management fee 0.35%, investment cost 0.19%)
  • Fixed Allocation Portfolio: up to £100k 0.62% PA (made up of 0.45% management fee &  investment cost of 0.17%)  Above £100k 0.42% PA (made up of 0.25% management fee &  investment cost of 0.17%)
  • Socially Responsible Portfolio up to £100k 1.07% (made up of 0.75% management fee &  investment cost of 0.32%) Above £100k  0.67% (made up of 0.35% management fee &  investment cost of 0.32%)
  • The minimum investment for Scalable is £10,000.
  • Scalable Capital uses low-cost ETFs for building portfolios.
  • The firm's investment principle, backed by research, is that managing risk should improve the performance of your portfolio in the long run.
  • They use a quantitative simulation framework and for each category of risk and current market conditions they generate many plausible future price paths and if more than 5% of those paths end in losses greater than your selected maximum downside risk they adjust your portfolio.
  • The total cost is 0.91% of which 0.16% is ETF cost and 0.75% is management cost
  • The minimum investment for Wealthify is £1.
  • They have five risk categories: cautious, tentative, confident, ambitious and adventurous
  • Asset allocations chosen by their in house team
  • 0.82% made up of 0.6% fee and 0.22% average investments cost
  • The minimum investment for Moneyfarm is £1500.
  • Moneyfarm constructs your portfolio based on the amount of risk you are ready to take.
  • The fund uses a questionnaire to gauge your risk appetite and based on that it sets up your portfolio to maximize the returns based on your risk taking ability.
  • Asset allocations chosen by their in house team
  • £1500 to £10,000 0.95% (made up of management fee 0.75%, average ETF cost of 0.2%)
  • £10,001-£50,000 0.8% (made up of management fee 0.6%, average ETF cost of 0.2%)
  • £50,000-£100,000: 0.7% (made up of management fee 0.5%, average ETF cost of 0.2%)
  • £100,00+: 0.55% (made up of management fee 0.35%, average ETF cost of 0.2%)
  • The minimum lump sum investment is £1,000 and the minimum monthly investment is £100
  • Wealth Horizon uses cheap passive investment funds to construct your portfolio based on your risk taking ability.
  • The fund uses a questionnaire to gauge your risk appetite and based on that it sets up your portfolio to maximize returns based on your risk taking ability.
  • The discretionary portfolio is rebalanced from time to time based on the market situation and you are allowed to change your portfolio based on the change in your risk taking ability


  • Initial investment charge 0.25%
  • Ongoing fee 0.5%
  • Average fund charge: 0.22%
  • Average Platform charge 0.25%
  • Total ongoing charge: 0.97%
  • True Potential Investors allow you to invest as little as £50 and to add more regularly to build your portfolio. It invests in both active and passive funds.
  • It classifies your risk profile and allows you to invest in 10 portfolios which vary from a defensive portfolio providing a low risk, low return strategy to an aggressive portfolio which has higher risk and the possibility of higher returns.
  • Total ongoing cost 1.16%
  • Broken into 0.4% platform fee and 0.76% portfolio fee
Wealthsimple Logo
  • Wealthsimple has no minimum investment.
  • It classifies your risk profile based on an online 12-question risk tolerance questionnaire that takes about 5 minutes to fill in. It allows you to invest in 9 portfolios which are graded conservative, balanced and growth.
  • up to £100k 0.9% (made up of 0.7% fee & 0.2% additional charges)
  • above £100k 0.7% (made up of 0.5% fee & 0.2% additional charges)

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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