Holly Mckay
Holly MackayFounder and CEO
Avatar

Subscribe Now

Free of Charge

Avatar
    • Home • Advice • Common questions

    What is the different between robo advisors and regular platforms?

    29 July 2021

    Question by Flora

    What is the different between robo advisors and regular platforms?

    Answered by James Greenly

    Good question!

    ‘Robo’ advisers are essentially investment platforms that use little-to-no human intervention when suggesting an appropriate home for your money. The ‘robo adviser’ (spoiler alert: there is no actual robot behind the scenes, just some fairly basic algorithms) typically asks you a series of questions to measure your risk appetite (how would you feel if your portfolio dropped -10%?) and your investing timeframe (how long are you planning on investing for?), and it will then automatically steer you towards an investment portfolio with an appropriate risk level.

    A ‘regular’ investment platform does not attempt to direct you towards a specific portfolio, and instead allows you to pick your own investments, or if you are working with a financial adviser, allows them to recommend something appropriate for your needs.

    Robo advisers certainly have a role to play, but they are not suitable for all. They can be a bit one dimensional in that the ‘advice’ will always be to invest in one of their own portfolios. If you are confident about what you are hoping to achieve with your money, then they are typically a low-cost, hassle free solution. You also benefit from having your money invested in a well-diversified mix of investments, constructed by a professional investment team. They also take care of things such as ‘rebalancing’ your portfolio. Rebalancing is important as your portfolio would contain lots of different funds. Each year, some will do well and others not so well. Over time, the portfolio can become unbalanced.

    If you would like to know more about the benefits and drawbacks of Robo Advisers, here is a useful article on the subject of ‘Robo advice vs Human advice’: https://www.capital.co.uk/life/financial-planner-vs-robo-adviser-apps

    I hope this helps.

    Answered by

    James Greenly

    Chartered Financial Planner

    I am a Chartered Financial Planner at Capital Asset Management, a boutique financial planning and wealth management firm based in the City of London.

    Important stuffHolly and the team have worked in the finance industry for many years but we are not regulated to give you personal financial advice. For every story on this website about a good investment, or something which went up by 10% or made someone £200, we could also share a story about a bad investment, something which fell in value or lost someone £200. We aim to provide general information and pointers – and btw we are totally agnostic about which providers you might pick – but if you have complex affairs, want personalised advice or need specific recommendations, please look at advice pages and see if regulated digital or traditional financial advice would be the best solution for your needs. Boring Money Ltd is a limited company registered in England and Wales under registration number 09459832 and we have our registered office at 10 Lower Thames Street, London, England, EC3R 6AF.
    Risk warningAs is always the case with investing, your capital is at risk. The value of your portfolio can go down as well as up and you may get back less than you invest. Tax treatment depends on your individual circumstances and may change in the future.
    Boring Money Ltd is a limited company registered in England and Wales under registration number 09459832 and we have our registered office at 10 Lower Thames Street, London, England, EC3R 6AF.
    |

    We use cookies

    You will see cookie information on different websites and regulation means that we need to ask your permission to use them. We use cookies to improve our website, for analysis of our visitor data, to show personalised content and to give you a great website experience. For more information about the cookies we use open the settings.