Robo Adviser

The Basics

In a nutshell

  • All-in fees are almost always under 1% – so fair value

  • The sites are usually user-friendly and easy enough to navigate on mobile

  • Typically choose from between 5 and 10 investment portfolios

  • These are built to range from very mild to super spicy in terms of investments

A robo-adviser is simply an online investment service which typically asks you about 10-15 simple questions and then allocates you to a suitable basket of investments. And manages these for you on an ongoing basis.

The big plus for less confident investors is that you don't have to pick all the individual investments – they do it for you. Simples!

It's still a small and growing market and many of the players are new and unfamiliar brands. But hold onto your hats – lots of the Big Boy Banks have now entered the robo ring too.

Is It Right For Me?

The Numbers

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Most Recommended

Unsure where to start? Our independent team have rated scoured the markets, set up test accounts and really put these companies through their paces. This best buy table represents our 100% independent opinion, analysis and comparison.

Don't just take our word for it. Our best buys also include how thousands of other investors rate their providers along with their recommendation score.

If you are an existing customer, feel free to add your score to the mix here.

According to the user vote, this ranking represents the providers you are most likely to recommend as at November 2020

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Robo v Uk Shares - Diversification

A core benefit of robo advice is having a diversified portfolio managed on your behalf. This means that you get a wide mix of investments, unlike people who just buy a few shares and are totally exposed to the UK market only.

Nutmeg are the only robo advisor that currently has a 5 year track record, and the illustration on the left compares the performance of their highest risk portfolio to the FTSE 100 over the five years from October 2012.

£5,000 invested through Nutmeg in October 2012 would have been worth £8,252 5 years later, in comparison to £7,938 if you had opted for just UK shares via the FTSE100. As a rule of thumb, not having all your eggs in one basket should work out better for you over the long term.

Getting someone else to manage the wide spread of investments for you is probably the main benefit of these robo advisers.

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Let's talk performances

Trying to work out which investment providers have performed well after fees is no easy task. We decided that the easiest and least controversial way to measure who does well was simply to open an account, stick £500 in and see how they did.

Here is our January 2021 independent guide for consumers.

*Its important to note that Barclays, Fidelity and The Share Centre have elements of fixed or monthly £ fees which disproportionately impact a small £500 portfolio.

To see how our full range of test accounts have performed as part of a larger portfolio balance, please visit

The Detail

Guide To Robo Advisers

A robo-adviser is simply an online investment service which asks you about 10-15 simple questions and then puts you into a suitable basket of investments. And manages this pool of assets for you on an ongoing basis. You don’t have to choose the ingredients – this is all done for you.

Once online you will either self-select a ‘risk profile’ or go through a series of simple questions which will allocate you to a risk profile. In the same way that a curry menu uses 1 – 3 chillies to show you how spicy your meal will be, the investment world will usually grade you between a 1-5 when it comes to how spicy your investment mix should be.

Starting with Cautious moving up through Balanced and onwards to Aggressive. Cautious portfolios will behave the most like cash but also carry some investment risk. That £100 could turn into £110 or maybe £90 over say 3 years. The Aggressive one could turn into £140. Or maybe £60. No pain no gain but over the longer-term the more sense it makes to be in something more volatile as the upside is better.

The longer your investment horizon, the more likely it is that you can ride out the choppy nature of the more aggressive portfolios. Although they are called robo advisers, be careful about how much advice you are getting. Not all of them have people on the end of phones who can help you through the process and guide you and offer up suggested paths of action. The benefit of going to what the regulator sees as an ‘adviser’ is that you have recourse for some poor decisions made. With the DIY brigade it’s up to you. Robo advisers are a great addition to the landscape but they are not a like-for-like substitute for an experienced financial adviser today. They’ll help you assemble a portfolio of assets and help manage them on an ongoing basis. But they won’t give you full financial advice and manage the whole bigger financial picture of your life.

WHAT DO 12-MONTH RETURNS LOOK LIKE?

Since January 2018 Boring Money have held test accounts with 19 robo advisers and investment platforms. We opened the accounts with an initial deposit of £500 and have been analysing returns net of charges.

Higher risk robo portfolios will have mostly shares inside, as well as less risky assets such as bonds, and cash. Inversely, lower risk robo portfolios will be mainly made up of bonds and cash, which are ‘safer’ than shares because they’re less volatile. Each portfolio will have a different amount of each asset, therefore these portfolios are not necessarily like-for-like which can contribute to the different returns you see. We have tried to select accounts with are as close to 60% shares as possible, which in most cases constitutes a "medium risk" investment option.

The contributing factors to any relative and short-term underperformance are charging structures (Fidelity and Barclays both have minimum £ monthly charges which impacts a £500 account), fees (The Share Centre and Hargreaves Lansdown have ongoing fund charges of 1.56% and 1.43% respectively which are much heftier than the ‘passive’ robo advisers ) and asset allocation (Charles Stanley Direct had just 44% in shares in a year when global stock markets typically did well. So a conservative chunk in shares gives the portfolio less oomph).

A fairer way to look at performance for those with total sums of £50,000 or more…

The below is arguably a fairer way of illustrating performance, removing the fixed fee versus the % fee argument from the table for a second. If we assume that the £500 fund or portfolio was held as part of a bigger £50,000 investment account, this of course dilutes the blow of any fixed fees or monthly minimums.

For example, Barclays has a £4 a month minimum fee which sounds pretty reasonable, but takes a huge bite out of a £500 account every month! Looking at this as part of a £50,000 portfolio, the impact of this minimum monthly charge disappears and we see the Barclays relative performance look much healthier.

To see the full list of how robo advisers and investment platforms have done with their "ready-made" investment solutions click here

HELP ME CHOOSE

Our Best Buys will show you who we rate and why, as well as what their customers think. We also segment the providers according to who is the most helpful for less experienced and less confident investors.

According to the user vote, the ones you are most likely to recommend as at January 2020 are PensionBee, Moneybox, Santander and True Potential,

www.boringmoney.co.uk/best-buys