Robo advisers

Simple digital services which stick two fingers up at the old-guard and take the pain out of investing.

 

What are they?

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! 

Still relatively new in the UK, the major emerging brands hit £1.6 billion of assets in September 2017. 

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 are entering the robo ring this year. 

 

4 things you should know

  • 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

 


 

How much might I make?

The million dollar question. It depends on what happens in the global stock markets. And how spicy your portfolio is.

As a guide, over the last 12 months in the UK the most 'Mild' robo portfolios returned about 1-2%. The ‘Medium’ portfolios typically returned circa 5%-6%. And the ‘Spicy’ ones between about 8%-12%. 

Returns aren't like cash – we don't have a crystal ball. There will be some years where it goes backwards. And some years when they jump. Have a look at our Best Buys product cards for more performance details. 

If you'd like to read more, this PDF shows how some of the robos have done over the past year.

If you're stuck, have a read about what others think about these robos:

12-month returns

Average robo-adviser returns on an initial £5,000 investment, over the 12 months to September 2017.

How do they work? 

The basic idea is that they ask you enough to gauge how much investment risk you can stomach. The longer your timeframe, the more you can weather any financial storms. If you're investing for 10 years say, you are less fussed by short-term Brexit wobbles in the stock market. 

The quizzes – similar to personality profiling with an investment flavour – will work out whether you are super cautious or a bit more adventurous. 

And then that in turn determines the blend of investments they put together for you. Cautious and they'll serve up less spice, fewer shares or 'equities'. More adventurous and you'll get 70% and higher in shares. 

 


 

Guide to Robo Advisers

Still confused? Here's some more detail on how they work.

 

Robo facts