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Published on 31st October 2017

Will 2018 be the year of the Robo Advisor?

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How we manage our money really does matter. And while its long been drilled into us that we should be saving for a rainy day, too many of us simply aren’t….In September 2016, a Money Advice Service study reported that over 16m UK consumers have savings of less than £100.

But with the UK population getting older, there’s a renewed focus on encouraging us all to think more about our long-term goals and how we plan for them. Couple that with the backdrop of savings rates remaining at an all time low, and it’s no surprise that more of us are looking for ways to beat the 1 or 2% on offer at our local bank or building society.

This has helped fuel the rise of so-called Robo Advisors. These firms aim to deliver a simple, transparent and efficient investment experience that puts digital channels at its heart, and is accessible to consumers without large investment pots. Most of the firms we profile below will open an account and start investing your funds once you’ve deposited £100, although to get some diversification of risk, most will recommend an initial investment pot of over £1,000.

Robo Advisors also focus on what has been coined ‘passive’ investment management strategies (e.g. purchasing ETFs to track the performance of a market index such as the FTSE 100) as opposed to ‘active’ strategies, and all use technology to help understand the risk appetite of their investors rather than a more traditional face-to-face meeting.

As with any financial investment, it’s worth remembering that the value of your investment may go down as well as up, and your investments are not covered by the Financial Services Compensation Scheme (FSCS), but any cash not invested may be covered.

In this blog post, we profile 5 Robo Advisors. Who are they? And what do they offer? One of the major barriers all Robo Advisors face is high customer acquisition costs. And as voting in the British Bank Awards 2018 kicks-off on the 6th November, we really can’t wait to see if a Robo Advisor will walk away with one of our consumer voted-for awards, and become a go-to provider for UK consumers looking to access simple and fair investment advice and execution.

Bringing a taste of Milan to UK investing

Year founded: 2011

The company sales pitch: “We create investment solutions that grow and protect
your wealth inexpensively and with maximum transparency.”

Minimum investment required: £100

ISAs available: Yes (Stocks & Shares ISA)

Our initial thoughts: A good looking website that blends a bit of colour into a very easy to navigate and consumer friendly website. As with all the below, costs are displayed prominently and the mind set is focused around a subscription, which is a healthy way to approach growing your money.

One of the old guard with a funky name

Year founded: 2011

The company sales pitch: “Nutmeg is changing the way people manage their money. Specialising in investments, ISAs and pensions, our online investment management service is intelligent, straightforward and fair.”

Minimum investment required: £100 for a Lifetime ISA

ISAs available: Yes (Stocks & Shares ISA)

Our initial thoughts: Nutmeg really pioneered this new approach to investment management in the UK, and aim to appeal to consumers who may be new to investing with a lot of easy to consume content designed to ease in a beginner investor.

Fusing German efficiency with British service

Year founded: 2014

Company sales pitch: “Small differences in fees add up in the long run, to more than one would expect at first glance. That is why we have aligned our entire business process to offer you an investment at the lowest possible cost.”

Minimum investment required: £10,000

ISAs available: Yes (Stocks & Shares ISA)

Our initial thoughts: Slick operation, and simple to understand website, with more detail readily available for those seeking it. The £10,000 minimum investment is high relative to peers.

A firm that recently made news by announcing a major strategic investment from Aviva

Year founded: 2014

Company sales pitch: “Wealthify is for everyone”

Minimum investment required: £1

ISAs available: Yes (Stocks & Shares ISA)

Our initial thoughts: Wealthify does look a bit different to some of the other firms profiled here. They’ve gone very heavily down the “Wealthify is for everyone” route and the branding and marketing copy clearly reflects this.

Last but by no means least we have Wealthsimple, a Toronto-based firm beginning its UK expansion

Year founded: 2014

Company sales pitch: “Wealthsimple is a new kind of financial advisor — one that's intuitive, affordable, and human. We take the guesswork out of investing and get you on the right track. We build a diversified portfolio of ETFs on your behalf and guide you to achieving your financial goals.”

Minimum investment required: £1

ISAs available: Yes (Stocks & Shares ISA)

Our initial thoughts: A new entrant to the UK, Wealthsimple’s website is pretty simple with a distinct lack of financial jargon. They offer to manage the first £5,000 invested for free for the first year.

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