Robo-advisors in the UK have become more popular than ever before. But what are they exactly?
In the year 2008, there were two startups of fintech that created a revolution when it came to trading. Both Betterment as well as Wealthfront launch their products, which were robo-advisors. These products were meant to cater to a new audience, the digital natives. It was also meant to tackle issues that previously locked many people put of investing as well as trading.
These startups offered services at lower fees, ideal for clients who wanted to see their investments before them, when they wanted to. This was opposed to summaries prepared quarterly, by wealth managers.
In the year 2014, robo-advisors really made their entrance in the UK. By this time, a lot of the Chinese that existed in the previous product was worked out. Nutmeg is a startup that became the nation’s answer to Betterment. This was just the beginning however, as many other startups started offering people the chance of investing in their financial markets.
What Exactly Is A Robo-Advisor?
Essentially, a robo-advisor is an investment platform that is online. A robo-advisor uses a survey in order to determine what your strategy for investment is. It then matches you to a portfolio that is appropriate. You’ll receive the help of a software program that is proprietary, in order to better manage investments.
In this way, you get financial advice. This advice is provided by artificial intelligence as well as algorithms that are complex. It’s an approach to investing money that is hands-off. Both new as well as experienced investors can check what their portfolio is. And they can do this without knowing the intricate workings of the stock market.
You can think of a robo-advisor as a solution for investment as well as wealth management. The only details you’ll need to provide are your bank details. You will also need to answer certain questions. This will help in creating a risk profile for you. You won’t be needing to make trades. You also won’t be informed who stocks as well as shares or bonds that you 8mvested in. All you’ll need to do is allow your computer to make those decisions. This makes the whole process super easy for you.
How Do Robo-Advisors Work?
A robo-advisor will make use of an algorithm in order to determine what your investment portfolio is. This is dependent on things such as:
• Risk profile
• Investment goals
• Investment term that is projected
Since you won’t be trading by yourself, and you also won’t have a human advisor to trade for you, your portfolio will come from funds that are different. This is as opposed to stocks as well as bonds that are individual.
Choosing Robo-Advisors in the UK
For people who want to use robo-advisors in the UK, here are the best options available:
This is an online trading platform that also offers robo-advisor services. There is no charge or a platform fee when it comes to management. You will need to pay 0% when it comes to commission on your stock investment. You will need to pay an inactivity fee that is $10 every month. This is charged if you’re inactive for at least a year. You also have lower withdrawals fees as well around $5.
This is the most well known robo-advisor in the UK. You’ll need to make a minimum investment to use this platform. This is around £500. That is why this platform is more suitable for investors who are serious. It comes with an interface that is innovative, which enables you to track your investments. It also takes just a few moments to open your account.
This robo-advisor platform used to be known as ‘tickr’. You’ll be charged a £1 fee every month. There are no annual fees for the platform. That is, until your balance exceeds £3000. At this point, you’ll be charged 0.3% of what your assets are.
The minimum amount you need to invest to use this platform is £5. However, if you want to see actual returns on your investment, you need to invest more than £100 at least.
This is a robo-advisor platform that was first launched in Italy, but has seen gained in popularity in the UK. There is a minimum amount you need to invest, which is £500. You will also need to do direct debit each month, which is of £100, or sometimes more.
Another robo-advisor that’s popular in the UK is Moneybox. This is a platform, that more so than others, actively encourages users to save. The kind of fees you would need to pay depends on what you have in your account. There’s also a subscription fee of £1 for accounts that aren’t pension related. You may also have to pay a platform fee that is annual, which is around 0.45%.
Robo-advisors are becoming more and more popular in the UK. Use this guide to learn what they are, as well as which robo-advisor platforms you should choose.