Which is the best robo-adviser in the UK?

Robo-advisers have become popular in recent years as an easy, low-cost way of creating an investment portfolio. They help investors identify an investment approach that matches their risk appetite, filtering them into a suitable portfolio, which they then manage on the investors’ behalf. Robo-advisers are generally targeted at those with relatively little investment knowledge or experience or those who don’t have the time or expertise to manage their own portfolio.

In this article, we explain how a robo-adviser works and who should consider investing with one. We also provide a handy comparison table so you can easily compare the UK's best robo-advisers.

What is a robo-adviser?

Robo-advisers were developed as an alternative to discretionary wealth managers, who created bespoke portfolios for their clients, but with fees that put them out of reach for most people. Instead, robo-advisers use algorithms that, by analysing prospective investors’ answers to a series of questions, can suggest the best match from within their range of investment portfolios. 

Once someone has opened an account and invested in the suggested portfolio, the robo-adviser manages that portfolio for the investor, adjusting the allocations within it to ensure it continues to match the risk/return profile. They are then required to check regularly - generally once a year - to make sure the investors’ needs are the same and that the portfolio is still suitable for them. 

While a variety of investment platforms call themselves “robo-advisers”, for the purposes of this article, our definition of a robo-adviser is an online or app-based investment platform that uses a questionnaire to ascertain someone’s attitude to risk and capacity for loss. This questionnaire then leads to a suggested portfolio, including information on the underlying asset allocation. This definition excludes those platforms that only require someone to define themselves as “cautious”, “moderate” or “adventurous” without asking further questions to check whether this self-assessment is accurate.

Robo-advisers generally state that they offer “guidance” rather than “advice”. This is because “advice” comes with its own regulatory burden and, instead, this approach presents potential investors with an option, but the responsibility of making the final decision rests with the investor.  

Which is the best robo-adviser in the UK?

In the table below, we highlight our pick of the best robo-advisers currently available in the UK. Our in-depth analysis led us to identify 4 providers, which excelled in specific categories, as well as providing good all-round products and services.

	Number of portfolios	Account types	Ethical Portfolios	Minimum investment	Money to the Masses sign-up offers
J.P. Morgan Personal Investing (formerly Nutmeg)	10 Fully Managed 10 Socially Responsible 5 Fixed Allocation 5 Smart Alpha portfolios powered by J.P. Morgan Asset Management 3 Thematic investment options	ISA, General Investment Account, Junior ISA, Lifetime ISA and SIPP	10	£500 (£100 for JISA and LISA)	N/A
Wealthify (an Aviva company)	5 Fully Managed 5 Ethical	ISA, General Investment Account, Junior ISA and SIPP	5	£1,000 (£500 for JISA)	N/A
Moneyfarm	7 Fully Managed 7 Socially Responsible 7 Fixed Allocation	ISA, General Investment Account, Junior ISA, SIPP	7	£500	No management fees for 12 months (terms and conditions apply)*
InvestEngine	10 Growth portfolios (Note: Growth Portfolios are temporarily unavailable. InvestEngine is making improvements to its portfolio-building questionnaire)	ISA, General Investment Account, Savings Plans	n/a	£100	N/A

Best low-cost robo-adviser

InvestEngine

Although InvestEngine is relatively new to the market, it has gained popularity among both DIY investors, who are keen to take advantage of the fact it has no dealing or account fees, and those looking for a managed portfolio. For the latter, there is a choice of 10 growth portfolios which attract an annual platform fee of just 0.25%, which is significantly lower than for its rivals. There is no charge for setting up an account or withdrawing funds, although there are ongoing charges for the underlying ETFs that populate the portfolios. According to InvestEngine, this is around 0.12%, which is lower than the majority of other robo-advisers. To find out more, check out our full independent InvestEngine review.

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Best robo-adviser for choice

J.P. Morgan Personal Investing (formerly Nutmeg)

While robo-advisers can offer as few as 3 different portfolios - generally labelled as "cautious", "balanced" or "adventurous" - J.P. Morgan Personal Investing has 10 risk-rated portfolios in its Fully Managed range, which are numbered from 1 to 10 and have varying degrees of exposure to equities. However, in addition to the main Fully Managed range, there are a further 10 portfolios in its Socially Responsible range, which mirror the risk ratings on the main range but invest in companies that have high environmental, social and governance standards.

As well as the Fully Managed and Socially Responsible portfolios, J.P. Morgan Personal Investing also has a Fixed Allocation range and Smart Alpha portfolios. The fixed allocation range is based on a more "hands-off" approach, with the investments automatically rebalanced but only formally assessed once a year. Its 5 risk-rated portfolios are available at a lower cost than the main range. Meanwhile, the 5 Smart Alpha portfolios are actively managed by J.P. Morgan Asset Management, with the potential for enhanced returns. To find out more, check out our full independent J.P. Morgan Personal Investing review.

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Best robo-adviser for customer service

Moneyfarm

Moneyfarm is currently the only robo-adviser that incorporates personal advice as part of its core proposition. It offers three 'Wealth' tiers: Core, Premium and Private, designed to provide additional support to investors as their wealth grows. The 'Premium' tier is aimed at engaged investors who want access to expert guidance and can be accessed once you have more than £10,000 invested with Moneyfarm. Its 'Private' wealth tier is aimed at investors with larger portfolios who are looking for ongoing support from a Wealth Manager, and this can be accessed once your portfolio grows to more than £100,000. Moneyfarm charges a platform fee of 0.25% (minimum £1.25 per month) and a management fee of up to 0.45% depending on the amount you wish to invest.

According to Moneyfarm, both the digital investment process and the "personal advice" is guidance rather than regulated advice. However, it is certainly a useful service to double-check the portfolio you've chosen is the most appropriate for you, as well as providing you with support on decisions about market conditions or if your circumstances change. To find out more, check out our full independent Moneyfarm review.

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Best robo-adviser for usability

Wealthify (an Aviva company)

Although all robo-advisers aim to be user-friendly, some are more successful than others. Wealthify is particularly strong in this field, with an easy-to-navigate website and intuitive onboarding process, as well as a useful app, which makes it simple to manage your investments from your phone.

What we particularly like about Wealthify, however, is the feature that allows you to easily visualise the difference between the portfolios by using sliders which then shows you the likely return you are likely to get over a set period of time. The timeframe is adjustable and it also shows you how your portfolio could perform if markets perform worse or better than average over that period. It's easy to move between the 5 portfolios on the original plan, as well as moving to its ethical plan, allowing you to draw direct comparisons. To find out more, check out our full independent Wealthify review.

Advantages of robo-advisers

Low cost

Robo-advisers offer a cheaper service than a traditional discretionary manager for two main reasons: they don’t attract the same management charges and the underlying investments, which tend to be passive funds, have lower ongoing charges. 

Good diversification

By investing in a portfolio from a robo-adviser you are automatically exposed to a range of asset classes, including equities and bonds. The allocation will vary depending on the level of risk, but you will generally be invested in a wide range of underlying holdings.

Simplicity

A robo-adviser portfolio offers a straightforward solution as the asset allocation and day-to-day management is taken care of. There isn’t the requirement to select your own funds or rebalance the portfolio or react to short-term market movements. 

Disadvantages of robo-advisers

Not bespoke

While robo-advisers use a questionnaire to help guide you to the most suitable portfolio, they don’t offer a tailor-made product that is specifically targeted at your individual needs. While you will be in a category that generally matches your needs, this can still be quite broad. There also isn’t usually the option to modify your portfolio, although some robo-advisers do offer separate options where you can pick your own funds from within a set range that they have available. 

Not suitable for short-term investments

Although robo-advisers generally offer good levels of diversification in their portfolios, there is certainly no guarantee that they will always provide the level of return the investor is looking for and they will be subject to the same fluctuations that can be expected in any portfolio. For this reason, it is better to have a longer-term time horizon and to try to avoid making dramatic changes driven by short-term market events. 

Guidance not advice

Although with the moniker “robo-adviser” you would be forgiven for thinking that the portfolio recommendation you are given during the onboarding process constitutes advice, it is actually “guidance” and there are no guarantees it will actually suit your specific needs. An automated questionnaire, while offering a quick, easy and low-cost option, should not be seen as a substitute for a full face-to-face consultation with an investment adviser. 

Summary: Should you invest using a robo-adviser?

Robo-advisers are certainly a good option for certain types of investors, particularly beginners or those who do not have the confidence to put together and manage their own portfolios. Although they have always been a cost-effective way to invest, as the number of robo-advisers has increased, they have become even more competitively priced, which also increases their appeal. While we've highlighted the importance of cost, service, choice and usability, for some, the choice simply comes down to performance and so you may wish to check out our article "Which is the best performing stocks and shares ISA", where we take a look at the performance of a number of robo-advisers over the last three years.

In addition to the examples of robo-advisers we have outlined above, there are managed portfolio options available from other platforms, however they don't have the same questionnaire process in place as with true robo-advisers. There are also a plethora of do-it-yourself platforms for those who want to choose their own underlying investments. We highlight the best of all of these in our article "The best investment platform".

 

When investing, your capital is at risk and you may get back less than invested. Past performance doesn’t guarantee future results.

 

 

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