How Robo-Advisors are revolutionising financial advice

Are you looking for lower cost financial advice? Have you ever wanted to start an investment portfolio, but were unsure how to or whether you could afford it? A Robo-Advisor could be the answer.

According to the FCA, you could be one of 16 million people in the UK trapped in a “financial advice gap” – making harder for you to make the most of your savings.

Until recently, receiving real investment advice has seemed impossible for younger or lower net worth individuals – many Financial Advisors have minimum asset requirements of £500,000 or above, and charge 1-2 percent for their services. And in the age of the Internet, the problem is exacerbated; Millenials are used to getting what they want, when they want it. For this generation, sitting down with a traditional broker to discuss their savings seems archaic, time-consuming and expensive.

Enter the new wave of robo-advisors, a growing field of online investment and savings platforms revolutionising the financial sector. According to the FCA, robo-advisors offer “online automated advice models that have the ability to deliver advice in a more cost-efficient way”, widening access to financial advice to those that may previously have felt excluded.

Robo-advisors offer online advice and guidance for investments and, depending on the platform, execute it as well. They typically charge less than half the fees of traditional brokerages and their low-cost, simple approach to investing has earned them a real name for themselves. Companies such as Wealthfront and Betterment started the trend in the US, with Nutmeg fast becoming one of the UK’s biggest players.

Nutmeg’s platform is simple, clear and user-friendly; tell them your goals and how much risk you are willing to take, and they will build you a suitable investment portfolio. You can invest with as little as £500, with an annual fee of between just 0.3 and 0.96 percent. Accounts can be opened online without the need for paperwork, and the money invested can be withdrawn at any time.

The extent of options and advice offered by platforms varies widely – Investment Superstore offers free tips, guides and information designed to make investing easier for all, and Nutmeg allows users to invest directly on the platform with their stocks and shares ISAs and pension portfolios.
No matter what level of advice you are looking for, there will be a robo-advisor that can help – for a fraction of the cost of a traditional broker.