With the cost of professional financial advice on the rise, it is no wonder that millions of Millenials are turning to a new wave of ‘robo-advisors’ to meet their investment needs.
These Fintech companies are dragging the financial advice industry into the Age of the Internet, meeting the average investor’s desire for cheap, quick and easy investment opportunities. It is estimated that the robo-advice market in the UK currently accounts for about £140 million of customers’ assets, and is set to rise fast.
Most robo-advisors offer advice and financial solutions at a charge of less than 1 percent; this compares to the standard 3 percent charged by most advisory services, who often charge an ongoing 0.5 to 1 per cent on top. Unsurprisingly, more than 85 percent of people said they were unwilling to pay this price; meaning there’s plenty of room for robo-advisors to fill the gap between what people want, and what they can currently get on the market.
In essence, robo-advisors are disrupting the industry, democratising financial advice and making it attainable to all. Here are The Investment Observer’s top picks.
Nutmeg
Arguably the most well-known of the robo-advisors thanks to an aggressive marketing strategy, it also offers a smooth service. Its easy-to-use websites asks for your goals, creates portfolio recommendations based on your preferences and risk tolerance and manages it all for you. Clear charts and tables map out the different options, allowing little room for confusion.
Easier and simpler than a trading platform, as an online discretionary investment management company Nutmeg makes all investment decisions for its customers. Its minimum investment is a relatively low £1000, with fees beginning at 0.95 percent.
Wealth Horizon
Created by actual financial advisors, Wealth Horizon offers advice both online and over the phone – perhaps a USP for the older generation less trusting of total online management.
Their strategy is, apparently, “based on Nobel prize-winning theories on portfolio investment” and is powered by Parmenion and Aberdeen Asset Management.
They begin by asking you about 20 questions and devise a ready-made portfolio.
Like Nutmeg, their minimum investment requirement is £1000.
Fiver A Day
As the name suggests, Fiver A Day‘s marketing is aimed at minimizing the time needed for investing – perfect for time-strapped Millenials.
The site will establishes suitability and capacity for investment risk, chooses funds for its clients, regularly rebalances the portfolios, reports back twice a year and gives clients 24/7 access – and charges just 0.82 percent a year.
The company makes it clear that they won’t let you invest if they think it’s not right for you – perhaps stressing honesty as its USP. However, it is currently only available to UK residents.