How to choose a Robo Advisor?
Discussion
Hi all,
I'm looking to open an investment portfolio. I am new to this and won't be investing much initially (approx £1000 maybe). I like the idea of robo-advisors such as Nutmeg; apparently you choose you level of risk and let them do the rest. I know there are lots of robo-advisors out there including fiveraday which is mentioned a lot on here.
My question is, how does one go about choosing who to invest with? Nutmeg are a little more expensive than some of the others but they post their yearly performance figures and seem to outperform the average competitor.
Any advice would be appreciated. Thanks.
I'm looking to open an investment portfolio. I am new to this and won't be investing much initially (approx £1000 maybe). I like the idea of robo-advisors such as Nutmeg; apparently you choose you level of risk and let them do the rest. I know there are lots of robo-advisors out there including fiveraday which is mentioned a lot on here.
My question is, how does one go about choosing who to invest with? Nutmeg are a little more expensive than some of the others but they post their yearly performance figures and seem to outperform the average competitor.
Any advice would be appreciated. Thanks.
Hi
Fiveraday is not technically robo advice. It is an online advice service with an actual qualified adviser there should you need one. It is also cheaper than Nutmeg.
You can get the same service for less money going direct to Parmenion (the provider Al uses for Fiveraday) - but you won't get Al.
Robo advice is actually quite long winded and restricted to ISA's in the main. It won't, for example, tell you you would be better off with a SIPP or using the money to pay down your mortgage more quickly.
Robo is a great concept, but it is also very flawed. Spending so much time answering a series of questions online to find out you are either cautious, balanced or adventurous (in order to cover the advice given) is a waste of time. If you can't identify that yourself then you probably need to speak to an adviser.
Ask or PM me if you would like me to elaborate further.
Fiveraday is not technically robo advice. It is an online advice service with an actual qualified adviser there should you need one. It is also cheaper than Nutmeg.
You can get the same service for less money going direct to Parmenion (the provider Al uses for Fiveraday) - but you won't get Al.
Robo advice is actually quite long winded and restricted to ISA's in the main. It won't, for example, tell you you would be better off with a SIPP or using the money to pay down your mortgage more quickly.
Robo is a great concept, but it is also very flawed. Spending so much time answering a series of questions online to find out you are either cautious, balanced or adventurous (in order to cover the advice given) is a waste of time. If you can't identify that yourself then you probably need to speak to an adviser.
Ask or PM me if you would like me to elaborate further.
Thanks all for the advice so far;
Julian; regarding cost, nutmegs website says 0.45% or 0.75% (non-managed or managed) + 0.17% or 0.19% investment fund costs. Fiver a day charge 0.25% of each initial contribution. Then a further 0.34% per annum for management. Investment managers charge you a further 0.46 – 0.52% per annum and 0.25% for any initial contribution(s). Fiver a day say "We expect that the overwhelming majority of our clients will pay 0.82% per annum for an ongoing, all inclusive service." Is this not more than the 0.45+0.17% that nutmeg offer or am I reading it wrong?
Regarding Parmenion and Fiver a day. Why might I be best to choose one of these over nutmeg? I'm not just interested in cost but potential performance too. What makes one better than the other? I don't need anyone to tell me what sort of risk I want but what I do want is a diverse fund that I don't need to mess with too much and that will potentially mean my money will work harder than it currently is sat in the bank.
Willia66 - Did you not have a managed fund? Their (nutmegs) website suggests they made the correct decision RE Brexit.
Yipper - what you say makes some sense but if based on point 1), no one would invest who hadn't paid off their mortgage, which clearly isn't the case. Nutmeg reckon to be able to get me 7% return on a medium-high risk investment and my mortgage is significantly lower than this. Should I not invest a penny until my mortgages are all paid?
RE point 2 - I'm pretty sorted RE pension for the time being. I will invest into a SIPP in the next year or two but the thought of not getting at the money until I'm in my late 50's puts me off a bit (I have a good pension already plus a buy to let house on which the mortgage will be paid off next year) so feel the pension side of things isn't too bad at the minute.
Julian; regarding cost, nutmegs website says 0.45% or 0.75% (non-managed or managed) + 0.17% or 0.19% investment fund costs. Fiver a day charge 0.25% of each initial contribution. Then a further 0.34% per annum for management. Investment managers charge you a further 0.46 – 0.52% per annum and 0.25% for any initial contribution(s). Fiver a day say "We expect that the overwhelming majority of our clients will pay 0.82% per annum for an ongoing, all inclusive service." Is this not more than the 0.45+0.17% that nutmeg offer or am I reading it wrong?
Regarding Parmenion and Fiver a day. Why might I be best to choose one of these over nutmeg? I'm not just interested in cost but potential performance too. What makes one better than the other? I don't need anyone to tell me what sort of risk I want but what I do want is a diverse fund that I don't need to mess with too much and that will potentially mean my money will work harder than it currently is sat in the bank.
Willia66 - Did you not have a managed fund? Their (nutmegs) website suggests they made the correct decision RE Brexit.
Yipper - what you say makes some sense but if based on point 1), no one would invest who hadn't paid off their mortgage, which clearly isn't the case. Nutmeg reckon to be able to get me 7% return on a medium-high risk investment and my mortgage is significantly lower than this. Should I not invest a penny until my mortgages are all paid?
RE point 2 - I'm pretty sorted RE pension for the time being. I will invest into a SIPP in the next year or two but the thought of not getting at the money until I'm in my late 50's puts me off a bit (I have a good pension already plus a buy to let house on which the mortgage will be paid off next year) so feel the pension side of things isn't too bad at the minute.
History is littered with financial salespeople saying they can make 7% returns...
If you "must" invest, a FTSE All-Share tracker (that reinvests dividends and pays them to you, not its shareholders) is the consistently most reliable way to get decent stockmarket returns year after year after year. It has delivered 6-10% gains per year on average since the 1980s (see links below).
http://www.thisismoney.co.uk/money/investing/artic...
http://www.fool.co.uk/investing/2014/10/24/the-fts...
If you "must" invest, a FTSE All-Share tracker (that reinvests dividends and pays them to you, not its shareholders) is the consistently most reliable way to get decent stockmarket returns year after year after year. It has delivered 6-10% gains per year on average since the 1980s (see links below).
http://www.thisismoney.co.uk/money/investing/artic...
http://www.fool.co.uk/investing/2014/10/24/the-fts...
To be honest you could probably research and pick the best funds, all the best information is out there for all to see for free (look at Hargreaves Lansdown fund research for example). Pre selected portfolios tend to be quite expensive and "safe" ie you won't see huge returns.
I've got a stocks and shares ISA with https://www.rplan.co.uk/ and picked the funds myself, it's grown 10% since I opened it circa 12 months ago.
I've got a stocks and shares ISA with https://www.rplan.co.uk/ and picked the funds myself, it's grown 10% since I opened it circa 12 months ago.
JapanRed said:
Thanks all for the advice so far;
Julian; regarding cost, nutmegs website says 0.45% or 0.75% (non-managed or managed) + 0.17% or 0.19% investment fund costs. Fiver a day charge 0.25% of each initial contribution. Then a further 0.34% per annum for management. Investment managers charge you a further 0.46 – 0.52% per annum and 0.25% for any initial contribution(s). Fiver a day say "We expect that the overwhelming majority of our clients will pay 0.82% per annum for an ongoing, all inclusive service." Is this not more than the 0.45+0.17% that nutmeg offer or am I reading it wrong?
Regarding Parmenion and Fiver a day. Why might I be best to choose one of these over nutmeg? I'm not just interested in cost but potential performance too. What makes one better than the other? I don't need anyone to tell me what sort of risk I want but what I do want is a diverse fund that I don't need to mess with too much and that will potentially mean my money will work harder than it currently is sat in the bank.
Exactly. their non-managed offering is 0.45% + 0.17% (0.62%) and there managed one is 0.76% + 0.19% (0.94%). Given that without the management you would be better off investing in Vanguard EFTs I would assume you were looking at the managed option at 0.94%. Fiver averages 0.82% (including advice) and Parmenion is 0.46% to 0.52% for a fully managed service (no advice).Julian; regarding cost, nutmegs website says 0.45% or 0.75% (non-managed or managed) + 0.17% or 0.19% investment fund costs. Fiver a day charge 0.25% of each initial contribution. Then a further 0.34% per annum for management. Investment managers charge you a further 0.46 – 0.52% per annum and 0.25% for any initial contribution(s). Fiver a day say "We expect that the overwhelming majority of our clients will pay 0.82% per annum for an ongoing, all inclusive service." Is this not more than the 0.45+0.17% that nutmeg offer or am I reading it wrong?
Regarding Parmenion and Fiver a day. Why might I be best to choose one of these over nutmeg? I'm not just interested in cost but potential performance too. What makes one better than the other? I don't need anyone to tell me what sort of risk I want but what I do want is a diverse fund that I don't need to mess with too much and that will potentially mean my money will work harder than it currently is sat in the bank.
I really wouldn't worry to much about the initial charge, it has very little impact and is only applied ones. The annual costs are the killer as they compound up every day. Over the years it eats into your investments.
On this basis Fiver is a great option given advice is included and Parmenion direct is a a lower cost option if you don't require advice. I also rate Parmenion's investment management way above that of Nutmeg. That is of course a personal opinion.
HootersGsy said:
Just to chuck it in there, Wealthily is another option.
As to who's best? I think it's too early to really make any sensible decisions as the mainstream robo-advice is relatively young, let's see how they go following the next crash/recession etc.
Did you mean Wealthify?As to who's best? I think it's too early to really make any sensible decisions as the mainstream robo-advice is relatively young, let's see how they go following the next crash/recession etc.
It is a very young sector with a lot of small start up players. That is why I like Parmenion. It was established many years ago, has a proven track record, several billions of asset under management, used widely by the adviser community as well as direct and is owned by Aberdeen/Standard Life.
Managed Direct from Intelligent Money is the same in terms of being established 15 years ago, billions of assets, proven track record and used by financial advisers. Downside is you have to have an adviser in place to use them.
None of the other players can touch these things as they all are still going through funding drives to stay afloat whilst they grow assets.
[quote=JapanRed]
Willia66 - Did you not have a managed fund? Their (nutmegs) website suggests they made the correct decision RE Brexit.
I did indeed have a managed fund. That little para doesnt entirely cover the issue. They went conservative - markets rallied hard. March 16 - June 17 their "5" was up 6.6%. I reckon the average balanced fund was up at least double that, more if it was globally diversified. I think a lot of people (me included initially) look at the tech and forget about the investment process. If one has any sort of active management, even if it implemented via rtfs and is only around asset allocation, then the quality of the investment professionals is important. I quite like scalable capital for this reason but moved mine to UBS, although I get staff rates there so v cheap.
Willia66 - Did you not have a managed fund? Their (nutmegs) website suggests they made the correct decision RE Brexit.
I did indeed have a managed fund. That little para doesnt entirely cover the issue. They went conservative - markets rallied hard. March 16 - June 17 their "5" was up 6.6%. I reckon the average balanced fund was up at least double that, more if it was globally diversified. I think a lot of people (me included initially) look at the tech and forget about the investment process. If one has any sort of active management, even if it implemented via rtfs and is only around asset allocation, then the quality of the investment professionals is important. I quite like scalable capital for this reason but moved mine to UBS, although I get staff rates there so v cheap.
JulianPH said:
Did you mean Wealthify?
It is a very young sector with a lot of small start up players. That is why I like Parmenion. It was established many years ago, has a proven track record, several billions of asset under management, used widely by the adviser community as well as direct and is owned by Aberdeen/Standard Life.
Managed Direct from Intelligent Money is the same in terms of being established 15 years ago, billions of assets, proven track record and used by financial advisers. Downside is you have to have an adviser in place to use them.
None of the other players can touch these things as they all are still going through funding drives to stay afloat whilst they grow assets.
I did indeed. Autocorrect is a wonderful thing.It is a very young sector with a lot of small start up players. That is why I like Parmenion. It was established many years ago, has a proven track record, several billions of asset under management, used widely by the adviser community as well as direct and is owned by Aberdeen/Standard Life.
Managed Direct from Intelligent Money is the same in terms of being established 15 years ago, billions of assets, proven track record and used by financial advisers. Downside is you have to have an adviser in place to use them.
None of the other players can touch these things as they all are still going through funding drives to stay afloat whilst they grow assets.
As you say, there are a lot of start ups without any real demonstrable track record so choosing one is quite difficult at the moment. Even robo platforms from established players still haven't necessarily been running the algorithms for long enough to see how they cope in extreme turbulence.
It's a very interesting sector, mainly because it opens investment up at a lower entry price and therefore to many more people.
HootersGsy said:
JulianPH said:
Did you mean Wealthify?
It is a very young sector with a lot of small start up players. That is why I like Parmenion. It was established many years ago, has a proven track record, several billions of asset under management, used widely by the adviser community as well as direct and is owned by Aberdeen/Standard Life.
Managed Direct from Intelligent Money is the same in terms of being established 15 years ago, billions of assets, proven track record and used by financial advisers. Downside is you have to have an adviser in place to use them.
None of the other players can touch these things as they all are still going through funding drives to stay afloat whilst they grow assets.
I did indeed. Autocorrect is a wonderful thing.It is a very young sector with a lot of small start up players. That is why I like Parmenion. It was established many years ago, has a proven track record, several billions of asset under management, used widely by the adviser community as well as direct and is owned by Aberdeen/Standard Life.
Managed Direct from Intelligent Money is the same in terms of being established 15 years ago, billions of assets, proven track record and used by financial advisers. Downside is you have to have an adviser in place to use them.
None of the other players can touch these things as they all are still going through funding drives to stay afloat whilst they grow assets.
As you say, there are a lot of start ups without any real demonstrable track record so choosing one is quite difficult at the moment. Even robo platforms from established players still haven't necessarily been running the algorithms for long enough to see how they cope in extreme turbulence.
It's a very interesting sector, mainly because it opens investment up at a lower entry price and therefore to many more people.
Given Intelligent Money is adviser only, this leave Parmenion as the natural choice for people looking for a fully managed service at an equal or lower price point the DIY platforms.
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