LINKS MARKED * ARE AFFILIATE LINKS.
If you spend a lot of time following the financial markets or you’ve been researching ways to start investing, then you may well have come across names such as Betterment and Wealthfront.
These two investment companies have become huge in the US and they are known as robo advisors. If you have tried to invest your cash with one of these companies and you live in the UK, however, you may also have realised that these companies don’t actually allow UK investments at this time. Something which I imagine would have disappointed you.
If this has been your experience then try not to despair too much. I have some good news for you in that there are actually UK robo advisors who work very much like a UK Betterment or Wealthfront. These companies allow you to take a hands-off approach to investing in the stock market, while at the same time offering low management fees based upon your own personal risk profile.
UK Betterment or Wealthfront Equivalent
There are a few different robo advisors which operate like a UK Betterment and Wealthfront but some are more established than others. They also offer different minimum investments amounts and different fee structures.
One well-established UK based robo advisor you might want to try is Moneyfarm*.
Most UK robo-advisors offer a discretionary online investment approach. This means that they make all of the investment decisions on behalf of their customers based on the investment preferences of the investor, including their attitude to risk.
To keep investment fees low, robo-advisors mostly invest in ETFs or Exchange Traded Funds. There may be occasions where they utilise other investments. Discretionary means that you cannot make your own trades via a robo-advisor platform, instead they make the investments for you.
If you want to make your own trades, then you would be better off opening a standard share dealing account like the Fund and Share Account* from Hargreaves Lansdown.
Is a Robo Advisor Right For Me?
If you harbour dreams of picking one of these rare stocks that skyrockets over the period of just a few years making you rich beyond your wildest dreams, then a robo-advisor probably won’t be the best option for you. This is because they are deliberately structured in a way that will provide steady growth, while taking into account your own attitude to risk.
If you are looking to invest in the stock market to get a greater return on your cash than you might if you simply left it in a cash ISA, however, then a robo-advisor might well be for you. It should be mentioned that the value of any investment can go up as well as down. This means your initial capital investment may be at risk.
Now It’s Your call
So, there we have it. You now know that there are alternatives available if you were looking for a UK Betterment or UK Wealthfront. Whether a robo advisor is right for you or not is your decision to make, but at least you now know that you have options available to you as a UK resident. To read more about what Moneyfarm have to offer, check out our full Moneyfarm review.
*Capital at risk
*Tax treatment is dependent on your individual circumstances + *Subject to HMRC requirements
*Past results do not guarantee future results