Best Robo Advisors

A bit like a ready-made meal that you can select straight off the shelf, a ready-made portfolio is a collection of assets that have been selected by an investment expert. They utilise financial planning and investment strategies in order to provide investors with a simplified way to enter the market in a diversified way and in line with their appetite for risk. Investors simply select their risk level themselves, or alternatively, are recommended a portfolio by a robo-advisor.

For more information on ready-made portfolios and to see a complete picture of performance across the entire industry, click here.

Ultimately, the goal of investing is to grow your wealth, and in the case of a robo-advisor, this all comes down to the performance of the ready-made portfolio you are matched with.

Here at Investing Insiders, we have conducted independent research into the performance of the portfolios for 1, 3 and 5 years cumulatively so you can see where your money would have grown the most during that time period. Click the toggle at the top of the graph to change the time frame.

It’s important to remember that while past performance can provide you with insight into how effectively the portfolio in question is being managed, it is not a guarantee of future results.

Starting out with an idea of what you require from a robo advisor is advisable. Are you simply looking for something that is really easy and won’t take up your valuable time? Or are you looking to grow your wealth as much as possible? Do you want to learn about investing so you can take over the reins and manage your investments yourself or are you happy to have an expert manage the whole process for you?

Bear in mind that if you are a more proactive type of investor, a robo-advisor may not be the best fit for you. Even the platforms that offer assets such as stocks and funds in addition to ready-made portfolios will be fairly limiting to anyone with any sort of experience with the markets.

If a robo advisor is the direction you would like to take, then consider how important the following factors are to you:

Fees:

I have included a direct comparison of what each platform would charge for a year of services above to help you with this. Remember that cheaper isn’t always better. The most cost-effective platform is still only as good as the performance of the portfolios it offers (unless you are picking your own investments).

Performance:

The idea of investing is to grow your wealth. If you are planning to invest in a ready-made portfolio where all the investments are managed on your behalf, then it’s important to know that the portfolio will help you achieve your financial goals.

Do not assume that ready-made portfolios, managed by professionals, will always do well.

Our independent analysis has highlighted that these portfolios are underperforming the market, and in most cases, a simple tracker fund would have yielded better results and, in many cases, cost less. Where these portfolios excel, is in managing your risk and keeping volatility to a minimum.

Minimum investment:

You may not have a large starting capital for your portfolio. There are some robo-advisors on this list which will allow you to start with just £1, while others will require an upfront investment of £500.

Account types:

This is very important, especially for those seeking a tax wrapper for their investments. Tax wrappers, such as ISAs, ensure that any gains you make from your investments are not subject to tax.

Ease of use:

This is less important for robo-advisors, as my extensive research has revealed that all these robo-advisors, and the ones not included on this list, have been designed with ease of use in mind. These are all beginner-friendly options that are easy to navigate.

Customer support:

I reach out to customer support on every platform I review. Results are variable, with some platforms offering instant responses while others may keep you waiting a couple of days.

Security and regulation:

Don’t concern yourself too much with this aspect, as I will never recommend a platform that I don’t deem safe. I check authorisation and regulation on all platforms as well as account access security and whether client funds are covered by the Financial Services Compensation Scheme (FSCS).

In short, no! This may be the easiest way to invest, but each and every one of these ready-made portfolios has failed to beat or even match the S&P 500, which means your money would have grown more in a simple tracker fund in both the short and long term. In fact, our senior equity analyst had the following to say:

Costs are calculated as a total for 1 year and exclude fees stated in each ready-made portfolio’s fact sheet, such as the annual management fee, commission fees, and bonus fees, which may be substantial and impact overall returns. Hidden fees such as inactivity fees, platform fees, and/or foreign exchange fees have also not been included.

As you can see from the table above, you will pay more for an actively managed portfolio. This is because actively managed portfolios require regular human intervention in order to tweak the asset allocation within the portfolio in response to changes in the market. Here at Investing Insiders, we are currently conducting analysis into whether having your portfolio actively managed is worth the additional cost you will incur.

Whilst this research is ongoing, preliminary results from 2023 on Moneyfarm portfolios have indicated that the passively managed portfolios actually outperformed the actively managed portfolios. This is especially true for lower-risk portfolios.

A robo-advisor is an online investment platform that is designed to make investing as easy as possible. They are a solution for people who would like to invest but don’t know where to start and would rather avoid the cost of a wealth manager.

Robo-advisors aim to keep costs low when compared to traditional wealth management by employing algorithms, hence requiring minimal human intervention. They typically use data collected when a user opens their account in order to offer tailored advice on how to invest their money in line with their financial goals and risk tolerance.

Typically, an account is very easy to set up, requiring the user to answer a series of questions about their financial situation and future goals via an online survey. This information is then used to offer investment strategies that are inexpensive.

Robo advisors are intended as a solution for beginners and intermediate investors looking for low-cost opportunities to grow their wealth. With this in mind, I have personally downloaded, deposited, and invested funds on all the platforms on this list. There are additional robo-advisors that I have tested in this way that have not made it onto my list, such as Wealthify. This is because, for whatever reason, I have not found them worthy of recommendation.

To find out more about each of these platforms, you can go to the main reviews, where I go into considerable detail on the features, fees, performance, and services of each platform.

For more information on how we conduct our reviews and score the platforms, click here

Outside of robo-advisors, the platform that has achieved the best returns over the past 5 years, net of fees, with a ready-made portfolio, is eToro. The portfolio that has performed the best is called Four Largest Tech Giants (@Four-Horsemen). Before you rush to buy shares in that portfolio, it is important to know that this is a very risky investment, as this portfolio only holds 4 assets and is lacking in any sort of diversification:

• MSFT – Microsoft
• GOOGL – Alphabet
• AMZN – Amazon
• AAPL – Apple

However, had you held shares in that portfolio for the last five years, you would have experienced returns of 230.2%. When you pitch that against the best-performing portfolio from the robo-advisor category of 64.9% (Moneybox’s adventurous portfolio), you see just how well it has done.

Even if you were to take a less risky strategy and decide to put your money into an index fund that tracks the S&P 500, you would have returned 83.2%, which still outperforms the top robo-advisor portfolio.

What our independent analysis has revealed is that, more often than not, ready-made portfolios are underperforming the market.