Non-US robo-advisors

A robo-advisor is an online "wealth management" service that provides automated, algorithm-based portfolio management advice. They usually do not get involved in more personal aspects of wealth management, such as tax planning, retirement planning or estate planning.

Overview
Robo advice is a digital customer interface for identifying the most suitable risk profile for an investor. A web-based or app-based input template gathers customer data, investment horizon, risk preference and other legally required investor information and then determines a risk profile using if-then logic.

Robo advice digitizes the local jurisdiction classification and the MiFID II suitability and appropriateness assessment normally carried out by a client advisor in a traditional advisory meeting. The robo-advisor then uses this risk profile to create a strategic asset allocation, and an implementation that uses selected specific investment products.

Robo-advisors have now become a part of the financial and investment retail world as more and more new companies spring up across Europe and elsewhere. From the Financial Times: "One-third of new DIY investors are opting for automated online investment apps — so-called 'robo-advisors' — instead of fund supermarkets such as Hargreaves Lansdown, as demand for low-cost investment services grows."

Robo-advisor and investment services have some clear parallels with Bogleheads® investment philosophy, including:


 * Generally passively managed funds;
 * Index funds are used;
 * Risk assessment follows widely accepted norms;
 * Low costs, although these can be higher than a do-it-yourself (DIY) Boglehead portfolio but lower than a traditional advisor-led portfolio;
 * Diversified;
 * Buy and hold formula;
 * Rebalance automatically.

Costs
Each individual company has its own pricing structure, and it is important to check for hidden fees and anomalies when comparing providers. With a robo-advisor, you pay both a service fee and the expenses of the investments it uses.

Therefore you need to compare the total expenses for each platform. Some providers ladder their fees on a descending scale for higher principal amounts.

Each robo-advisor should have a reasonable service fee. It may structured that as a fixed monthly fee, or as a percentage of assets.

Fixed fees
Where robo-advisors charge a fixed monthly fee the range depends upon portfolio size.

Percentage fees
With a percentage of assets structure, you will see fees in the range of about 0.15% to 0.50% of your account size per year.

Other costs
You also pay any expenses associated with the investments used by the robo-advisors. For example, exchange-traded funds (ETFs) have expense ratios, and other costs such as spreads. You pay these costs within the fund itself.

Pros

 * It takes out all the research, stress, vigilance and emotions that come with picking funds or stocks and maintaining an investment portfolio yourself. Customer interfaces are usually very user friendly.
 * Offers low cost ETFs (overall costs should be lower than a traditional adviser). Minimum investment amounts are generally low.
 * Simplicity, including matching risk appetite with standard index products.
 * Provides passive indexing setup.
 * Provides "packages" of funds to matching the investor's responses to the risk assessment software. This takes the emotion out of risk assessment.
 * Automatic rebalancing and reports.

Cons

 * Costs are higher than DIY solutions (but generally lower than traditional adviser).
 * It does not account for potential complexity of an individual investors background, for example pensions, other benefits and alternative assets.
 * Limited or no discretion for investor in the choice of funds and the fund costs.
 * If the platform uses active investment approach then results may to diverge from market returns.

Access to robo-advisors
The spread of robo-advisors has led to the proliferation of providers across different jurisdictions. The lists below result from internet searches (as of August 2019), and provide a reference point for a non-US investor. You should carefully carry out your own checks on any provider, to review what is available in their particular location as and when the information is available. Do not rely solely on these lists for investment or other financial purposes. You need to carefully review the available providers, check the suitability of their products, check the statutory and financial position of the company, and perhaps seek advice before committing to any purchase.