Non-US Robo-advisors

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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.

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. [note 1]

Overview

Robo advice[1] in itself is the digital customer interface for identifying the most suitable risk profile for an investor. A web- and/or app-based input template gathers customer data, investment horizon, risk preference and other legally required investor information and the risk profile is determined using an if-then logic.

The robo advice digitalizes the local jurisdiction classification and the MiFID II suitability and appropriateness assessment normally carried out by the client advisor in a traditional advisory meeting. The robo-advisors then using the given risk profile translates this into a strategic asset allocation and implements this by selecting specific investment products.

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 its important to check for hidden fees and anomalies when comparing providers. With a robo-advisor you pay a service fee and you pay the expenses of the investments used.

Therefore the customer should look to compare the total expense ratio 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 that may be structured 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’ll 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 have expense ratios and other costs such as spreads. Those type of costs are taken out of the assets of the fund before any returns are allocated to investors.

Rationale for using a robo-advisor

Pros

  • It takes out all the research, stress, vigilance and emotions that come with picking funds and / or stocks and maintaining an investment portfolio yourself. Customer interfaces are usually very user friendly.
  • Offers low cost ETF's (overall costs should be lower than a traditional adviser). Generally minimum investment amounts are 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, (takes the emotion out of risk assessment).
  • Automatic rebalancing and reports.

Cons

  • Costs are higher than DIY solutions (but generally lower than traditional adviser).
  • Complexity of an individual investors background including pensions, other benefits and alternative assets are not taken into consideration.
  • Limited or no discretion for investor with regards to choice of funds and resultant fund costs.
  • If the platform uses active investment approach this may lead to divergence from the market outcome.

Access to robo-advisors

The spread of robo-advisors has led to the proliferation of providers across different jurisdictions. The lists below resulting from internet searches (as of August 2019) provide a reference point for a non-US retail investor. The individual investor should carefully carry out their own specific due diligence on any provider to review what is available in their particular location as and when the information is available. No reliance should be made on the suitability of these references for investment or other financial purposes. The investor should carefully review the available providers, check the suitability of their products, check the statutory and financial position of the company and seek advice before committing to any purchase. [2]

Robo-advisors in EU

List of Robo-advisors in EU[3]
Robo-advisor Contact info Locations covered
etfMatic[4] link Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic,
Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece,
Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania,
Luxembourg, Malta, Netherlands, Norway, Poland, Portugal,
Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom
moneyfarm link UK and Italy
nutmeg link UK
cashboard link Germany
FeelCapital link Spain
quiron link Germany and Switzerland
wealthify link UK
fiveraday link UK
TrueWealth link Switzerland
GINMON link Germany
EASYVEST link Belgium
Wealthhorizon link UK
growney link Germany
swanest link EU
vaamo link Germany
indexacapital link Spain
scalable link UK, Germany and Austria
whitebox link Germany
FundShop link France
easyfolio link Germany
YOMONI link France

Robo-advisors in Australia

List of Robo-advisors in Australia [5]
Robo-advisor Contact info Locations covered
Stockspot link Australia
investSmart link Australia
Ignition Wealth link Australia, Ireland
Quiet Growth link Australia
RAIZ link Australia
Clover link Australia
Plenty link Australia
Six Park link Australia
Cashwerkz link Australia
Fincast (non retail) link Australia

Robo-advisors in Canada

List of Robo-advisors in Canada [6]
Robo-adviser Contact info Locations covered
Wealthsimple link Canada
Nest Wealth link Canada
WealthBar link Canada
Justwealth link Canada
ModernAdvisor link Canada
BMO Smartfolio link Canada
Invisor link Canada
Questwealth link Canada

Robo-advisors in Hongkong

List of Robo-advisors in Hong Kong [7]
Robo-advisor Contact info Locations covered
Chloe by 8 Securities link Hong Kong
Smartly link Singapore
Kristal.Ai link Singapore, Hong Kong, India, U.A.E.
Aqumon link Hong Kong

Robo-advisors in India

List of Robo-advisors in India [8]
Robo-advisor Contact info Locations covered
ScripBox link India
5paisa link India
Angle Broking link India
GoalWise link India
Upwardly link India

Robo-advisors in Singapore

List of Robo-advisors in Singapore [9]
Robo-advisor Contact info Locations covered
Kristal.Ai link Singapore, Hong Kong, India, U.A.E.
Smartly link Singapore
AutoWealth link Singapore
OCBC RoboInvest link Singapore
UTrade Robo link Singapore
MoneyOwl link Singapore
EndowUs link Singapore
Kristal.Ai link Singapore

Notes

  1. "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." FT article

See also

References

  1. Robo-advisor - Wikipedia
  2. Bogleheads® forum topic: What we know about robo-advisors, jbolden1517. July 9, 2019.
  3. Robo-advisors EU
  4. Transparent, peer-reviewed Digital Wealth Management, White Paper describing the background to etfmatic's approach.
  5. Australia share-trading
  6. Best robo-advisors in Canada, monenysense.
  7. Robo-advisor compare
  8. Robo-advisor, wealthpedia.
  9. Singapore robo-advisors, moneysmart.

External links