Finding the right platform for your savings can be quite difficult – especially if you know little or nothing about finance. One option is the growing trend for something called “robo investing,” and top High Street bank, Barclays, is the latest to jump of the “robo” bandwagon. But is investing your savings into an automated savings platform the best thing to do?
Fully automated robo investment platforms
Many robo investment services are fully automated. There is no human intervention. This makes it very easy from the saver’s point of view, because their savings portfolio will be chosen for them automatically.
The way it works is that you have to complete a registration form that asks you various questions about your financial circumstances and your attitude towards risk. Your portfolio will be decided automatically by the robo process algorithms, based on the information you’ve provided. The advantages of these fully automated systems are that they don’t attract hefty management fees because there is no human intervention, and the amount you have to invest is minimal.
One size doesn’t suit all
Some people are very happy with this type of arrangement, purely and simply because they don’t have to get involved. Beyond filling out the initial application form, there is simply nothing else to do. You will not be contacted or consulted in any way; your savings fund will be fully, robo-managed. This doesn’t however, suit all people.
If leaving your savings to decisions made totally automatically by robo-investment service makes you nervous, you are not alone. Just last month, new research found that so-called robo-advice is less popular than getting financial advice from financial professionals, friends, or going online.
ING survey highlights doubts in 91% of people
The survey, which was carried out by ING took in almost 15,000 people across 15 countries. It found that 91% of people were not prepared to let a robo-advisor handle their savings. However, when asked if they would be happier if they were given the final say-so on decisions, 26% of people said that this would be an option. When quizzed further, only 3% though, would be willing to give a robo-advisor total control.
Robo investment platforms with a human touch
The new platform launched by Barclays does however, goes further than simply offering a fully automated robo service. They are one of the few banks who are joining wealth management specialists Moneyfarm, the first company to offer robo-advice that is augmented by expert human advice.
The Barclays robo-plus offering is called “Ready Made Investments.” It is designed to permit customers to assemble a savings portfolio through investing in one, single Barclays fund. Clients will be able to opt for growth and/or investment funds, according to their personal appetite for risk, and dependent on their goals. This new service is available to their Smart Investor clients. Charges for the new service will in addition to the existing Smart Investor fees.
The management fee of growth investment funds is set at 0.45%, while the management fee for the income investment option is between 1.45% and 1.48%.
Take expert advice about a range of savings vehicles
Of course robo investment platforms, either totally automated, or with human-friendly intervention, are not the only vehicles to be considered when it comes to saving money. Whether you are saving for a rainy day; for some sort of special event like a wedding, to get a deposit on a property, or to put money aside for your retirement; there are other options you need to check out – the wide range of ISAs for example.
The big attraction with ISAs is the fact that they are tax friendly. New directives issued by the government in March this year, mean that here in the UK, you can save up to £20,000 per annum, tax free, by investing in a number of ISA products. Any interest that accrues is also tax free.
Whichever route you decide to do down, deciding the right platform for you as an individual, can be quite complex. For that reason, you should get expert advice from an FCA approved wealth management specialist.
