Moneyfarm UK Robo-advisor Review

Moneyfarm is one of the UK’s most well known wealth management services and like other robo-advisors, they rely more on algorithms and computing power than men in suits.

Ever since Michael Lewis wrote about Daniel Kahneman and Amos Tversky demonstrating algorithms beat doctors in the Undoing Project, robo-advisors have been steadily replacing greedy bankers.

And it looks like that’s a good thing because algorithms take the complexity out of investing and mean Moneyfarm will help you to:

• Determine the amount of risk you should take
• Construct a diversified investment portfolio
• Keep costs as low as possible
• Maximise returns
• Keep an eye on your investments
• Review your investments

And by the way, this takes minutes rather than days.

Operating in Italy since 2011, then in the UK from 2016 Moneyfarm offers Stocks and shares ISAs, General investment accounts and Pensions.

Advantages

Moneyfarm has three major advantages over their competitors as far as investors should be concerned.

• They actually provide regulated investment advice (many of their competitors appear to, but don’t)
• They make active investment decisions (where as many of their competitors just passively follow the market)
• They offer a totally free portfolio tool that lets you determine your perfect investment asset mix (even investors that don’t commit to investing with Moneyfarm can still use this)

Regulated Investment Advice

Moneyfarm is regulated by the FCA and investments with Moneyfarm are covered by FSCS up to £85,000. Robo-advisors often leave the decision making up to you, but when you choose a portfolio with Moneyfarm, you are opting to follow their recommendation. This means they are providing you with regulated financial advice that must follow strict FCA guidelines.

Many of Moneyfarm’s competitors appear to do this but don’t. Rather, they leave the decisions up to you.

Investment Action

Moneyfarm doesn’t just passively invest your money. They make active decisions to maximise your returns, and pretty successfully, by all accounts see below:

Portfolio Tool

Moneyfarm has an excellent portfolio tool and the best news is you don’t have to invest with MoneyFarm to try out the platform. Register for free and build a free bespoke portfolio with their portfolio tool in minutes. Basically, you just fill out a questionnaire and hey presto. The results are used to put together a portfolio especially for you based on your investment time horizon and tolerance for risk.

This tool determines what kind of investor you are:

And then illustrates what percentage of your money you should put in different investment assets. Take the following example:

And let’s face it, that information is extremely useful whoever you are.

Fees

Those that do invest, should find the costs reasonable. They are pretty much the same as their competitors even though Moneyfarm offers a lot more.

• 0.75%: <£10,000
• 0.60%: £10,001 – £50,000
• 0.50%: £50,001 – £100,000
• 0.35%: >£100,000

Additionally, you need to pay an average of 0.2% for the underlying fund costs.

And according to Moneyfarm themselves, they are 1.2% cheaper than investing with the UK’s largest investing platform Hargreaves Lansdown.

Minimum funding requirements of £1500 should mean Moneyfarm stays within range of most investors

Moneyfarm Alternatives

As reasonable as those fees are, some investors won’t be prepared to pay for a robo-advisor at all. Choosing instead to take a totally DIY approach. At the end of the day, platforms like eToro offer commission free trades and no platform fees these days. Investors with the inclination and time on their hands can save a few pennies going it alone.

Additionally, Moneyfarm is only open to residents of the UK and Italy right now, so residents of other countries will have to look elsewhere. I’ve talked about a few options here here.

That said, even if you were to take a totally DIY approach it would still be worth signing up with Moneyfarm to use their portfolio tool. Most investors would benefit from their insight and it is totally free.

Bottom line

The bottom line is Moneyfarm offers everything a Robo-advisor should do and more, and even if you don’t end up investing with them, you are missing out if you don’t try their portfolio tool for free.