Many of us lack confidence, experience and interest when managing our finances. We could do with an expert to give us a steer or tell us what to do. But, until recently, getting financial advice remained the domain of the wealthy. Most advisers won’t see clients with less than £75,000 in long-term savings, so those with less are forced to go it alone.
Even those who can access advice do not always want to pay charges that can tot up to two per cent or more a year – or do not want to spend their time having meetings with an adviser when their finances are relatively straightforward.
But now, technological advances and innovation mean new digital advice services are stepping into the breach. There are a number of good options for the less wealthy, the time-pressured or those who need straightforward one-off advice around a specific life event such as retirement. Advice that you can then use to make key investment decisions.
The human touch: Digital advice can be used to serve up investment and pension products matched to your specific needs
What is digital advice – and how does it work?
Much like traditional financial advice, digital advice is personalised and regulated. It can be used to serve up investment and pension products matched to your specific needs.
However, unlike traditional advice, you do not spend time meeting an adviser. Instead, you answer online questionnaires designed to get to the heart of your financial goals and needs. Most of these take between ten and 25 minutes to complete, and can be done at a time that suits you.
Digital advice will become more common over the next five years, with a number of big brands working on new options. There are already a number available that it might be worth considering.
Since some people are happy with digital advice, but want the option to speak with an adviser along the way if they need to, we have included our own ‘humanometer’. This shows what level of human interaction is available from each service. The more interaction possible, the higher the score (maximum score of five).
Anyone with more complicated finances or who prefers the human touch may still be better off with a traditional face-to-face financial adviser.
A small nest egg or simple finances?
Not everyone has complex financial affairs or a large sum to manage. If that’s you, here are two options to consider.
OpenMoney is relatively new, aimed at a younger audience who have yet to build large savings stashes. It can help with general money management, using an online questionnaire before starting you on your investing journey. You can invest from just £1 or take a free financial health check. You can access the service through a smartphone app. It gets a humanometer score of two. You can talk to a qualified adviser if you want to, although it’s mostly online.
MyEva from Wealth Wizards is offered through employers who want to help workers with their financial wellbeing. Employees are given a financial health score, followed by a ‘to do’ list with prompts and help to improve their score.
You can also pay an additional fixed fee for specific advice as and when you need it. Why not ask your boss to investigate?
Like OpenMoney, it gets a humanometer score of two.
Are you ready to start investing?
Millions of people have their savings stuck in cash accounts that pay just pennies in interest. But they are too scared to put these savings into investments where their money could grow quicker over the long term.
Sound familiar? The following two advised digital options will guide you towards your first investment, and take the stress of decision-making away.
Barclays’ Plan & Invest allows its banking customers to complete a detailed online questionnaire, which takes roughly half an hour.
At the end, you get a personalised investment plan, which makes good use of the tax relief options available to savers (via pensions and Isas).
You must invest a minimum of £5,000 to get started. It’s not the cheapest service out there, but it is thorough.
Santander customers can access a similar, slightly less sophisticated but quicker customer service advice designed to put together an investment portfolio.
With regards to humanometer scores, they both get zero. These are online digital services: you won’t be able to speak to an adviser.
Saving up for a distant retirement?
If you are ten years or more away from retirement, then US giant Vanguard provides a decently priced digital advice service.
You will need a minimum of £50,000 and will have to invest it in Vanguard’s own range of funds.
Those with greater amounts can access an adviser on the phone. It’s a solid, low-priced option for anyone in their 30s, 40s or 50s with a decent chunk of savings who wants some help to sort out their retirement savings with a hugely credible global brand.
Its humanometer score is four – there is a pool of well-qualified advisers available who can take calls and queries.
…or is it just around the corner?
Pensions are bafflingly complex and confuse most people. The closer we get to retirement, the more important our decisions become. Here are two good options to help.
Investment house abrdn has a solid service if you are planning to retire in the next few years and you would like to speak to a person, diving into more holistic financial advice.
It’s a mix of human and digital interaction and feels helpful. It is aimed at people with more than £50,000.
It gets a humanometer score of four – a good mix of a modern investment journey with adviser Zoom calls and phone calls to support.
Destination Retirement by Hub Financial Solutions is a digital platform helping you understand how to plan your retirement and minimise your tax bill.
Aimed at people aged 55 and over, it provides a decent personalised plan illustrating what life after work may look like. Minimum investment required is £30,000.
Its humanometer score is three. It provides solid support if you call the company, but its service is mainly algorithm based.
Sick of paying out a fortune to the big boys?
For anyone with a traditional adviser, but who doesn’t feel they need the full fandango of advice every year, I like Netwealth.
It’s a hybrid offering, with an adviser assigned to each client offering either face to face or online meetings. The extent to which you use a real-life adviser is up to you. If digital is more your bag you can take that route. Minimum investment is £50,000. You can take a simpler investment-only path when it suits you, only paying for advice as and when you need it.
It gets a top humanometer score of five – you can dial up the human element as much, or as little, as you want.
Holly Mackay is the founder and chief executive of independent consumer website Boringmoney. co.uk. She holds test accounts with more than 30 investment, pension and advice firms.