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Now HSBC and Investec join the robo-advice ranks to help investors with less than £15,000: We take a look at what they’re offering

Investec Wealth & Investment and HSBC are the latest providers to reveal their robo-advice services, designed to offer those investing smaller amounts cheap and easy access to financial advice.

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Topic: Investing

Investec Wealth & Investment and HSBC are the latest providers to reveal their robo-advice services, designed to offer those investing smaller amounts cheap and easy access to financial advice.
Investec Wealth & Investment is already trialling its new service – Click & Invest – which offers investors fully regulated financial advice.

HSBC meanwhile plans to offer a fully advised investment service later this year.
The two firms are only the latest in an increasingly long line-up of robo-advisers – firms that are designed to offer investors an automated way to invest their savings online.

Some of these services, including Nutmeg, Scalable Capital and Moneyfarm, offer investors a watered down version of fully regulated investment advice. This could either be information and a slick technology platform on which to choose and manage your investments or ‘simplified’ advice that guides you towards the best funds after you tell them your risk appetite.
Others, including eVestor and newly launched Timber, offer full-fat advice that recommends specific funds and whether you should invest through a pension, Isa or other means depending on your personal financial situation and goals.

HSBC and Investec will join the ranks of these latter firms, bringing increased competition to the sector, which should improve services, pricing and choice for investors looking to go online.
For more information on the different services available across the whole robo-advice market and what sort of investors use them, read our guide to the UK’s robo-advisers here.
Below, we have taken an in-depth look at both Investec’s and HSBC’s new offerings and how they compare.

What is Investec offering?
Click & Invest stands out from the crowd in the sense that while the vast majority of robos put investors’ money in passive investments – typically exchange traded funds (ETFs) that track certain indices – it invests in actively managed funds.
Managers of active funds choose investments with the goal of outperforming an investment benchmark index. Active investments are typically more expensive than passively managed propositions, due to a higher day-to-day management burden.
But Jane Warren, chief executive of Investec Click & Invest, believes it’s worth paying the premium.
She said: ‘There is no getting away from the fact that active management is more expensive. While we believe that passives are great when the markets are good, ultimately, active investment is going to see you right.
‘The cost of active funds is coming down while the rise of passive funds has resulted in the providers of many active solutions cutting charges. Also active managers have felt more pressure to cut their charges from the Financial Conduct Authority – which has been looking closely at the fees charged for active funds to determine whether they represent value for money.’

Who is it for?
Click & Invest is for individuals who have a minimum of £10,000 to invest.

What do you get?
Investec said its in-house team of investment managers will create and actively manage investment portfolios on behalf of clients. They will comprise of a portion of funds from a pool of 300 actively managed funds.
Crucially, the service does not solely offer funds operated by its well-known asset management arm. Its investment universe comprises of active funds managed by a host of providers including BlackRock and Schroders.
The funds are assessed and reviewed on a monthly basis with the aim of outperforming the market.
How much does it cost?
The service levies 0.65 per cent on the first £100,000 invested, 0.50 per cent on the next £150,000 invested and 0.35 per cent on any amounts invested over £250,000.
The figures are not inclusive of fund charges which can amount to between 0.35 per cent and 0.7 per cent.
A customer with £10,000 to invest would be charged a minimum of 1 per cent and a max of 1.35 per cent every year to use the service.

What is robo-advice?
Robo-advice is the term given to a new breed of automated investment. It’s largely offered by online investment managers, who have worked out a low-cost way to offer individuals wanting to invest a way to get started.
Instead of grilling the individual on every aspect of their finances, the investment manager offers them access to a number of investment portfolios and identifies which might be suitable for them based on how they answer an online questionnaire.
They are quizzed on some elements of their financial position, objectives and attitude to risk and depending on the answers they give, a computer algorithm then categorises them accordingly and presents them with a broad investment strategy. The portfolio usually consists of passive investments that track certain indices, such as exchange traded funds, that don’t require oversight by active managers and so are much cheaper to run.

What are the benefits?
It’s quick and convenient. Robo-advice comes from companies operating online, most of which also have apps, so individuals can access investment opportunities wherever they are at any time of the day or night. They are spared the time and hassle of having to find and visit a financial adviser, who will grill them on every aspect of their financial affairs to come up with a bespoke investment strategy as part of a detailed financial plan. And as mentioned above, it’s low-cost by comparison to traditional face-to-face advice and active investment management.

What are the risks?
The companies tend not to offer financial or investment advice specific to an individual’s needs. They are responsible for devising investment strategies suitable for certain types of investor only. They do not make personal recommendations. This means that the investment strategy might not be the most appropriate for your situation and you may be better off with another strategy.
While these companies offering investment on an ‘execution only’ basis – where the individual is responsible for their own decisions – are regulated by the Financial Conduct Authority in the UK, all this means is that should one go bust, your money would be protected up to £50,000 per institution under the Financial Services Compensation Scheme. It doesn’t pay out if you think you might have been mis-sold the investment strategy.

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What is robo-advice?
Robo-advice is the term given to a new breed of automated investment. It’s largely offered by online investment managers, who have worked out a low-cost way to offer individuals wanting to invest a way to get started.
Instead of grilling the individual on every aspect of their finances, the investment manager offers them access to a number of investment portfolios and identifies which might be suitable for them based on how they answer an online questionnaire.
They are quizzed on some elements of their financial position, objectives and attitude to risk and depending on the answers they give, a computer algorithm then categorises them accordingly and presents them with a broad investment strategy. The portfolio usually consists of passive investments that track certain indices, such as exchange traded funds, that don’t require oversight by active managers and so are much cheaper to run.

What are the benefits?
It’s quick and convenient. Robo-advice comes from companies operating online, most of which also have apps, so individuals can access investment opportunities wherever they are at any time of the day or night. They are spared the time and hassle of having to find and visit a financial adviser, who will grill them on every aspect of their financial affairs to come up with a bespoke investment strategy as part of a detailed financial plan. And as mentioned above, it’s low-cost by comparison to traditional face-to-face advice and active investment management.

What are the risks?
The companies tend not to offer financial or investment advice specific to an individual’s needs. They are responsible for devising investment strategies suitable for certain types of investor only. They do not make personal recommendations. This means that the investment strategy might not be the most appropriate for your situation and you may be better off with another strategy.
While these companies offering investment on an ‘execution only’ basis – where the individual is responsible for their own decisions – are regulated by the Financial Conduct Authority in the UK, all this means is that should one go bust, your money would be protected up to £50,000 per institution under the Financial Services Compensation Scheme. It doesn’t pay out if you think you might have been mis-sold the investment strategy.

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