There are three main types of fees charged by robo-advisors:
Platform fees
This is an annual fee charged as a percentage of the value of your portfolio. Platform fees can vary significantly, typically ranging from 0.25% to 0.75%.
Platform fees are usually tiered, in other words, you pay a different fee percentage on each ‘slice’ of your portfolio. For example, if you had a portfolio of £25,000, you might pay 0.45% on the first £10,000 and 0.35% on the £15,000 balance.
One of the providers on our list, Moneyfarm, charges a non-tiered fee. In the example above, 0.35% would be charged on the full £25,000. This can be a significant cost-saving for investors with larger portfolios.
Fund fees
These are charged by the fund manager on the underlying funds in your portfolio. One of the reasons that robo-advisors principally invest in ETFs is that they are passively-managed, and, as a result, charge a low fee, typically around 0.1% to 0.2%.
ETF spread fees
As with shares, ETFs have a ‘buy-sell’ spread, meaning that brokers make a small profit on the trade by charging buyers a slightly higher price than the price received by sellers.
The typical ETF spread is 0.07% to 0.10%. It’s worth noting that this spread can vary according to the number of times that the robo-advisor repositions the portfolio, however, the provider will usually try to keep this within the quoted range.
