How to Evaluate a Robo-Adviser When You Still Want Someone to Blame

A robo-adviser is an online investment service that builds and runs your portfolio from a risk questionnaire rather than from a conversation with someone who knows your circumstances. In the UK that usually means a discretionary fund manager — Nutmeg, Moneyfarm, Wealthify and InvestEngine are the names you’ll meet — running model portfolios of low-cost funds, with platform fees typically between 0.25% and 0.75% a year on top of fund costs, and minimums measured in hundreds of pounds rather than six figures.

The question I hear from readers in their fifties and sixties, holding £300,000 or more across pensions, ISAs and property, is rarely whether the technology works. It’s whether they should hand a portfolio of that size to a service with no legal duty to judge whether the plan behind the portfolio makes sense — at exactly the stage of life when plan quality starts to matter more than fund selection. So here is the evaluation, end to end: what you’re buying, what you’re giving up, and what the human actually costs once you price blame in pounds.

What you are actually buying from either model

Start with the boundary that governs everything else. Under FCA rules, guidance is generic and unaccountable; advice is personal, regulated and accountable. A robo-adviser sits mostly on the non-advised side of that line. What it offers is discretionary management: you fill in the questionnaire, the firm selects and manages the holdings within the risk mandate you picked, and that questionnaire is the suitability process — you were the one who filled it in. Some services sell a hybrid upgrade with human access. Read what that access can and cannot recommend before you pay for it.

What a human adviser sells is different in kind, not just in service. You’re buying the transfer of suitability responsibility: a legal duty to show that recommendations fit your circumstances, backed by professional indemnity insurance that can outlive the firm itself. And you’re buying judgement on questions a questionnaire can’t see — the tax-year phasing of withdrawals, the death-benefit nominations, the conversation with a spouse whose instincts about risk are not yours.

Ownership matters too, because this sector has consolidated before. Nutmeg has been owned by JPMorgan since 2021. Wealthify is majority-owned by Aviva. Smaller services have closed outright — UBS shut its SmartWealth platform in 2018 and moved the customers on. Your assets sit in your name and can be re-registered elsewhere, but a provider’s corporate parent tells you something about staying power.

One more piece of current context. The FCA’s long-running review of the advice/guidance boundary, including its “targeted support” proposals consulted on in late 2024, is expected to widen what firms can say without giving full regulated advice later this decade. The line you’re evaluating today is being redrawn — one more reason to check what permissions a firm actually holds rather than what its marketing implies.

The blame question, answered in pounds

Here’s the honest answer: with a robo-adviser, most of the blame stays with you — and the price reflects that. The service is responsible for doing what it promised: managing the portfolio within the mandate, rebalancing, executing trades, reporting accurately. It is not responsible for whether the risk level you picked suits a retirement starting in four years. Not for whether drawing from a general investment account before touching the ISA was sensible. Not for whether your pension nominations survive the inheritance tax changes arriving in April 2027.

Put the accountability premium in numbers. On £500,000, a managed robo service at a large-balance tier might come in around 0.40% all in — roughly £2,000 a year. A traditional advised arrangement at, say, 0.75% advice plus 0.30% platform plus 0.20% fund costs is 1.25% all in — roughly £6,250 a year. The gap is about £4,250 a year, or some £64,000 across a 15-year retirement before compounding. That is what “someone to blame” costs at this balance. It may be worth it. It may not. But it should be a decision made in pounds, not in vague comfort.

What the premium buys on the protection side: the adviser’s suitability duty, professional indemnity cover, Financial Ombudsman redress that can run to six figures for a failed recommendation, and — for both models — FSCS protection of up to £85,000 per person per firm if the firm itself fails. Check any candidate on the FCA Register for its permissions, and confirm FSCS status at fscs.org.uk.

Some of the premium can also pay for itself in behaviour. Morningstar’s long-running “Mind the Gap” work in the US puts the annual cost of badly timed fund decisions at around one percentage point. An adviser who talks you out of one daft decision in a drawdown year has often earned that year’s fee. A quarterly email rarely stops anything.

And the uncomfortable truth cuts both ways. An adviser charging 1% a year to hold a portfolio you could have bought for 0.25% is a poor deal. A robo-adviser that can’t answer your decumulation questions is also a poor deal, for a different reason. Neither model wins on a slogan. Both should be made to win or lose on your numbers.

Seven checks before you move a penny

1. Get the fee stack in pounds, not percentages

Ask both candidates the same question: “On my exact balance, what will I pay over the next twelve months, all in?” The robo stack: platform fee, fund ongoing charges, transaction costs, currency costs on overseas-listed ETFs, any transfer-out charges. The adviser stack: initial planning fee, ongoing percentage, platform fee, fund costs. Percentages hide scale. Pounds don’t. On £500,000, “just 0.25%” is £1,250 a year.

2. Look inside the portfolio

How many holdings, passive or active, and what are the rebalancing rules? Who is the actual investment team, and what governance do they publish? If the honest answer is “a global index tracker plus four satellite ETFs”, you could hold something similar yourself for under 0.30% — and the management fee has to justify itself against what you’d have done alone.

3. Check the firm’s standing before its marketing

Ten minutes on the FCA Register tells you whether a firm holds “managing investments” or “advising on investments” permissions — or both — and whether anything disciplinary sits against it. Then ask the closure question: “If you shut down, what happens to my money?” The correct answer is that assets sit in your name and re-register to another provider, typically within weeks. A firm that answers badly has told you something important.

4. Run the decumulation test

This is the test most robos fail at your age, so run it early. Say: “I’m 58. From 60 I want £30,000 a year net until State Pension age. Show me how your service produces that.” A good answer covers whether you can take flexible income in situ or must transfer the pot away to draw it — some big names still require the transfer, so ask directly — how cash-flow buffers are held, and how withdrawals are phased across tax years.

Two legislated dates turn this from admin into planning. From 6 April 2027, unused defined-contribution pension funds are due to be brought within the inheritance tax net, which turns death-benefit nominations into tax paperwork. From 6 April 2028, the normal minimum pension age rises from 55 to 57: born before 6 April 1973 and you keep access at 55; born on or after, it’s 57 unless your scheme rules gave you a protected right to take benefits earlier. For a 52-year-old planning to bridge from 55, that’s two more unfunded years. Layer on the State Pension age step-up from 66 to 67, phased between April 2026 and April 2028 (check your own date on gov.uk), and the bridge some readers must fund runs longer than the plan they made at 50. None of this is a trap — every date has been legislated for years and can be planned around — but a questionnaire won’t adjust your plan for any of it. That adjustment is advisory work.

5. Ask the wrapper questions

Which wrappers does the service actually offer — ISA, general investment account, SIPP — and what happens at the joins? On a GIA, ask about consolidated tax reporting, and whether transfers move in specie (holdings intact) or by sell-down. A forced sell-down can realise gains against a capital gains exempt amount now set at just £3,000, alongside a dividend allowance of £500. The ordering of withdrawals — pension income to fill the personal allowance, ISA for tax-free top-ups, GIA disposals managed against the annual exempt amount — is where advice earns its fee in the drawdown years. It’s also work a robo won’t do.

6. Test the escalation path and the exit door

Ask: “When markets fall 20%, who calls me, and within how many days?” Get the service standard in writing. Then test the exit: re-registration to another provider commonly takes two to six weeks; ask what transfer-out costs apply and whether everything moves in specie. You’re evaluating a relationship you may hold for two decades. The way out tells you as much as the way in.

7. Ask the death-benefits question

“If I die next year, what does your service do — and what does my spouse do?” You’re listening for an expression-of-wish form on the SIPP, clear beneficiary options, and staff who know that from 6 April 2027 inherited pension arrangements interact with estate planning differently than they did in 2025. The robo will process your nomination form correctly. It won’t advise on whether the nomination is right for a blended family, a care-funding plan, or a taxable estate. That’s exactly the family money conversation that planning paperwork quietly decides — and it doesn’t happen on a questionnaire.

Where a robo genuinely earns its place after 50

None of this makes robo-advisers a bad choice. It makes them a specific one. They’re excellent at the accumulation end: a clean, low-cost home for an ISA sleeve during the bridge years, a sensible parking place for a defined-contribution pot you’re not yet drawing, and a useful floor to benchmark any adviser’s portfolio costs against. If you already use an adviser, the robo price list is a fair instrument — ask your adviser to justify their model portfolio in pounds against the robo equivalent. Good advisers can.

The hybrid arrangement works for many couples I sit down with: planning advice bought on a fixed fee — a retirement and estate plan for perhaps £1,500 to £5,000 — with implementation left to a low-cost platform. Two conditions keep it honest. First, one person must own the plan, including the sequencing of withdrawals across every account. Second, the combined fee stack must still beat the single-adviser alternative once you add everything up in pounds. If both hold, you’ve kept accountability where it matters without paying a percentage of the whole pot for it.

Stated plainly: a robo is cheaper, cleaner and lonelier. An adviser is dearer, accountable and present. Paying the premium knowingly for the second is a rational decision. Paying it for a portfolio you could have held at 0.25% is not. And paying nothing for a plan nobody owns is the most expensive option of all.

Frequently asked questions

Is a robo-adviser regulated the same way as a human adviser?

Both are FCA-authorised, but the permissions differ. A robo typically holds “managing investments” permissions and acts as a discretionary manager within a mandate you selected; an adviser holds advising permissions and carries a suitability duty for personal recommendations. The regulation is equal. The accountability for your plan is not.

Can I complain to the Financial Ombudsman if a robo-adviser loses my money?

You can complain about the service: execution errors, misleading questionnaires, inaccurate reporting. You can’t expect redress for market falls, and in non-advised mode the risk level you selected was your call. With a human adviser, the recommendation itself is challengeable — that’s the substance of what the fee buys.

How much cheaper is a robo-adviser on £300,000 or more?

In pounds: at £300,000, a managed robo service typically costs around £1,050–£2,400 a year all in, against roughly £3,000–£5,400 for a full advised service. The delta is about £2,000–£3,000 a year — £30,000–£45,000 across a 15-year retirement before compounding. Whether an adviser adds more than that in tax, timing and estate outcomes is the entire question, and it’s answerable only case by case.

Should I split my money between a robo and a human adviser?

Often, yes: robo for the ISA sleeve, adviser for pension decumulation, tax and the family conversation. Keep two conditions — someone must own withdrawal sequencing across all accounts, and the combined fee stack must beat the single-adviser alternative in pounds, not in impressions.

The one-question test

Before you decide, write down the scenario you’d want to blame someone for. A 25% fall in the first year of drawdown. A tax bill from badly sequenced withdrawals. A pension nomination that sends the pot to the wrong estate outcome. For each one, ask two things: which model would have prevented it, and who picks up the phone?

Wanting someone to blame isn’t petty. It’s a proxy for three serious questions: who holds suitability, who acts when things break, and who talks to your family when you can’t. If a robo answers all three adequately for your situation, use it and keep the £4,000 a year. If it answers none of them, the human is cheap at the price. And if the bigger question — when to retire and how to fund the gap to State Pension age — is still open in your house, start with the question you should be asking years before you retire, because adviser or no adviser, that decision sets the frame for everything else.

This piece is part of a running series on evaluating and switching advisers. The next instalment walks through a pounds-based fee audit line by line, so you can put any adviser — human or otherwise — on one page and compare.