Saga and EQ Investors launch hybrid robo-advisory platforms
Two new robo-advisors are entering the UK market. Saga is launching a service in partnership with Tilney BestInvest and EQ Investors, the financial planning firm bought by BestInvest founder, John Spiers, last year is launching Simply EQ. Saga is targeting its core market, UK over 50’s investors, with a broad choice of offerings. It  estimates that 90% of its target market do not have a financial advisor, either because of cost or lack of trust. EQ Investors aims to foster more socially responsible investment with a model that assesses investor risk and recommends portfolios based on investment themes. Neither firm appears to be competing on price, coming in at or above the level charged by incumbents, but both will be hybrids supplementing the on-line offering with telephone support.

Where should you go to buy an Isa or invest in a pension? Who can you trust? How much should you pay? What on earth should you actually invest in?

Saga this week joined the myriad companies now offering to answer such questions with a variety of services aimed at people not fully confident in doing it all themselves.

The Saga service is pitched squarely at the middle market: people with £100 or more to invest, or who can put aside at least £50 a month. Saga reckons that of the 12.5 million over-50s in Britain, nine out of 10 don’t have a financial adviser, but it acknowledges that most can’t afford one either (or don’t trust them). It claims its service will guide them through their options with a series of ready-made portfolios to match their needs, and free telephone support.

Meanwhile, a separate launch called Simply EQ aims to give investors with at least £10,000 (or £500 a month) a low-cost investment portfolio tailored to their risk, with telephone advice from fully qualified financial advisers.

How do these services match up against the competition? We compared them to existing providers.

The new providers

Saga Investment Services

Who? The cruise ship company that became a financial services giant. This venture is in partnership with Tilney BestInvest, a long-established financial planning firm.

What? You choose from a ready-made set of portfolios (largely rebadged Tilney BestInvest funds), or select investments from its “top pick” range of funds, or search more than 2,000 funds and select your own. You choose whether to put the money into an Isa (where you can keep £15,240 tax-free) or in a pension, or in a general investment account.

How much? You pay Saga 0.4% of all your money invested every year to run the service, plus a fee to the underlying fund manager (groups such as Invesco or M&G, which actually invest the money). If you bought Woodford Income, a very popular fund, Saga would charge its 0.4%, plus 0.75% to Woodford, making 1.15% a year. For an index fund, such as Vanguard Developed World the cost is 0.15%, making a total of 0.55%. On its ready-made portfolios the total charge is around 2%.

Between now and April Saga is discounting its service fee to zero.

Verdict: An easy to use website with a broad range of services, though in reality Hargreaves Lansdown and Fidelity offer much the same and can be cheaper. The telephone support will be useful for nervous investors who aren’t confident about doing it all online.

Financial expert Justin Modray of impartial money website CandidMoney says: “While the platform is fine, it’s not the cheapest. Those charging fixed annual fees for a Sipp [pension], such as Interactive Investor and Alliance Trust Savings, could prove significantly cheaper on larger sums. And Saga is undercut on Isas by Cavendish Online, which charges 0.25% a year, and the fixed-fee platforms on larger portfolios.

Customers go through profiling and fact finds, either online or on the phone, where questions judge their risk exposure

Simply EQ

Who? A new launch from John Spiers, who reportedly made £100m selling his financial advice firm BestInvest to 3i in 2007. EQ stands for Emotional Quotient. He says his aim is to foster more socially responsible investment free of short-term pressures from outside shareholders so it can deliver better returns for clients.

What? “Don’t spend hours working out how and where to invest your savings, we can do all the hard work,” the website promises. Customers go through profiling and fact-finds, either online or on the phone, where questions and scenarios judge their exposure to risk. Then they are put into a portfolio of funds tailored to them. Initially you are asked to choose between three themes: best ideas, low-cost or a green/ethical positive impact portfolio. Crucially, you don’t choose the funds, they do it for you.

How much? On test we were graded “7” for risk and offered a low-cost portfolio made up of 10 different tracker and index funds, at a charge of 0.99% for Simply EQ and 0.2% to the fund managers – making a total of 1.19% a year. The positive impact portfolio drawn up for us was made up of 24 funds in the ethical and sustainable sphere, but was a lot more expensive: 1.19% to Simply EQ and 0.83% to the fund managers, making a total of 2.02%. We also tested the phone support and were answered immediately by a qualified adviser who dealt with all questions helpfully.

Verdict: Modray says: “This simple service carries out some basic fact finding to ensure you can afford to invest, determine how much risk you can tolerate and select an appropriate portfolio. I see this as a sensible option if you want to invest up to, say, £50,000 and are not confident making your own decisions. But on larger portfolios the fees could become excessive compared to the service. For example, £200,000 invested in the best ideas portfolio will incur a 0.89% annual fee of £1,780 plus fund charges. This looks high, given you’re invested in a standardised portfolio with minimal financial planning advice.”

The existing heavyweights

Hargreaves Lansdown

Who? Hargreaves is the gorilla in the investment jungle, started in a spare bedroom in Bristol in 1981 by two accountants and now a FTSE 100 company worth nearly £7bn.

What? A vast website offering low-cost funds, Isas and self-invested pensions through to individual share dealing, such as the forthcoming RBS share sale. It is expected to capture the billions that used to go into annuities but which will increasingly be used to produce an income from funds.

How much? Most investors pay 0.45% to Hargreaves to administer their money in an Isa, pension or investment account, plus the underlying fund manager charge. Hargreaves uses its muscle to extract discounts – for example, offering the Woodford fund at 0.6% instead of the 0.75% investors will pay at Saga.

Fidelity

Who? The second biggest investment management group in the world, based in Boston, with $2trn in assets. In the UK it offers its own funds, plus those of rivals in its fund supermarket.

What? Isas, pensions and investment funds and, like Hargreaves, a vast website of tools and guides. Also offers “pathfinder” portfolios for those who want their money managed, through to entirely self-directed investments.

How much? Slightly cheaper than Hargreaves at 0.35% a year for administering funds, plus the underlying manager charge.

The cheap and cheerful

Nutmeg promises a “fully managed investment portfolio all for the cost of doing it yourself”. They assess you, then build a set of funds to suit using cheap ETFs (exchange traded funds) to track stock market indices. It charges 0.3%-1%. iWeb, part of the Lloyds bank group, used to be a Guardian Money favourite for share dealing as much as investment Isas, but after introducing a £200 account opening fee is much less attractive. The super-cheapies are AJ Bell’s YouInvest, Charles Stanley Direct and Cavendish Online, charging around 0.2%-0.25% a year to manage your money before the specific fund manager fee.

A relative newcomer strongly rated by The Lang Cat is Trustnet Direct, which mixes the performance data of Trustnet with the infrastructure of the big Interactive Investor trading website and charges 0.25%.

More information



A full guide to all the services and fees is available at Langcatfinancial.co.uk. CandidMoney.com, meanwhile, is an independent site with a range of investing guides and impartial advice on the various platforms.