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What type of digital financial advice should I choose?

Updated 05 May 2022

4min read

Kate Morgan
Staff Writer

Over 20 years ago, Sort was introduced as the first regulated online financial adviser in the UK.

As the digital era started to gain traction, many thought that the future was digital and the people providing financial advice – our human financial adviser friends – and the need for them would soon become extinct.

But today, we can see that isn’t the reality. 

What type of digital financial advice should I choose?

There is human financial advice, digital advice, robo-advice, and hybrid advice – all of which offer investors and those in need of financial assistance a variety of pros and cons. 

To help you decide which type of financial advice will work for you, let’s take a closer look at the type of advice that is at your disposal.  

How different advice solutions work

If you’re thinking of choosing digital financial advice in some capacity, there are a few different avenues you can choose to take. 

Online digital advice

As the name dictates, online digital advice is offered almost exclusively online, and is typically lower cost, offering investors a lot more bang for their buck. 

Online digital advice services are particularly helpful and beneficial for cash savers at the beginning of their financial journey, or those on the lookout for a ready-made investment ISA put together by financial experts behind the scenes.  

Whether you’re looking for financial advice and tips or investment information, there are a number of providers at your disposal. Some examples to consider are: 

For investment: 

For cash savers or general financial advice and tips: 

Hybrid digital advice 

In comparison to online digital advice, hybrid digital advice is usually aimed at prospective investors with assets of around £50,000 or more.

And as the name suggests, these services blend experienced human financial advisers with modern financial tech.  

Many of the customers who utilise hybrid digital advice are focused on retirement – whether working through the somewhat complicated financial steps of switching from salary to pension income, or simply planning ahead for the future.  

One of the real draws for this type of digital advice service is that these solutions can help those who don’t want the expense of a personal adviser or those who don’t necessarily need full traditional (and of course pricier) advice services. 

If you’re simply saving up for your retirement and planning ahead, you could take a look at Vanguard; or if retirement is right around the corner, there’s abrdn or HUB Financial Solutions which could help you out. 

But if you need some broad advice and would like the option to speak with a human financial adviser if you need to, Netwealth is one source to check out. 

Robo-adviser 

If a ready-made investment ISA without human interaction or bespoke tailoring is what you want, then you could consider using a robo-adviser for your financial needs.  

However, it’s worth noting that robo-advisers usually aren’t regulated advice, but the digital advice platforms will ask you a few questions as you prepare to put together your financial portfolio and will suggest a ready-made ISA (with a supporting digital app) to send you on your merry way. 

Which financial advice is best for different needs? 

The creation and inevitable development of digital advice has boosted the number of choices and, most importantly, the cost for investment management and advice available to anyone on the lookout. 

Whether you’re thinking about a human financial adviser or robo-adviser, there are a number of things to consider.

For starters, you could in fact get started right now with a robo-adviser (while utilising low costs and low or no-account minimums), then hire an adviser later for comprehensive financial planning.  

Robo-adviser v hybrid digital advice: What’s the difference? 

Robo-advisers use computer algorithms to build and manage your investment portfolio, and as the name suggests, require little human interaction. 

You, the investor, will set your own parameters: how much investment risk you’d like to take on and your time horizon for example, and let the computer and algorithms do the rest.

Robo-advisers are a fantastic low-cost option, especially when you only want or need investment management rather than comprehensive financial planning.  

On the flipside, hybrid digital advice offers the best of both. Hybrid advice involves the use of technology to enhance, rather than replace, the work of the financial adviser. 

Who will benefit from each type of advice? 

Digital investment advice started becoming more mainstream around the time of the 2008 recession, with a number of companies similar to Moneyfarm, InvestEngine and Wealthify UK emerging to redesign the ways in which finance is undertaken. 

And today, there are so many options for potential investors, giving them the ability to decide on the best method for them and their circumstances.  

Digital advice services will offer you self-serve, simplified guidance and advice for initiatives like ISAs and pension top-ups, all the way through to hybrid advice services which utilise machine learning aligned with a firm’s advice policy to effectively direct the client to the best financial route according to their needs. 

Hybrid digital advice is often used for investors who want to plan for their retirement, receive some guidance on pensions, or even learn a little more about wealth accumulation via an investment strategy.

Clients with more complex needs and circumstances, or higher wealth levels can therefore be offered an automated approach, but with an adviser co-ordinating the process and the relationship behind the scenes.

The hybrid approach makes the customer journey more intuitive, tailored and convenient for their needs. 

Millennials are twice as likely as some older investors to consider using a robo-adviser, which is unsurprising as Millennials and Gen Z have grown up in a tech-laden world.

If you are looking to invest in the stock market to get a greater return on your cash than you might if you simply left it in a cash ISA, then a robo-adviser might well be for you.

But remember, the value of any investment can go up as well as down, meaning your initial capital investment may be at risk. 

For starters, you can start to compare savings options right here with our shortlist of best ISA options.

About the author
Kate has written for leading publications and blue chip companies over the last 20 years.