Digital investment services and robo-advisers

A robo-adviser is an online service that builds and manages an investment portfolio for you without a human adviser doing the choosing. You answer questions about your goals and your attitude to risk, and the service recommends a tailored portfolio of funds, gilts and bonds¹. It is one form of the wider world of digital investment services: apps and websites where you can open an account, put money in, and hold investments, all from a phone or laptop.

These services sit on the same legal footing as traditional investing. Dealing in investments is a regulated activity in the UK, so trading platforms require authorisation from, and are regulated by, the FCA². The advice element is regulated too: the rules recognise that advice can be delivered through an interactive software system, not only face to face or by telephone³. What changes with a robo-adviser is the delivery, not the underlying protections or the risks.

The two things most people want to know are what it costs and what happens if things go wrong. Costs come in layers: platform fees, fund fees, dealing charges and, where a human is involved, advice fees, and firms must disclose all of them to you⁴. On risk, the honest answer is that investments can fall in value and you can get back less than you put in; with high-risk investments arranged through online platforms, investors often lose 100% of their money⁵.

What a robo-adviser does and what it offers

A robo-adviser automates the part of investing that many people find hardest: deciding what to buy. Rather than picking individual shares or funds yourself, you answer a questionnaire about your aims and your attitude to risk, and the service recommends a portfolio built from pooled investments such as funds, gilts and bonds¹. The portfolio is then run for you, with the service rebalancing it over time, and you can usually top up, withdraw and monitor everything through an app or website.

This is a form of the "do-it-for-me" end of the platform market. An investment platform, sometimes called a fund supermarket, allows investors to buy and hold a range of investments in one place online, and sometimes with a smartphone app¹. Within that world, most do-it-for-me services ask for your investment aims and assess your attitude to risk through a questionnaire, then recommend a tailored portfolio¹. A robo-adviser is essentially this model taken to its most automated form.

What a robo-adviser offers, in practice, is convenience and structure. It removes the need to research individual investments, it spreads your money across many holdings by default, and it keeps the portfolio aligned with the risk level you selected. What it does not offer is a human being who knows your full circumstances. The questionnaire captures what you tell it, and the recommendation follows from those answers. That is why the rules treat the output as a personal recommendation, with the consumer protections that come with that, rather than as casual guidance.

Three ways to invest online: do it yourself, robo-advice and a human adviser

Digital investing is not one thing but a spectrum, and it helps to see the three main models side by side.

The do-it-yourself route is execution-only: the platform carries out your instructions but does not advise you, and many platforms offer access to stock-exchange-listed investments such as shares, investment trusts and exchange-traded funds as well as funds, while some only offer investment funds¹. The robo route hands the choosing to a rules-based process. The human-adviser route is the most personal and the most expensive: independent and restricted advisers must agree up front how much you will be charged, when you will be charged and how payments will be made to them⁶.

There are hybrid points between these. Some investment platforms offer one-off advice sessions for a fixed fee from around £500 to £1,000, which can suit someone who wants a single review rather than an ongoing relationship⁶. Advisers can also use platforms as part of their service: platforms are an acceptable part of independent advice, as long as advisers use them to benefit their clients⁸. And within pensions, drawdown investors can ask their provider to choose for them based on their preferences, using ready-made options called investment pathways, pick their own investments, or have a financial adviser manage them⁹.

Fees and charges: platform, fund and advice costs

The cost of digital investing comes in several layers, and it is worth understanding each one because they compound. The rules require firms to give you costs and charges information covering a one-off entry costs figure, a one-off exit costs figure, an ongoing costs figure, a transaction costs figure, and any performance fees and carried interests⁴. In other words, the full picture must be shown to you before you are committed, not discovered afterwards.

The layers themselves look like this:

• Platform fee: a charge for holding your investments on the service, usually a percentage of your pot or a flat fee.
• Fund fees: the internal costs of the funds in your portfolio, which apply whoever holds them.
• Dealing charges: you might be charged each time you buy and sell a share, investment trust or exchange-traded fund, though fees for buying and selling traditional funds are less common¹.
• Exit fees: you might be charged if you transfer investments from one platform to another, but many platforms have scrapped these fees, and others will offer to cover switching fees as an incentive to join them¹.
• Advice fees: where a human adviser is involved, they must agree the charges with you up front⁶.

On advice costs, the figures depend on how much advice you want. One-off sessions on some platforms cost from around £500 to £1,000⁶. For full ongoing advice, an industry example quoted for a £250,000 investment over five years is £14,809, made up of £5,036 upfront and £9,773 ongoing⁶. Advisers who work on pensions may charge a fee, or receive commission from the pension provider¹⁰. An independent financial or pensions adviser can help you decide which personal pension is suitable for you, and they usually charge for giving advice¹¹.

There are also rules governing how platforms themselves are paid, which matter because they shape what a platform has an incentive to sell you. A firm must not use a platform service as part of a personal recommendation, or of the provision of a targeted support service, to a retail client in relation to a retail investment product unless it has satisfied itself that the platform service provider and its associates only receive permitted remuneration for UK business¹². The aim is that the platform's pay does not distort the recommendation you receive.

The dedicated guides to investment platform fees and charges, dealing charges and fund charges and the ongoing charges figure break each layer down in more detail.

What you can invest in: ISAs, pensions and general accounts

A digital investment service is a wrapper around investments, and the wrapper you choose affects tax and access. The main options are ISAs, pensions and general investment accounts, and most robo-advisers and platforms offer some combination of them.

On the ISA side, there are four types of ISA available: cash ISAs, stocks and shares ISAs, innovative finance ISAs and Lifetime ISAs¹³. A stocks and shares ISA is one where the money you put in is invested on the stock markets¹⁴, which is where a robo-adviser's recommended portfolio typically sits. The rules on what can be held are the same whether you invest through an app or through a traditional broker.

On the pension side, a self-invested personal pension (SIPP) works in a similar way: you hold investments inside a pension wrapper, with pension tax treatment and pension rules on when you can take the money. If you are already drawing a pension, you can ask your provider to choose investments for you based on your preferences, using investment pathways, pick your own, or have a financial adviser manage them⁹.

A general investment account has no ISA or pension wrapper, so returns fall under the normal rules for taxing investments. The guide to where investments can be held compares the options, and general investment accounts explains the unwrapped version in full.

Inside any of these wrappers, the investments themselves are much the same across the market: investment funds, shares, investment trusts, exchange-traded funds, bonds and other investments, though some platforms only offer investment funds¹. If you want to understand the building blocks, see investment funds, investment trusts, ETFs, bonds and gilts.

Risk questionnaires and how your portfolio is chosen

The questionnaire is the heart of a robo-adviser. Most services ask for your investment aims and assess your attitude to risk through a questionnaire, then recommend a tailored portfolio of funds, gilts and bonds¹. The questions typically cover how long you plan to invest, how you would react to falls in value, and your capacity to absorb losses. The output is usually a portfolio labelled by risk level, with a higher-risk portfolio holding more in shares and a lower-risk one holding more in bonds.

Two things follow from this that are worth being clear about. First, the recommendation is only as good as your answers. If you overstate your comfort with losses, or your time horizon, the portfolio you get will be riskier than suits you. Second, the questionnaire captures what you tell it, not your whole life: a human adviser can pick up things a form cannot, which is one reason ongoing advice from a person costs more. Ongoing advice services may include reviews of investments, adjustments to financial strategies, and updates on financial products¹⁵.

The risk labels themselves are not guarantees. A "cautious" portfolio can still fall in value, because anything invested in markets can. The FCA's own risk summary language for high-risk investments is blunt about the worst case: if the business you invest in fails, you are likely to lose 100% of the money you invested, and most start-up businesses fail⁵. That language applies to the riskiest end of the market, not to a diversified robo portfolio, but it is the standard against which any online investment offer should be read.

For more on how risk is measured and managed, see investment risk and your attitude to risk and diversification and asset allocation.

Where robo-advice may not suit you

A robo-adviser suits someone who wants a portfolio chosen and managed for them, is comfortable answering questions about risk honestly, and does not need advice on anything beyond the investment itself. It may not suit you if your situation falls outside that.

The main gaps are these:

• Complex circumstances. A questionnaire cannot weigh competing priorities such as pensions, protection insurance, debts and inheritance in the round. An independent adviser can look across the whole market; a restricted adviser will either focus on one subject area but look at the whole of the market, or recommend from all providers for one product type, or have access to a limited number of providers⁸.
• Vulnerability. The Financial Ombudsman Service has noted that vulnerable customers are over-represented in higher risk investments, quasi-gambling trading behaviours and complex digital platforms¹⁵. If you are under stress, in poor health or under financial pressure, an automated process may be the wrong place to start, and free help from MoneyHelper is available first.
• High-risk or speculative investments. The FCA's rule of thumb is not to invest more than 10% of your money in high-risk investments⁵. If an online service is steering you towards start-up shares, mini-bonds or cryptoassets, that is a different market from mainstream robo-advice, and the protections are thinner. Most cryptoassets are not FSCS protected because they are not regulated, including virtual currencies like Bitcoin and Litecoin¹⁶.
• Wanting someone to answer to. With robo-advice the recommendation comes from a process. If you want a person who knows your file, ongoing advice services exist for that, at the costs described above⁶.

The comparison of execution-only, advisory and discretionary services sets out the differences in more detail, as does independent vs restricted financial advisers.

How to open an account and transfer existing investments

Opening an account with a digital investment service is usually done entirely online: you provide identity details, answer the risk questionnaire, choose your account type (ISA, pension or general account), and fund the account by debit card or bank transfer. The guide to how to add money to an investment account covers the funding options, including setting up monthly savings.

Transferring existing investments in is the part that needs care, because the rules differ by wrapper. For a stocks and shares ISA or an innovative finance ISA, the current year's subscriptions and the previous years' subscriptions may be transferred to a stocks and shares account, an innovative finance account, a Lifetime ISA, or a cash account if the account investor is 65 or over at the end of the year, belonging to the same account investor¹⁷. Legislation in force from 6 April 2027 sets out the same transfer routes¹⁸. The practical points are these:

1. The transfer is arranged by the new provider: an existing customer of interactive investor logs in and selects 'transfer in' from the 'cash & transfers' menu, and Vanguard Investor allows a customer to start by transferring investments from another provider¹.
2. Transfers can be made in two ways: in-specie, where the investments themselves are re-registered in the new account, or by selling the investments and rebuying them, which has different timing and tax consequences¹.
3. Barclays Investment Account customers can transfer existing Investment Accounts in at any time, once a Direct Investing account has been opened¹.
4. For pensions, PensionBee asks for a few simple details and then works on finding and transferring old pensions; exit charges and any guarantees that would be lost are set out by the transferring scheme before anything moves¹.

If you are closing an account rather than moving it, how long does it take to close an investment account? covers the timescales, and do you pay capital gains tax when selling investments to transfer them? covers the tax question for general accounts.

Online adverts and promotions: what the rules require

Digital investment services advertise heavily online, and the rules on what those adverts can say have tightened. Financial promotions for investments must be fair, clear and not misleading, and where a sale is made over the internet, the firm should display the required information on a screen which the retail client must access and acknowledge as part of the sales process; it would not be sufficient for the information to be accessible only by clicking a link or downloading a document¹⁹. In other words, the key information has to be put in front of you, not buried a click away.

Beyond financial promotion rules, the Digital Markets, Competition and Consumers Act 2024 created a wider consumer protection regime. Section 225 sets out what are unfair commercial practices and prohibits the use and promotion of them²⁰. The Act prohibits "drip pricing" of unavoidable fees by requiring traders to set out in an invitation to purchase the total price of a product including any mandatory fees, taxes and charges²¹. It also imposes duties on traders in relation to subscription contracts, provides rights for consumers if those duties are breached, and provides rights to cancel subscription contracts during cooling-off periods²¹, which matters for investment services sold on a monthly subscription model.

Reviews and advertising to children are regulated too. Submitting or commissioning fake consumer reviews, publishing reviews in a misleading way, or failing to take reasonable and proportionate steps to prevent and remove such reviews are banned practices²¹. Adverts containing a direct appeal to children to buy advertised products, or to persuade their parents or other adults to buy products for them, are also banned²¹.

Your money is not guaranteed: investment risk and FSCS protection

The most important thing to understand about any digital investment service is that investment risk sits with you. The value of your portfolio can fall, and you can get back less than you put in. The FCA's risk summary for high-risk investments states it plainly: investors in these shares or bonds often lose 100% of the money they invested, as most start-up businesses fail⁵.

FSCS protection does not change that. Protection from the Financial Services Compensation Scheme, in relation to claims against failed regulated firms, does not cover poor investment performance⁵. You will not be compensated for investments falling in value, or for a company in which you hold shares going bust, unless the poor performance resulted from bad advice by a regulated independent financial adviser that has since failed⁸.

What FSCS does cover, for investment business with authorised firms that fail, includes bad or misleading investment or pension advice, negligent management of investments, misrepresentation, and fraud²³. FSCS covers a range of financial products if a UK-authorised financial firm fails, including deposits, insurance, investments, pensions, mortgage advice and certain other regulated services²⁴. It also protects pension advice, so compensation can be paid if an adviser giving pension advice fails²⁵.

Two conditions govern whether protection applies at all. First, the investment provider or adviser must be authorised by the Prudential Regulation Authority or the Financial Conduct Authority⁷. Second, the particular activity the authorised firm is carrying out for you must be regulated by the PRA or the FCA²⁶. Some investments fall outside this altogether: FSCS does not cover investments in peer-to-peer loans⁵, and it does not protect qualifying cryptoassets because they are not a "specified investment" under the UK regulatory regime⁵.

Questions worth asking any adviser or provider before you invest include whether FSCS protects the financial advice, what happens if the firm gives bad advice and fails, whether the products are FSCS protected, how much of your money is protected, and what would happen to your money if something happened to the provider²⁶. The narrow guides to FSCS and poor performance, FSCS and financial advice and what happens if a platform fails cover each of these in detail.

How to check a firm is authorised

Before opening an account or transferring money, check the firm. The steps are simple and take minutes:

1. Check your provider is authorised by the Financial Conduct Authority on the FCA Register at register.fca.org.uk²⁷. Dealing in investments is a regulated activity in the UK, so trading platforms require authorisation from, and are regulated by, the FCA².
2. Find out whether the particular activity the authorised firm is carrying out for you is regulated by the PRA or the FCA, because FSCS protection only attaches to regulated activities²⁷.
3. Check the details of the investment and whether the provider is genuine on the FCA's ScamSmart pages, particularly for anything promising high returns²².
4. If you cannot find the firm on the Register, or the firm claims an exemption, treat that as a warning sign; FSCS provides guidance on what to do when you cannot find a firm²⁸.

Clones of authorised firms are a common scam technique, where fraudsters copy the name and details of a real firm. Checking the contact details on the Register against the ones you have been given, rather than the other way round, is the safe habit. The FCA's Firm Checker tool exists to help consumers confirm a firm is authorised and avoid scams²⁹.

Complaints and where to get help

If something goes wrong with a digital investment service, the complaint route is the same as for any regulated firm. The Financial Ombudsman Service can look at complaints about businesses regulated by the Financial Conduct Authority, including some pension schemes and their services³⁰. For investments specifically, you can complain if you were advised to make an investment that wasn't right for you, or misled or misinformed about an investment product, if you lost money because of administrative errors, or if you were overcharged³¹. You can also complain about the way an adviser or investment company managed your ISA¹³.

The volume of these complaints is real: in the first quarter of 2026/27 the ombudsman opened 118 complaints about advisory services within mixed investment portfolios³². The process is:

1. Complain to the firm first, giving it the chance to resolve the matter.
2. If you remain dissatisfied, take the complaint to the Financial Ombudsman Service, which is free for consumers.
3. If your complaint concerns a decision made about you purely by automated means, you can also complain to the Information Commissioner's Office: first complain to the organisation, then to the ICO if still dissatisfied, and courts are a further option with independent legal advice³³.

For free help before things reach a complaint, MoneyHelper brings together the support and services of three former government-backed financial guidance providers: the Money Advice Service, The Pensions Advisory Service and Pension Wise³⁴. nidirect also points consumers towards ways of finding a financial adviser, including contacting trade bodies like IFA Promotion or the Personal Finance Society¹⁰. For suspected scams, see investment scams and the wider guide to scams and fraud.