would YOU trust a robot with your pension?

They’re touted as cheap way to get expert financial advice, so .

THANKS to the pension freedom reforms in 2015, the power is now in your hands to do what you like with your savings in retirement. The flip side is that you only have yourself to blame if something goes wrong.

Over the past week we’ve gone into meticulous detail to teach you how to use the freedoms safely. We’ve explained the dangers of withdrawing money too quickly, how to avoid rip-off charges, warned of the threat of high taxes and run through some of the best investments to keep your nest egg on track.

If you’re still feeling worried about how complicated pensions seem — that’s because they are. There’s no two ways about it: investing to make your pension last for life is tricky and it will take research and effort on your part. but don’t be daunted. Help is at hand. You should read Money Mail every Wednesday for the latest tips and tricks to make your money go further. Then think about getting financial advice from an independent expert.

Financial advice standards were given a big boost in 2013 when advisers had to meet higher qualification levels and state their fees up front (rather than collecting them sneakily from your pot in the background).

Now there’s a new way to slash your costs — robot advisers. These are essentially low-cost investing websites that help you pick the right investments for your money.

‘Robo-advice’ is being pushed by the Government over fears that pensioners are having to fend for themselves because they can’t afford to pay an expert to guide them. but would you really trust a robot with your pension? Here, we run the rule over robo-advice tools — and explain why an expert with a pulse might not be such a bad move after all . . .

GET ALL THE FREE HELP YOU CAN

bEFORE you do anything at all, take advantage of the Government’s free guidance scheme, Pension Wise. You won’t get a recommendation from the staff member you speak to, but they will be able to give you valuable pointers. You may find after an appointment with Pension Wise that all your questions have been answered. Equally, you might realise that there’s more to get your head around than you thought.

Pension Wise will help anyone aged 50 or over. It will go through the tax implications of making withdrawals and the different types of deals available and how they work. Go to. pensionwise.gov.uk or call 0800 138 3944.

You can also see someone in person at sites around the UK.

If you have access to the internet you’ll find a host of tools to help you. Pension provider Standard Life offers a retirement calculator that lets you type in your pension fund value to see what income it could provide, as well as the tax implications. See standardlife.co.uk/c1/ guides-and-calculators/retirementcalculator.

HOW ROBOT ADVISERS WORK

AT A bASIc level, robo-advisers are online investment companies that manage your money using computer models called algorithms.

The concept is that computer programs can make smart investment decisions based on a few facts and figures about your circumstances.

Typically, you will fill in a questionnaire about your attitude to risk, your financial circumstances and the size of your pension pot. These answers are fed into the adviser program which then recommends where to put your cash.

Nutmeg claims to be the UK’s biggest robo-advice investment service. It offers cheap investment portfolios that are tailored to the amount of risk you can afford to take.

When you’re investing, risk means how much you’re willing to gamble to see your pot grow. Taking more risk usually means that your fund grows more quickly in the long term. by the same token, less risk means your fund is likely to stay steadier — and won’t crash so hard if the markets dip.

London-based Nutmeg started in 2012 and claims it can help you set up a shares Isa or pension in less than ten minutes.

It charges 0.75 pc a year for a fully managed portfolio, dropping to 0.35 pc for investments beyond £100,000, plus an average investment fund cost of 0.19 pc. It says this type of service would cost nearer 2 pc at a traditional wealth manager.

It charges no set-up or exit fees, transaction or trading fees.

You must invest at least £500 initially plus commit to a £ 100 monthly payment. If you pay in £ 5,000 initially there is no monthly commitment. London-based Money On Toast offers five investment portfolios to match risk profiles ranging from ‘very cautious’ to ‘ very adventurous’. It charges an initial £69 fee for a one-hour telephone or video call with a regulated adviser. The adviser will go through your options and make suggestions. If you sign up to its ongoing management service, it charges annual costs of 1 pc. It says this compares to

3pc for traditional financial advice. Money on Toast, founded in 2012, requires you have at least £50,000 of investable assets to use the service. otherwise, the firm says, it will not be economical. its website boasts: ‘Gone are the days of high fees and dodgy salesmen — we are entering an age of quality, accessible advice.’ netwealth, co-founded last year by charlotte Ransom, a former partner at U. S. bank Goldman Sachs, arges 0.9 pc a year for investments under £ 250,000. The minimum investment required is £50,000.

HALF MAN, HALF ROBOT

THE biggest downside to robot advisers is that they can’t look at your whole financial situation when they tell you which route to take.

If your best bet is to get an annuity, which provides a guaranteed income for life, rather than take the risk of investing in the stock market, you won’t get that information from a computer algorithm (at least not the ones currently on offer).

Some firms are using a combination of robo-advice and human interaction. Timber Finance is an example.

The company, which has been part-funded by Associated Newspapers, the parent company of the Daily Mail, and whose adverts have appeared in Money Mail, uses technology to make advice quicker, more convenient and cheaper.

Rather than waiting for someone to visit you or driving to an adviser’s office, you can talk to its advisers over the phone and through video calls to get recommendations tailored to you. Advice on a £100,000 pot would cost £1,000 (Timber charges 1 pc of your level of savings).

Pension providers are also trying to bridge the gap. LV= offers an online service called Retirement Wizard for those within three months of wanting to access a pension worth £150,000 or less.

The service looks at annuity quotes from all providers in the market — but it only offers access to information about its own drawdown plan.

The service costs £199 and, for a further £499, LV= will complete the paperwork, contact existing pension providers and organise the payment of any tax-free cash.

YOU GET WHAT YOU PAY FOR ULTIMATELY,

you may decide that none of this is as good as speaking to a human being.

Most robo-advisers struggle to take into account your tax position, your spouse’s pensions and any dependants’ benefits and health, as well as if you have other pensions.

An independent financial adviser (IFA) will be able to provide you with a detailed retirement plan and help choose the best value deals.

The drawback is that IFAs can charge hundreds or even thousands of pounds.

Jamie Jenkins, head of pensions strategy at Standard Life, says: ‘ There’s no substitute for the human touch.

‘An adviser will take so many important things into consideration when assessing what you should do with your savings — your plans, your needs, attitude to risk, investment choices, the income you can expect and need and the tax implications of your decisions.’

An adviser can also decipher complex pension jargon and translate your situation and options. The cost of advice for converting a £100,000 pension pot into a lump sum and annuity is around £1,750.

The average bill for setting up an income drawdown scheme for a £300,000 pot is £3,500, according to adviser directory Getting a few quotes will give you a feel for what represents value for money in your area. Some advisers will charge an upfront fee, while others will take a percentage of the savings you have to invest. Make sure you understand what you’re paying for at the outset. If it’s not clear, ask again.

The cost can be dwarfed by the benefits. A report by Unbiased found that, on average, people who take advice on their retirement planning have an estimated £48,279 more in their pot compared to those in a similar income bracket who do not take advice. That’s with tax relief and returns factored in.

Professional advice can help you avoid making expensive mistakes.

Anecdotal reports suggest many people plan to withdraw their pensions and put the cash in a basic savings account or Isa, where rates are abysmal.

Plus, taking all of your pension at once could mean paying tax at 40 pc or even 45 pc on three- quarters of your savings (25 pc is tax-free).

Jamie Jenkins, at Standard Life, says: ‘The tax implications of withdrawing all of your pension savings at once could be huge. The cost would dwarf a bill from a financial adviser who can help minimise tax bills.’

Another benefit to fully regulated advice is that if it turns out you are poorly treated, you can make a claim against the firm.

You are also eligible for compensation from the Financial Services Compensation Scheme in the event the adviser is unable to pay.

You can find local independent financial advisers at thisismoney. co.uk/find-an-adviser.

Here, you will also find a full list of the different qualifications an adviser can have as well as the professional bodies that represent them. Financial advisers have to be authorised by the Financial Conduct Authority (FCA).

Not all advisers are classed as independent, so it is important to know what the adviser you have chosen is able to offer at the outset.