Arigato Mr. Roboto – Robo-advisors in Japan

Andew4icoThis is a guest post by Ben Shearon, an English teacher living in Sendai, Japan. Ben runs the website RetireJapan to share information and help others take control of their financial future.

Enjoy, Andrew.


Arigato Mr. Roboto – Robo-advisors in Japan



Automation is popping up everywhere.

The sushi restaurant next to my house allows customers to order from their seat using a touch panel. Soon after ordering the freshly made sushi (the rice is shaped by a machine) arrives on a little train. Thanks to automation, a handful of staff can serve cheap sushi to hundreds of customers.

This is just a glimpse of what is coming. The BBC has a website that tells you how likely your job is to be automated in the future. This terrifying video shows some of the potential outcomes.

As part of this trend, financial advice is being revolutionised by the rise of the robo-advisor.


What is a Robo-Advisor?

Robo-advisors are financial services that offer portfolio management via computer software instead of human advisors. This allows them to offer lower fees and take on clients with much smaller portfolios than traditional financial advisors.

While in the past you might have needed 6- (or 7!) figures to get someone to manage your money, with a robo-advisors you can get them to do it with much less.



The main benefit of using a robo-advisor is getting access to professional portfolio design and rebalancing.

The fees tend to be relatively low, and portfolios are designed to match your risk profile and be diversified across different assets.

Another benefit is low transaction costs. With a robo-advisor you pay an annual fee, but individual transactions are often free. You can invest small amounts every month, something that wouldn’t be possible if you were paying a fixed transaction fee such as when buying ETFs or individual stocks.

Many of the people that come to the RetireJapan site have very little experience with investing and are perhaps not interested enough to read up on the subject, but are hoping to get their finances in order and invest for the future.

Being able to recommend a decent (not optimal, but good enough), easy-to-understand option would be wonderful. Unfortunately, there are some drawbacks.



I think there are two main drawbacks. The first is that the fees are higher than they would be if you made your own portfolio using low-cost ETFs.

The second problem is that the algorithm can’t save you from your own bad behaviour. Robo-advisors suit people who don’t know enough to manage their own portfolio, or who don’t have the time or desire to. Unfortunately this lack of knowledge may lead them to panic during market volatility and pull their money out at the wrong time.

The fact that there are no humans you can talk to during a crisis makes this danger worse.


Robos in Japan

Japan has seen at least three robo-advisors open in the last year or so. More are on the way, including a joint venture between Vanguard and large Japanese banks.

Services currently operating are 8 Now!, THEO, and WealthNavi (invitation only at the moment). They offer similar services but have slightly different minimal investments and fees, as shown in the table below.


Minimum investment

Annual fee

8 Now!




100,000 yen



1m yen



Now, based solely on that table, you might think that 8 Now is clearly the superior choice. Not only does it allow you to open an account with much less money, the annual fee is also lower. Given that the portfolios each service constructs are similar, why not go with the cheapest option?

Well, there are a couple of caveats. The THEO website is clearer and easier to navigate. Their application process and account management (transferring money to and from the account) are simpler and involved less back and forth in my case. And most importantly, they can provide you with a tokutei account. Tokutei accounts provide you with an annual summary that vastly simplifies your tax declaration. They are recommended for most investors (but please consult the tax office or your accountant). 8 Now! does not currently offer this.

To open a robo-advisor account you need to be a resident of Japan with a Japanese bank account and a Personal Identification Number (My Number). You will also need to complete the application and communicate with the company in Japanese. If your Japanese is not up to scratch you should be able to get by with someone to help you with the language as the application is online.


US Considerations

Unfortunately, US citizens and green card holders cannot use these services. This is because of the US government’s costly and punitive registration and reporting requirements.

There is another possible US issue. The IRS currently lays claim to inheritance taxes on US-listed shares and other property worth over $60,000, regardless of the nationality and country of residence of the owner. For many people, this means they should avoid US-listed shares and ETFs. The three Japanese robo-advisors described in this post use US-listed ETFs to construct their portfolios.

For residents of Japan, though, this may not be as dangerous as it first seems. I asked 8 Now! And THEO how they viewed the issue.

8 Now! (translated from Japanese): “Our company is incorporated in Japan and our accounts are administered under Japanese tax law, regardless of the country that issues them. Upon the death of an account holder all assets will be transferred to their inheritors.”

THEO (translated from Japanese): “We believe that our clients are not subject to US inheritance taxes. This is because all assets are held by THEO in a company account, not in individual investors’ accounts. On the death of a client, we would liquidate their account and transfer all proceeds to the inheritors.”


Other Options

For UK investors, a service called Nutmeg may be an option. They are currently willing to take non-residents (a rare occurrence in the UK) although there may be negative tax and residence implications. Holding a UK investment account would subject overseas investors to UK taxes on their holdings, and possibly result in them being deemed resident for tax purposes.

Either way you will have to declare any worldwide capital gains or dividends to the Japanese tax authorities if you are a long-term resident.


The Bigger Picture

There is some speculation about the future of robo-advisors. Michael Kitces wrote a detailed blog post about this topic, concluding that the technology may well be adopted across the financial sector while the companies that developed it are absorbed into larger entities.

Whether or not robo-advisors survive, or whether as in Chess, humans working alongside machines end up victorious, they represent interesting options for investors and those advising them.

For more information about investing for residents of Japan, please drop by RetireJapan. We don’t have all the answers, but together we can figure them out.



no one has more first hand experience helping expat investors

Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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10 Responses

  1. Bob says:

    I have just started reading up on you and your advice and I have been following Ben over at Retire Japan for a few months. I am also an English teacher in Japan like Ben and after finding out that the last 4 years of my IRA contributions back in the USA were 100% in excess (since all my income if foreign) I have been trying to find out what in the world to do with my money. Ben has been posting great advice and has answered many of questions, but I was hoping I could get your take on it, by it I mean investing as a US ex-pat in Japan. Japan has NISA which sounds great and the new Robo advisors seem worthwhile too; however, after some research it seems that US citizens can’t really benefit from ANY tax shelter anywhere. I am still VERY new to all this but right now my two best options seems to be put any Japanese investments in my Japanese wife’s name (with her permission of course) or continue to invest in my brokerage account (index funds) back home in the USA.

    • Ian says:

      Bob, I’m in a similar situation with you. Did you figure out anything new since your post?

      • Bob says:

        First off it came down to where my wife and I think we will retire. We are 95% sure we will retire someday back in the USA.

        So we could still open up a NISA or THEO in her name in Japan but after a bit more research I found that vast amount of the stocks you will be buying in Japan are still US stocks, so the poor exhancge rate we have right now won’t help on either side of the ocean. Also if my wife gets a green card when we go back she will be double taxed on her Japanese investments so they will all need to be closed and transferred to the USA. If you have half a million in there 40 years down the the line that could be problematic.

        So we just decided to stick with my Fidelty account back in the USA and invest in a diversified index fund. I want a hands off invest and forget approach so index works for me. If you want more advice on stuff to invest in or what type of diversification is good or recommended index funds you can check out the sidebar (guides) on Reddit under /r/personalfinance

        • Ian says:

          Thank you very much for the indepth reply, Bob. That’s essentially the conclusion I’ve come to as well and so I have been investing in US index funds through Vanguard.

          However, I’m unsure how to proceed regarding double taxation. Specifically of US investments by both the US and Japan. How are you handling this aspect?

  2. Ian says:

    Thank you very much for the indepth reply, Bob. That’s essentially the conclusion I’ve come to as well and so I have been investing in US index funds through Vanguard.

    However, I’m unsure how to proceed regarding double taxation. Specifically of US investments by both the US and Japan. How are you handling this aspect?

  3. bob says:

    If you are investing through Vanguard, then you are investing “in” the USA and Japan has no say in your overseas investments. If you are making the investments through a Japanese robo adviser or NISA or THEO then you need to “hide” your investments from the USA by having the accounts in your wife’s name.

  4. bob says:

    If you are investing through Vanguard, then you are investing “in” the USA and Japan has no say in your overseas investments. If you are making the investments through a Japanese robo adviser or NISA or THEO then you need to “hide” your investments from the USA by having the accounts in your j-wife’s name.

  5. Index says:

    Hi All,

    I have a question for any global nomads using a couch potato model. Which bond ETFs are you using?
    I’m using this model – my allocation to bonds is 35% and I am using IGLO (20%) and CORP (15%).
    I’m interested to know which bond ETFs are being used by others and if there are any better options out there.

    Cheers – Index

    • toony says:

      CORP & IGLO are two very good/well known bond ETFs from iShares – stay the course with them!
      With recent changes, IGLO & IAAA have become very similar (both are Gov bonds with very similar yield and duration).

  6. Index says:

    Thanks Toony. I was a bit a bit concerned with the durations for CORP and IGLO and was wondering if anyone had any comparable bond funds but with shorter durations.

    Cheers – Index

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