Robo-adviser is an automated online wealth management service or a class of digital online financial institutions that offer financial advice or investment management tips online with minimal human intervention. The algorithms are executed by software to allocate, manage and optimize clients’ assets. Being online, however, does not make it less effective and ideal financial institution as it has almost all the aspects of the physical human involvement.
The software allocates your investments in many investment products such as the stocks, bonds, real estate, commodities, and futures but directed towards an ETF portfolio. The main aim of the Robo-adviser is to provide portfolio management services or rather allocation of investments among asset classes. The investments are based on your risk tolerance and target return.
These firms offer lower-cost investment management and financial advice which can include tax-optimization, retirement planning, insurance and more. They advise clients online and at a distance, without the need for a physical location and inconvenient face-to-face meetings. Investing with a Robo-adviser doesn’t mean sacrificing quality, service or trust, it means getting more convenience and faster services and, most significantly, lower costs.
Robo-adviser is a technology that is bringing a digital revolution to the financial planning and investing sector.
Here are 5 key benefits of using a Robo-adviser:
1. Lower Fees
Online advisers cost is relatively lower compared to the traditional financial advisers. If you invest through a bank, you probably pay for advice through a commission embedded in the management fees or on your investments. Online firms, on the other hand, charge lower fees because they’re much more investments oriented only and the technology used is automatic and self-guided and thus frees up advisers to fully focus on the client service. This also reduces overhead costs for things such as office space and other office-related expenses. The Online adviser offers a greater fee transparency with no hidden costs.
2. More Convenient
With Robo-advisers, clients receive the advisory services from anywhere across the globe. This saves them time, and other resources and is thus more convenient compared to the traditional financial advisory services.
3. Low Minimums
Robo-advisers’ investment advice is accessible to everyone, regardless of their income or net worth. Online advisers do not categorize clients based on their level of income and will provide advice and investment strategies that are appropriate to the stage you are at.
4. Better Service
The online model fits the modern investor and offers the services to a broader audience compared to the traditional financial services. The advice can be given via Skype, email, or even a phone call and investors get the service they want on their own terms. You don’t have to schedule a meeting with your financial adviser as the advice is provided to you from wherever you are. This digital online experience means that you can be updated on how your investments are performing, get financial planning and analysis tips, and work with your adviser in real time and from any place across the globe.
5. Robo-adviser is as Safe as a Bank
Your accounts with Robo-adviser accounts have the same protections and are provided with similar account protection funds as any other registered bank or financial institution. You don’t have to worry about your investments loss in case of any unexpected occurrences.
Robo-advisers are modernizing investment advice and making it more affordable, more accessible, and more convenient for everyone and are thus something to consider.