Wednesday, 14 March 2018
Robo Advisors: Are They Going To Fail You?
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this is interesting
If you are a
finances aficionado, then you’ve probably heard not once about “Robo-Advisors”.
But just as many other terms in this industry, hearing about them it is not
simply enough to understand them. That’s why we’ve come out with this short
article to put you up to speed on one of the latest trending topics in the
financial word.
What are
Robo-Advisors?
Robo-advisors refer
to digital systems that offer automated, algorithm-driven financial planning to
customers, with a minimum of human interaction. A robo advisor platform usually
collects data from clients about their financial situation in order to
elaborate an assessment and offer advice or take actions on their behalf to
improve their situation.
Benefits of using
Robo Advisors
1 - Less pricey
As robo-advisors
are typically online platforms, the cost of their services are much lower than
those offered by traditional advisors. Human labor is drastically reduced,
mainly for monitoring, optimization and maintenance of the system.
A robo-advisor
would charge between 0.2 percent to 0.5 percent of a client’s account balance
per year, compared to a 1 percent to 2 percent charged by traditional financial
planners.
2 - Accessibility
Due to the fact
that robo-advisors are online platforms, clients can access to them 24/7,
without waiting for a call, make an appointment or writing an email. Instant
advice at a moment notice.
3 - Less for more
Plus, robo-advisors
have much lower capital requirements than traditional ones. To start investing
with a robo-advisor, an initial deposit of $5,000 would be just fine. On the
contrary, human advisors will not take clients who are ready to invest less
than $100,000.
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