Advantages of Robo-Advisor In The Investment Journey

Robo Advisor
  • Robo-advisors are a form of customer service and consulting to assist the customer.
  • Robo-advisors are feasible and provide a suitable platform to assist new and intermediate investors.

Robo-advisors serve as digital investment platforms provided by brokerages. The exact idea behind robo-advisors is that the company’s proprietary algorithm rejects the involvement of emotion in investing and eventually helps the investor yield better returns at a feasible cost that is lower than that of a manual human financial advisor. Robo-advisors are becoming increasingly popular among new-inexperienced investors.  This article is going to look at the four advantages and benefits of robo-advisor.

Lower Fees than Financial Advisor

The paradigm and model of financial advisory and consulting have changed. With the advent of innovative frameworks like robo-advisors. Before its existence, getting profound financial advice and assistance for less than 1% of an investor’s AUM (Assets Under Management) was a long distant dream.

With multiple low-cost robo-advisors to choose from, investors find it fairly easy to go with algorithm-based software for assistance rather than a human financial advisor. Some of the robo-advisors are Charles Schwab’s Intelligent Portfolios, which come without any advisory fee, and Wealthfront Betterment, which favors cost-conscious consumers.

Robust Investment Models

Many robo-advisor algorithms, including the ‘Betterment Model’, rely heavily on Nobel Prize-winning investment theory to drive their framework. To create an investment portfolio comprising the lucrative return of the investment with minimal risk, the best robo-advisor models are established and defined. Most of them use cutting-edge investment portfolios and model research supported by modern theories to drive their products.

Easy to Open an Account

Robo-advisors can be accessible at no cost to fairly new and inexperienced investors. Many traditional financial planners are referring robo-advisors to their clients.

This takes away the burden of choosing assets for the client and it allows them to focus on investing their time and energy in other aspects for their client like individual tax, estate, and financial planning issues.

Robo-advisors are not always acting as adversaries to financial advisors. In many instances, they can assist financial advisors and play a role in growing and escalating the existing market of financial advisory clients. More and more consumers are choosing robo-advisors for assistance as they get the perk of easy access and low fee charges.

Lower Account Minimums

Investors with a fairly small net worth or low capital to invest in can get the perk of financial management through a robo-advisory service. Integrating with betterment and folio investing, the robo-advisors framework allows an investor to open an account and run it with a lower account minimum of zero or a near-zero minimum balance.

Some robo-advisors are accessible and have a range of $1000-$5000 to get started with. Even with this high entry requirement, a robo-advisor is cheaper than a financial advisor facilitating the same services. As technological advances keep happening, there will be more and more services offered by robo-advisors soon.

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