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.