Firstly, they are more accessible than a human advisor, and can be available 24/7 on demand. Traditionally with human advisors, one would have to meet them in person, fill up a bunch of forms, and wait for the instructions to get processed back in the office. Robo-advisors make that much easier by making that whole process digital and instant via the internet. They also typically require less minimum capital to get started, and have less expensive fees than traditional platforms. Some reasons that is so, is that it’s much more scalable and is less dependant on human resource. Most providers also claim that it takes the emotion and human bias factors out of investing.
One does have to consider the possible drawbacks of course, as there are always two sides to a coin. Taking the human out of the picture also means you lose the benefit of meeting a real-life person. If you’re new to investing, you might need someone with experience to guide you in discovering your investment priorities, preferences and risk appetite. They could be able to relate better to certain things that a robot might not be able to discern, like changing family situations or life transitions. Financial planning needs to be thoughtful and factor in these things and we just might need that extra adaptive fine-tuning.
We hope you learned something new today. Do share with us your thoughts and comments. Excited to explore robo-advisory? Join us in our upcoming article where we give you some tips on how to choose a robo-advisor.