Did the thought of someone being there to carry out your task ever cross in your mind?
That not just ends there, carrying out your task meant someone wise, trustworthy and experienced enough to work out on all our necessary tasks.
For many in adulthood this wish just got transformed to ‘someone able to manage their finances effectively’!
Well, the good news is, it isn’t just a ‘wish’ anymore.
With the advent of technology and automated investing facilities available, you no longer need to worry about your money matters.
Robo advisory is the ultimate solution!
What is a Robo advisory?
Financial adviser who provides automated investment solutions online is Robo advisory.
Which means you no longer have to appoint a financial planner in person to design and monitor your investment plan.
Robo advisory platforms are digital advisors who provides portfolio management and financial planning services online, with constant improvising technology and enhancement techniques the human intervention in reducing considerably.
Do you remember the time when internet banking was introduced and completely unwelcomed?
But now it is the most hassle free and favoured ways of banking.
In the coming days your attitude robo investing would be the same as well.
Robo Advisors Vs Human Advisors
Surely, you must be wondering if you have a financial advisor why should you choose a robo.
Let’s understand why is this twist necessary!
Remember the good old days where you would receive a text message over your cell phone?
There was a time lag, high cost involved in this kind of communication.
Similarly, the basic difference between a robo and human advisor is their quick response, fee structure along with other points.
If you are an investor who wants to save on cost of investing, then you must invest via a robo advisor.
For years, many have been saving and investing by following the advice of a friend or relative. Someone who they believe have sound financial knowledge.
All that was just to save a financial planners fee.
Robo-advisors can lower costs, and therefore work out to be relatively cheaper than traditional financial planners.
As you would know financial planners usually charge hefty fees and deliver little results.
As mentioned before, robo advisors can save huge amount of costs due to little or no human intervention.
An ethical robo-advisor will be cost effective and offer you mutual fund direct plans as an investment option.
Over time, this will help you conserve an immense amount of money.
Human financial advisors are human first and investment advisers later.
A variety of events and developments affect them.
For example, if your advisor is risk averse, he/she will always discourage you from taking the risk, irrespective of your risk appetite.
Similarly, his/her response to your queries may differ depending on market conditions, business targets they may be working towards and your rapport with him/her.
Investment advisers may also give biased advice eyeing the high commissions.
Unlike this, robo-advisors offer you consistent and instant advice.
They might not look at the market indices and advise you on your investments.
Similarly, they won’t be driven by any sales targets.
Hence, they won’t alter their responses with some hidden motives.
Indiscriminately Provide Service
Robo advisors do not provide service according to the investor’s net worth.
Investors with nominal capital often feel dejected.
It has been observed in the past that very few advisors are keen to offer their services to investors with small asset base.
And acquiring High-Net-worth Individual (HNI) clients is their primary objective.
Robos, on the other hand do not discriminate investors on their asset size.
Many robo platforms let you even start a SIP of Rs 500.
With robo advisors you receive investment advice instantly and consistently. Because they are omnipresent- present everywhere at same time.
Human advisors on the other hand might be available only during their working hours.
Like you and me they too go for holidays and have their own calendar.
Hence your investment transactions are dependent on their availability.
Better Record Keeping
At present, not all human-advisors offer a digital record keeping option to their clients.
They follow maybe spreadsheet or diary to keep a record.
But these are not secure ways of record keeping.
As a result, many a time, they as well as their clients lose the track of their own investments.
Robo-advisors make a significant difference here.
They help you retrieve even the minutest detail of your investments on your dashboard.
Once you have created your investment plan, your robo-advisor will keep it on track.
Suitable For All
Robo advisory platforms can be used by investors as well as financial advisors.
As far as the investment advisories are concerned, they can use robo-advisory platforms as an additional tool that helps blend their offerings.
They can automate the simpler processes and retain the human-advisory model for more personalised and sophisticated advice.
This helps them add more value to their services and may lead to greater client satisfaction.
Surely, robo advisory platforms are likely to change the dynamics of the financial services industry in future.
Does this mean investor is to trust machines more than humans?
Not quite. Let’s not forget, behind any technology, there’s always a human brain at work.
Undoubtedly, robo-investing is a significant development that’s likely to work positively for investors.
Robo-advisors certainly may be a compelling alternative to many sources of traditional advice.
And in many cases may be a step ahead of such sources of advice due to their lower costs, well-grounded investment methodology, and alignment with you financial interests.
At the same time, you need to acknowledge that not all robo-advisors are perfect.
Their advice may not be fully customisable.
Hence, the robo-advisory service you choose needs to be well equipped to care for your investments and financial goals.