In this age of automation and advanced computing, many of the functions humans use to perform earlier are getting automated. One among them is the role of financial advisors. These days, you will find plenty of Robotic financial advisors that can advise you on your investments. Before you use a Robo financial advisor to generate a portfolio and investment advice, it is essential to understand the advantages of the same. We will cover five advantages of such financial advisors so that you can understand why it makes sense to go with robotic financial advice.
1. Less fees:
When you consider the human financial advisor, you are likely to pay up to 1% or even higher fees every year. While this might seem small, you have to pay the same on an annual basis. It means that if you stay invested for five years, it amounts to 5% and even more when you consider compounding.
With the help of robotic financial advisors, the fees can fall to less than 0.2%. It means that the amount which you pay in fees is much less.
2. Precise portfolios:
When you look at the portfolio breakdown recommended by robotic financial advisors, it is very precise. Like, it can advise 7% of your portfolio to be invested in debt. The accurate calculations depend on the data which you provide to these advisors. With the help of mathematical algorithms, it can design a precise portfolio for you that allows you to reduce your risk and maximize your returns.
The precision which such advisors have on offer helps them stand out.
3. Tailor-made solutions:
When you’re looking for financial advice, you need tailor-made advice. There are various factors at play like:
- Amount of capital
- Investment tenure
- Risk of which you can handle
- Volatility which you can handle
- And so on
Many human financial advisors might not create a tailor-made portfolio for every client. However, the robotic financial advisors certainly provide you with a tailor-made portfolio. With the help of this tailor-made portfolio, you will be able to create the type of portfolio best for you.
4. Set and forget mechanism:
Most Robo financial advisors offer you a passive investment portfolio. Even if they offer you active funds and active investments, they opt for a set and forget mechanism. With the help of this set and forget mechanism, it becomes easier to invest once and let your money grow.
The set and forget mechanism certainly minimizes the time and effort you need to invest in that portfolio.
5. Low minimum investment:
Many professional financial advisors like to work on particular minimum portfolio size. This can make above $ 50,000 or $ 100,000. The advantage of Robo financial advisors is that they seldom do they have such a high limit. They can create a portfolio for an investment corpus of $500 as well. The low minimum investment ensures that anyone can invest.
It makes perfect sense to go with robotic financial advisors rather than human ones with so many advantages. Such advisors’ customized financial advice makes it easy for you to reduce your risk and increase your return. With almost instantaneous advice, you won’t have to wait long for getting financial advice either. All these reasons make robotic financial advisors a better choice.