The Advantages of Robo-AdvisorsSubmitted by Elite Asset Management on June 10th, 2018
In the last few years, a new investing resource has become more popular. A robo-advisor is an online software application designed to offer automated investment technology for investors, providing them an ‘in’ to the investment world by offering lower minimum balances and lower fees, providing a more affordable entry into the world of investing.
Robo-advisors can be particularly useful for those that don’t want to (or can’t) hire a financial advisor, as they’re designed to automatically select investments deemed appropriate for you based on a detailed questionnaire that you complete that provides detail on your investment goals.
While some investors will always prefer a human touch to manage their investments, others may be more comfortable with the hands-off approach that robo-advisors provide. Here are just a few of the benefits of using a robo-advisor:
Simplicity – Everyone likes things to be easy. We tend to use things more when then easy to do. That’s one of the reasons why robo-advisors continue to be a popular solution for investors. They’ve made it easy to set up an individual account, make recurring contributions, and create a portfolio that matches the goals set in your investment profile.
Lower Fees – This can be particularly important to those with limited funds, or those just beginning their foray into investing. Robo-advisors fees are significantly less than those typically charged by financial advisors, with robo-advisor fees ranging from .15% to .50% of your current account size. On the other hand, financial advisors usually charge at least 1.35% of the value of your current portfolio, adding up to a major difference in fees charged, particularly as your investments grow.
Anonymity – Robo-advisors lean towards a one-size-fits-all investing solution – not always a bad thing. Investing anonymously can also create a sense of freedom, particularly for those new to the investment world. Robo-advisors can be particularly inviting to millennials who are accustomed to doing everything online, so using an online algorithm to pick the best investments for their portfolio just makes sense.
Lower or No Minimum Balance Requirements – While a financial planner’s typical client tends to have a portfolio value that ranges between $200,000 and $500,000, if not more, younger investors, or those just beginning to invest monies will typically have much smaller portfolios. But with the advent of robo-advisors, those with a smaller portfolio no longer need to wait to start investing, but can get started with their investments right away.
No Emotional Involvement is Necessary – Money can be an emotional subject for many of us. Investors, even experienced ones, have been known to make investment decisions based solely on emotion. Using a robo-advisor, snap decisions and emotional investments quickly become a thing of the past.
Robo-advisors can be the perfect solution for those that want to grow their portfolio of investments independent of the guidance that a financial advisor provides. While many investors will continue to use a financial planner for investment guidance, robo-advisors, with their low fees, minimum balance requirements and prize-winning algorithms, robo-advisors will certainly continue to grow and evolve as investors continue to explore their investment options.
*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2014-2018 Advisor Websites.