Rise of the Robo Advisor
I would like to understand the concept of Robo Advisor. Is it true that I can invest online without having to see an investment advisor?
Thanks to the rise of robo-advisors, investing for the future is now more accessible than ever. You don’t have to spend a lot of time or money hiring a financial advisor to create a complicated asset allocation to receive the best returns possible. Robo-advisors now have the technology and computer software that can automatically select investments and build a diversified portfolio for you, all at a lower annual fee. Once your funds are invested, on an ongoing basis, the software automatically makes changes to the investments to align your portfolio back to a target asset allocation appropriate to your risk profile.
With a robo-advisor you pay a service fee and the expenses of the investments used and the automated efficiency of the robo-advisor concept helps keep costs down.
One of the biggest benefits of using a robo-advisor as opposed to investing yourself is to avoid costly investment mistakes based on emotion. One of the biggest reasons investors obtain poor outcomes is due to their own behaviours. Investors make emotional decisions at market highs and market lows based on emotion and gut feelings. Software does not make emotive decisions. Another benefit may be reduced stress. Once you open your account the robo-advisor software automates the whole process. You no longer have to worry when you should make changes to your portfolio or whether you make decisions such as increasing or reducing your exposure to technology or financials and you do not have to log in and place trades.
Robo-advisors could be a great solution for first time investors or young professionals who want to put their portfolio on “automatic” and for smaller investors that cannot afford the cost of financial advice.
About the Author
John Leonard, Head of Business Development
Tel: 01534 488773 • Mobile: 07797 742811
John Leonard is responsible for our Private Clients based in Jersey. John recently joined SaSo Strategic Advisers in August 2017 having spent the previous 7 years in an established financial services business where he was responsible for providing advice to both private and corporate clients in all areas of financial planning.