Technology is growing at a faster pace and seeing an internet-like growth. In this technologically forward-looking society, it should come as no surprise that robo advisors are aiding people to make clever decisions about what to do with their money. Robo advisors are bringing about one of the biggest transformation in the investment World. If the term robo advisor reminds you of Terminator movie series, you are wrong; robo advisors aren’t really robots made of metals and plastics. They are automated investment services that promises to manage your finances and investment planning.
How do they actually work?
Robo advisors work by using algorithms to help clients make the finest investing decisions, balancing client’s tolerance for risk and preferred length of investment into the equation. Some robo-advisors are fully automated, while others also use humans to supplement their services. Clients fill out an online questionnaire about their income, goals and comfort with risk taking. Robo advisors then picks the best investments, often in various low-cost exchange-traded funds (ETFs). Technology then does all the work, frequently rebalancing the portfolios.
TOP REASONS TO CONSIDER ROBO ADVISORS FOR YOUR FINANCIAL ADVICE
When robo-advisors initially started venturing out a decade ago during the financial crisis in 2008, they were largely ignored by the financial industry. But as the years passed, the number of robo advisors has increased, and the convenience of the services has multiplied, they’re likely a biggest transformation in the investment world. Their influence is climbing to the level where robo-advisors are changing the way all advisors work. As with any life choice, the investor should decide what type of investment guidance he or she needs and select either robo-advisor or human advisor to match their individual style.