People often say that AI is the future, and a time will come when large companies and enterprises will not need human labor. And the process has already started with the introduction of Robo financial advisor. Robo advisors are digital platforms that provide their clients with automated, algorithm-driven specified financial planning with little to no human supervision. A classic Robo advisor collects clients’ information about their current financial situation and their future goals via an online survey or form. It then uses the data obtained to offer advice and automatically invests the client’s assets after receiving consent. The majority of Robo advisors use modern portfolio theory to build passive, indexed portfolios for their clients.
Benefits of A Robo Advisor
The rise in the number of Robo financial advisors over the years guarantees that it offers the best of its service and lives up to client satisfaction. Its benefits are as discussed below.
- Low cost: It is a low-cost alternative compared to a traditional financial advisor. By eliminating human labor, AI-based online platforms offer the same services for a fraction of the cost.
- Accessibility: A Robo advisor is easily accessible. It is available 24/7 as long as the client has access to the internet.
- Less capital: A Robo advisor will take on clients with low money or no minimum balance policy. An individual financial advisor usually takes up on high net worth individuals who are entirely established in their fields and are willing to pay for the services.
- Efficiency: A click of a few buttons in the comfort of your home can instantly give you the results that require a significant amount of physical labor when it comes to an individual financial advisor.
Shortcomings of A Robo Advisor
Just like every coin has two sides, Robo financial advisor also has its shortcomings like
- Lack of empathy- A Robo financial advisor operates on the assumption that its client is aware of everything they need and equips themselves with the required knowledge. The point questions do not offer any explanations, nor do they take up any client queries.
- Ill-equipped: The Robo advisors are also ill-equipped to deal with sudden financial crises or extraordinary situations.
- Range- While it is a useful tool for people with small accounts and limited investment experience, it cannot offer large-scale finance management solutions.
Given one’s personal preference, the pros and cons tend to outweigh each other. While the future is more inclusive of technology, you cannot rule out human supervision completely. An equal balance of both is required for the world to function smoothly. This way, the employment issue will reduce significantly, allowing people to lead to great development.