If you wanted financial advice in the past, you would speak to someone in person. As technology advanced, financial advisers started online businesses so that they could save their clients time and money.
In recent years, another financial adviser has appeared – the ‘robo-adviser’, also known as the automated investment service. People who use this service do not speak to a person; instead, they simply input their details into a computer and the robo-adviser comes back with suggestions and predictions.
How reliable is this service? Is it better than that provided by a human financial adviser? Here we go through some of the pros and cons of using an automated investment platform.
Automated advisory services may help to lower fees for financial services. As the systems are easy to run, automated advisory services will be much cheaper than human financial advisers. This will put pressure on financial advisers to lower their fees and offer more affordable services.
One of the best things about automated advisory services is that they will help to reduce the level of below-average human financial advisers. Many people have fairly simple financial needs and may choose to automate their finances instead of paying more for an inefficient human financial adviser; however, people with more complex finances are likely to still choose efficient financial advisers over less-competent financial advisers or robo-advisers.
One of the main issues with robo-advisors is that they are not actually advisers. They offer portfolio service and tips, but they do not have the same benefits of a real adviser; for example, they tend to have a lower added return and do not have the ability to answer your personal questions.
Another issue is that they are not human. According to USA Today, a financial adviser can provide helpful advice and tips tailored to an individual’s situation; however, a robot cannot differentiate between individuals. There are also back office systems for financial advisers, such as those available from https://www.intelliflo.com/, that can help financial advisers to provide a better service.
While robo-advisers are useful and affordable, they are not ideal for people with complex financial needs, as they are not equipped to deal with individuals and changing circumstances; however, automated investment platforms are well-suited to people with simple financial needs.