What is Roboadvisor?
Robo-advisor is a digital platform that provides automated financial services. Generally, this system functions using the data of clients about their financial situation and future goals. After reviewing their online survey answers, for instance, investment robo-advisor offers advice on choosing appropriate investment options and automatically invest client assets with little or no human involvement. Robo-advisors usually handle straightforward investment options, and they are not advisable for complicated financial services.
The first robo-advisor was launched in 2008, and it provides more financial options such as tax-loss harvesting, investment selection, and retirement planning. As a result, this industry has witnessed exponential growth in recent years dues to advancements in the system. In 2020, client assets handled by Robo-advisors hit $987 billion, and industry experts are expecting the number to reach $2.9 trillion globally by 2025.
Advantages of Robo-Advisor
Robo- advisors are much cheaper than ordinary platforms. Almost all Robo-advisors charge a fee of 0.2% to 0.5% of your total account balance annually. Comparably, human, financial planners charge the typical rate of 1% to 2% and even more than the specified amount, depending on their commission fee.
2. Low fees
Roboadvisor requires a low deposit and low opening balances to get started. Typically, $5,000 is a standard amount needed to register for an account. For instance, the first robot-advisor, Betterment, has even no account minimum at all. Comparably, human advisors do not work with you if you offer to invest less than $100,000.
You can easily realize that robo-advisor is more accessible. They are available 24/7 as long as you have a good Internet connection.
You had to call, meet your broker or advisor to tell them about your needs and preferences in the past. After clearly understanding your suitable and preferred investment type, they explained the options you had to choose. Moreover, if you need to change or cancel anything, you must again appoint a meeting with him and wait for several days. However, a robo-advisor can do all the processes easier once you click the button on your computer or phone at your most comfortable place.
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