Every sector has been affected by modern day technology, and the investment sector is no exception. With the emergence of robo advisors, the way people invest in stocks has changed dramatically. Robo advisors are automated investment services that offer investment advice to the investors without the use of human financial planners.
How Robo Advisory Services Work?
Robo advisors use automated proprietary algorithms to provide investment advice. In most cases, robo advisory services use the same algorithms as traditional advisors. A large quantity of past and current data is analysed to predict investments. However, there is a crucial difference between robo advisory and traditional advisory service. Unlike traditional advisors, robo advisors usually don’t get involved with the personal aspects of wealth management. Robo advisors in India are mainly used to create the long term portfolios for the client and keep tracking them for optimal performance.
Key Advantages of Robo Advisors
The fee charged by traditional investors can be too high for small investors. This fee reduces the net return that an investor gets on his portfolio. On the other hand, the fee payable to robo-investment advisor is almost negligible. As the fee is less, it doesn’t have any impact on net investment returns. With robo advisors, investors can benefit from sophisticated portfolio management at a low cost.
Many investors are uncomfortable with the idea of a computer picking their stocks. However, it is important to understand that robo advisors use highly advanced and powerful algorithms that can create almost accurate portfolio for you after assessing your risk profile.This is one of the key advantages of robo advisors.
Unlike traditional investors, robo advisors remain accessible to the investors at all times of the day. This makes the investment process a lot more convenient. An investor can easily handle his investment portfolio from anywhere. All that is required is an internet connection.
There is no denying the fact that robo advisors in India have proved to be very useful for many small investors who find the services offered by traditional advisors a bit expensive. However, it is important to highlight the fact that robo advisors also have some limitations as well. Robo advisors aren’t personalized. They aren’t able to fine-tune your plans the way a traditional investor can. For example, if you’re planning to save for retirement, a traditional advisor may be able to understand your needs in a better way and offer the best advice.
Robo advisory industry in India is still in its nascent stage and has plenty of potential to grow. It is attracting a lot of young investors who are comfortable using the internet. There are many tech-savvy young investors who want investment advice at a lower fee. Robo advisory services perfectly suit their requirements. Before availing the services offered by robo advisors, it is important for an investor to determine the type of services required. Robo advisory is a perfect option for those who need help in predicting investment performance and are not seeking more personal financial advice.