ProFinanceClub
Financial Advising

As You Look to Invest, Don’t be Afraid to Use a Robo-Advisor

  • Robo-advisors are quickly becoming the better option as you consider investing more of your money or diversifying your portfolio.
  • Robo-advisors offer lower fees for managing your funds and are highly predictable therefore eliminating any unwanted surprises.
  • Robo-advisors lack a sense of emotion or subjectivity which are often negatively influential in a human advisor’s decision-making.
  • Robo-advisors are the future of investing.

If you’re looking to invest more of your money or diversify your portfolio, you’ll more than likely use a financial advisor. Even if you are fairly knowledgeable concerning investments and transactions, it’s always good to get a second opinion or consult with someone else.

What if you could do this at a more affordable price as well as gain more up-to-date information to help you use your money wisely? Although human advisors have been the “go-to” for years, Robo-advisors are gaining traction and demonstrating why they may actually be the better option. Read on to discover ways in which a Robo-advisor may be your best route.

Robo-Advisor’s Fees Are Often Low and Consistent

A majority of human financial advisors will only charge a flat fee. This flat fee is determined by the actual amount that the advisor is managing and doesn’t try to “nickel and dime” you for every minute of consultation. However, using a computer to manage your finances is still the more affordable option. It essentially cuts out the middle man.

According to Business Insider, “the average Robo-advisor charges around 0.25% to 0.35%.” The human advisor charges closer to 1.00% to do virtually the same job. Not counting the fees from the low-cost funds that a Robo-advisor uses, you’ll spend approximately 4 times the amount of consulting a human financial advisor.

 Robo-Advisors Lack Emotion And Subjectivity

If there is one thing that history tells us, it’s that humans make irrational decisions when pressed or when they feel their backs are against the wall. This is the element of emotion, and Robo-advisors are not privy to its experience—and this is a good thing.

Humans will often take risks, or panic when they are confronted with the volatility of the market. This isn’t the end of the world when decided where to go for dinner, but when your money is involved you don’t want an advisor “going with his gut” or making a hasty decision. You’ll want something dependable and not influenced by the ups and downs of the investment marketplace.

Robo-advisors provide consistency and objectivism while handling your money. The computer knows how the current landscape of investment operates and makes calculated choices that may seem conservative but give you peace of mind as you diversify.

The Future of Investing Involves Robo-Advisors

Some of the best minds are constantly performing research concerning investment strategies and approaches. Highly trained financial PhDs are the driving force behind Robo-advisors. It’s fair to say that Robo-advisors are the future of investing.

This isn’t to say that human advisors are going extinct. There are still plenty of excellent advisors that perform at a comparable level to Robo-advisors, however, they are still more expensive in general. It may take some time before you feel comfortable handing your money over to a computer but it may be something you’ll need to adapt to quicker than you think.

Using a Robo-advisor can eliminate the middle man and save you thousands of dollars every year in unnecessary fees. Trusting the automated calculations of a computer rather than the emotions of a human just may be the difference in whether or not your wealth increases far into the future.