Robo Advisors: The Future of Investing

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Robo Advisors- The Future of Investing

Technology has brought disruption in all domains. Finance is also one of the sectors which has been affected by the disruptive technology. Fintech is one such innovation which have totally changed the way the financial sector is traditionally being run. Transaction and advisories play a crucial role in the world of finance. Technological innovation such as blockchain has changed the way the transaction is conducted, and other innovation has changed the way advisory is done. One such innovation which has made breakthrough in financial advisory is Robo Advisors 

Robo Advisors are financial advisors that offer investment advice online with little or without human interventions. It collects all sorts of information from clients about their financial goals, their present condition, future goals through an online survey and then they use the data to offer advice and recommendation automatically.  

The Functionality and rise of Robo Advisors  

The robo advisor main function is to advise people about their investment and helps in making strategy about investment. To activate it, go to a Robo advisory platform, after you need to fill out your personal data whether specify what financial aims you want to achieve and indicate your risk tolerance. Afterwards all the information, the software will create a portfolio for you, which it will manage on its own.  

robo advisors process

Robo advisors have been in the news largely due to rise in new disrupting fintech start-up. The incumbent firms are also implementing the sophisticated technology such as advanced analytics and AI to provide great customer service. In India, the AUM under robo advisory is approx. $42m in 2019 and will grow at an expected an annual growth rate of 36.2% resulting in the total amount of US$145m by 2023. The sheer rise of robo advisor due to various number of benefits offered by them such as an easier onboarding process, a suite of automated capabilities and minimal investment requirement compared to traditional alternatives. Robo Advisors are quite better compared to the human advisors in terms of cost, flexibility, time and research.  According to the reports of Burnmark, (fintech research company) the number of robot advisors are on the rise across the world.  

robo advisors 2017

Here’s a list of top 7 robo advisors in India.  

  1. Arthayantra 
  2. AdviseSure 
  3. Finpeg
  4. Goalwise
  5. 5Paisa
  6. Funds India 
  7. ScripBox  

Automated technology has certainly changed the way advisory is done. But there are certain concerns always remains with new technology. In the case of Robo Advisors, the traditional financial advisory model doesn’t work. The robo don’t have an office where a client walks in and talks directly talk to an advisor. So, there is missing element of personal contact, hence lack of hesitation or confidence in the investment process. Despite the investment tools may clear benefits, it’s better to under the risk and limitation before using them. One such risk associated with automated system is fat finger error. Fat Finger error is a human error caused by pressing the wrong key while using an input data. These errors have serious impacts on your portfolio holding. Robo Advisors offers simplicity, but simple isn’t always the best approach. Life time goals and plans cannot determine by few questions and answers. A robo advisor reason for choosing a portfolio could be different than an investor 

If you are an early investor, then Robo Advisors are a great option due to low fees, low threshold and simplistic use. But In case if you are a long-term investor with a large amount of capital then you required the guidance of a certified financial planner. For any investor every situation and needs are different, so they must weigh their options of whether a traditional investment advisor will work better or a robo advisor.  


*Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.

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