Robo advisors have been in the news mainly due to the rise in the fintech industry. They are basically an online advisory platform which provides algorithm-based investment management services, such as automated portfolio planning, automatic asset allocation, online risk assessments and account re–balancing. It has got numerous benefits such as an easier onboarding process, automated capabilities and minimal fees. According to the Blackrock, world’s leading top investment management firm, Robo advisory market is expected to grow at an overall compound growth rate of 53.54% and the expected AUM (Asset Under Management) by the year 2025 will be about $16 trillion. It will be three times more, the amount of assets managed by the BlackRock. It clearly shows the great future of the industry. The prime reason behind such stupendous growth is due to their reduced fees to target millennials and low-income households.
Robo advisors offer an affordable alternative investment tool to pick up mutual funds and stock. Comparing with old school of financial advisors, the robo advisors will leave you with more money in the end. There are various types of Robo advisors available in the market. Globally, the Robo advisor market is classified into two categories one is pure Robo advisors and other is hybrid Robo advisors. A hybrid Robo advisor combines the interference of a robo advisor and a human financial advisor, while in the case of pure Robo advisor it’s completely automated. Let’s look at the workings of the robo advisors. Robo advisors basically work by translating client input to investment logic such as risk appetite or liquidity factors and propose adequate investment opportunity from thousands of possibilities. Investment decisions and portfolio rebalancing proposals are based on algorithms, which monitor and satisfy the predefined investment strategies. There are various major players in the domain globally, which provides Robo advisory services. Some of the big names in the industry across the globe are:
It is quite popular for low fees and popular index funds. Even major robo advisors, fund invent client asset in Vanguard funds. The firm has billion dollars of AUM, this robo-advisor is already an industry juggernaut.
Betterment is one of the rising firms in the robo industry. Due to attractive features, such as no minimum balance to open an account and management charge of just 0.25%. It has become investor’s strong preference.
- Schwab Intelligent Portfolio
Charles Schwab is one of the most popular names in the investing world. It is the robot advisors’ arm of the Charles Schwab. It doesn’t charge any advisory fees, commission and other expense charges. But investing in the Schwab portfolio requires a minimum amount of $5000.
But in India, it is still a nascent industry, which has shown tremendous promise, there are several key players which are presently functioning in this market for acquiring the handsome amount of share in the short span of time. The Indian Robo advisory market is all set to grow with double digit growth beyond 2020.
- Funds India
- Scrip box
- 5 Paisa
The trend in India is on the rise with modified advice having progressive machine learning and artificial intelligence (AI ) coupled with an inferior cost of computing and storage in India also generating enormous avenues for the numerous Robo advisors.
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