Robo advisors provide online advice for investments to their clients based upon automated proprietary algorithms. For subscribing to the services, an investor has to register with the relevant website and provide the answers to the questions which decides your risk profile and based on the risk profile, algorithms generates a robo investment advice incorporating asset allocation and the security selection advice. The securities as advised by them can be the direct equities or the passive investment tools like exchange traded funds (ETFs), index funds or mutual funds. The charges for the services differ from one robo advisory firm to another.
Robo-financial advisors can be helpful to any investor no matter the amount of wealth and being online has the advantage of 24/7 accessibility.
Without any human interaction, the fees are drastically reduced and the robo advisors are much cheaper than the traditional advisors.
Robo-investment advisors are transparent on fees, portfolios, trades, etc.
Every change in the portfolio can be instructed efficiently
Easy and intuitive features allows a comfortable user experience
Some Robo Advisers are targeting small investors that are used to digital and are the potential wealthy clients of the future
Online investment advisory business in India is in a nascent stage. There are many big and small robo advisors in india and wealth management firms which provide customized financial planning and wealth management services to their clients. They also use advanced and different technologies in terms of financial planning and wealth management to improve their advisory practices.
If you are a tech savvy and a small investor, then you can go for a robo investment advice to build a good portfolio as it will cost you lower compared to the traditional financial advisors. But if you are a seasoned investor with a high investible surplus then it is advisable to go for the personal advisor where he can understand you better apart from evaluating your risk profile. Based on the asset class you want to invest in, you have to choose the right robo advisor.
Robo- financial advisors have strong algorithms at the backend where they create your portfolio based on certain parameters like risk profile, performance consistency vis-à-vis benchmark, investible surplus etc.
Before you go ahead to subscribe for a robo-investment advisor, you need to do the necessary due diligence for these platforms. You need to check out the products and the services they are offering, their detailed fee structure, their disclosures and the track record. You also need to understand the limitations of the robo advisers before you subscribe to their services. For Ex. If the markets are volatile, you may not be able to talk with an advisor when you need to.