Robo advisor. You don’t get more futuristic than that. Just think of J.A.R.V.I.S., the artificially intelligent robot PA from the Iron Man movies.
Or are they more like C-3PO from Star Wars: a vision of the future from the 1970s that no longer looks so cutting edge in the age of the iPhone?
It’s a bit of both. Robo advisors really are a cool new way to invest. You answer a number of questions about things like your investment goals and your appetite for risk, and presto: the robo advisor presents you with an investment plan. It’s quick, it’s easy, it’s efficient, and, best of all, it’s cheaper than using a traditional financial advisor.
Different but the same
In another sense, the process is fairly traditional. Robo advisors ask you the same questions that human financial advisor would ask and then generally offer clients the same kind of investment products.
Because the process is quicker, cheaper and more convenient than consulting a financial advisor, it’s no surprise that robo advisors have built a significant client base. As a result, traditional financial institutions are increasingly building their own robo advisors, or investing in existing robo advisor platforms.
That means that traditionally-minded investors can choose to invest their money with well-established companies, while also enjoying the cost-savings and convenience of automated investment advice.
That’s no reason to ignore the newer businesses or innovative new investment. It simply means that we have more options and better access to investment products.
South African financial institutions have a lot of catching up to do, but it’s only a matter of time before robo advisors enter the investment mainstream.
That’s especially good news for young South Africans, whom the technology will hopefully encourage to make smart investments for their futures.
Get more out of your investments by eliminating excessively high fees. Because there’s a wiser way to invest.