Investments and trading have become more and more accessible to people, thanks to the rise of smartphones, the internet, and fintech applications. With different trends that fintech has brought to the market, people find it really convenient to find the right stocks and invest their funds from the convenience of their smartphones.
One such exciting and unique trend of fintech is the robo-advisors. Several investment platforms today have integrated a robo-advisor into their platform so that they can attract more novice users and expand their clientele.
Robo-advisor platform development in itself has become a game changer as it allows people with lesser experience in investments and less market exposure to enter the lucrative field of investment advisory.
But wait a minute! What exactly is a robo-advisor? How does it work? Well, if you have these questions in your mind, do not worry, as by the end of this post, you will have answers to all of them.
As the name suggests, robo-advisors are artificial online entities that can offer to do several things for you when it comes to investments and the stock market.
These are considered financial advisors whose job is to deliver a personalized experience for the client that they cater to. For a fintech app development company, these advisors are a game-changer as they can offer more and more features to their clients.
What makes a robo-advisor so promising is that it can get the job done without having a human to guide it through. This means that, implementation of robo-advisors can give you financial advice and online investment management with minimal human intervention.
The idea behind a robo-advisor is to make it easier for new users to understand the market. Since hiring an investment advisor is not an affordable option for all, adding an artificial advisor that can analyze the market instantly and offer decent insights is certainly a good proposition.
The way it works is also wonderful, as it learns the market changes on its own and applies an algorithm to yield the advice that can be beneficial for the user. A robo-advisor applies the algorithm to manage the client assets and allocate them as it sees fit.
What makes a Robo-Advisor so fascinating and futuristic is the features that it offers. You see, the idea of introducing a robo-advisor emerged for people who are not directly involved in investing, yet they are not aware of how the market functions. And since they are new to investing, hiring a real-time advisor is certainly not an option for many.
Here is a list of features that a robo-advisor offers:
A robo-advisor can analyze the patterns in which you manage your portfolio and identify the best practices to automate the process. These advisors have access to the risk tolerance and financial goals of an individual, which allows them to calculate the investments and adjust them as per the situation of the market.
The best part about having a robo-advisor is that it charges less than a traditional investment advisor. The fees are calculated based on the asset under management formula, generally ranging between .25 and 75% of the total assets. In fact, several platforms offer a free version of the robo-advisors, garnering a wider audience.
With 24/7 availability and easy access mobile applications, robo-advisors are highly accessible and convenient for the user. Unlike an advisor who would require leaves or have shift timings of work, you can access your robo-advisor anytime and allocate the assets accordingly.
Robo-advisors are great at offering tax-loss harvesting, allowing the user to optimize the overall taxes and liabilities. You may be wondering how it does that? Well, let’s just say that the advisor is smart enough to sell investments at a loss to offset the capital gains, which in turn reduces the taxable income.
Unlike an advisor that can give you insights on what to do and what not to do, a robo-advisor can even help you understand the market better, allowing you to learn about the market if you are interested. This also means you can not only get the job done, but can also learn to do it all on your own.
With all those features and advanced understanding of the market, Robo-Advisors are all set to make a mark for themselves in the future. Needless to say, you can find the right guidance on your own and enter the volatile investment market with more confidence.
However, it can surely be difficult to say that these are 100% safe, as it is completely digital and you are already aware of the current cyberspace and the attacks that can take place. With that thought, we have reached the end of his post. Hope you have understood the concept of robo-advisor and the features that it offers.
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