Published Date : May 04, 2016
A robo-advisor refers to an online wealth management platform that offers automated, algorithm-based portfolio management advices. No human financial planners are involved in the whole process. The report defines robo-advice, providing an overview of the history of the global robo-advisors market and views of regulatory bodies regarding services offered by automated advice platforms. The wealth management industry has long been apprehensive in adopting the digitization process. The first client-facing robo-advisors were introduced in 2008. Robo-advice platforms have been gaining popularity since 2015 and hence, the automated investment management space is fast becoming competitive with the entry of new market players.
Financial regulators have been unable to keep up with the rising popularity of automated advice solutions. This has created an opportunity for industry leaders to directly impact the designing of regulatory framework around robo-advice. A majority of wealth managers focusing on high net worth clients do not consider robo-advisors as a business threat because clients show limited interest in robo-advice.
Robo-Advisors Might Rescue Investors from Debt
According to Art Seredyuk, the CEO of PocketGuard, it is high time to utilize technology to build smart spending habits. With financial managers, hedge fund managers, and investment consultants charging exorbitant fees for offering financial advices, algorithm-based robo-advisors are ideal for investors with little spare cash. It is estimated that by 2020, robo-advisors will be managing around US$2 trillion. Algorithm-based financial platforms can offer a portfolio of ideal financial instruments for a person in debt by understanding an investor’s credit rating and financial needs. These tools can further advise loan amounts and providers.