The rise of robo-advisors and their impact on the investment industry

Robo-advisors, an aspect of Artificial Intelligence, are software programs that help in forming and automatically managing people’s investment portfolios. They do this by using customer-supplied data. One of the hottest emerging trends in retirement planning is the use of robo-advisors. A human advisor assists in taking complex financial decisions. Robos does the same investment tasks by using algorithms.

Robo-advisors are helpful for people with small amounts of savings since they are not as costly as a human advisor. Robos are nothing but online services that one needs to sign up for by filling up detailed questionnaires. In this online form, the consumer has to disclose information like their financial goals and risk tolerance.

Using this information and algorithms, they create a suitable portfolio. After the asset allocation, robo-advisors also manage it by carrying out actions like executing trades. Retail investors have welcomed the rise of robo-advisors as they can manage people’s financial well-being too.

Benefits of robo-advisors

Brokerages are offering these automated investment services called as robo-advisors to customers. These new investment platforms certainly have some advantages which impacts the investment industry.

  • Low Cost

The fees for availing of the services of robo-advisors are much less than investment assistance by professionals. Thanks to automation, now there are many robo-advisors to help you at a minimal fee.

  • Leave human advisors with more time

Traditional financial advisors are white-labeling robo-advisors’ platforms. This helps them to be able to focus more on their clients as they no longer have to select assets. They can devote that time to other matters of financial planning, like individual taxes.

  • Easy accessibility to services

There are now zero minimum balance robo-advisors, so even a young investor with a low net worth can get professional financial management. But even robo-advisors with high entry barriers are more accessible than human financial advisors.

  • Remarkable investment models

Robo-advisors like Betterment’s algorithms use award-winning investment theory for accelerating their models. Usually, the best practices involve creating a portfolio with a huge return for a minute risk. For driving their products, Robo-advisors also implement modern theories which help in exceptional investment portfolio research.


Robo-advisors greatly benefit retail investors. It has been a boon for new investors or someone with low net worth. They made online investment management strategies very accessible and at a much lower cost. However, a traditional financial planner is still now more suitable for wealthy investors having complex needs. They can do a nuanced study of an individual’s financial position. If you think you need recommendations from a human, you have to pay the required fee. But robo-advisors are developing continuously and offering new services. You can confidently avail of the service of a robo-advisor for handling a lower minimum investment account.

The article has been published by the editorial board of the Fintek Diary. Happy Reading. For more information please visit

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