Robo Advisor Vs Online Financial Advisor
Do you have savings that you want to invest? If yes, then you must be familiar with the quote that “after a time, money multiple itself.” And it is only possible via investment.
Investment requires extensive investigation, evaluation, and experience for validating an intuition. Along with this, one also needs to have enough practice and knowledge about the market.
Feeling like you can’t invest. Then worry not, you can still consult financial advisors to manage your investment. This eliminates the risk for unverified investment. Hold on! if you still want to invest yourself without having any prior knowledge, then you can opt for AI-powered Robo investors.
Not sure about which one to choose? Don’t freight.
We have divided this article into three sections to help you understand the difference between automatic investment and active investment done either by a robot or an online advisor. Here you will find a brief difference between robotic and online financial advisors, along with some pros and cons associated with both Robo-advisor and online financial advisors.
To get quick advice on online investment, you can visit AdvisiaHub and book a consultation session with a finance expert from the comfort of your home.
Difference Between Robo & Online Financial Advisor
· The first thing that one needs to understand about the robot and actual financial advisor is the presence. Therefore, we can say that one can arrange a face-to-face meeting with the online advisor but with a Robo-advisor, you have no chance to meet and discuss your fears and confusions.
· On the other hand, financial advisors are well-paid experts who know everything about the financial industries, including the key insights, market behaviours, performing trends, ups, and downs, etc. Besides, they decide based on experience, relations, and market reputation of a profile before investing. While, the Robo advisor use algorithms, digital signatures, and trading applications or tools to evaluate the strength and weakness of a profile along with the instruction provided by the investor including the level of risk they can bear and funds offered for investment.
· Another difference between online and robot advisors is, the first one serves investors with a higher investment ratio. However, the latter one is designed to serve ordinary individuals, particularly those who neither have interest in investment nor knowledge about the investments.
· In addition to what we said before Robo-advisor uses algorithms to make investments while keeping the risk factor stated by the investors into consideration, therefore, it is considered cost-effective. Simultaneously, it requires a low balance to open an account. While online advisor charges a hefty sum of consultation charges and requires a high investment ratio to either manage investment or to provide investment and asset management advice.
· The last thing that makes online financial advisors different from Robo advisors is the number of roles they perform on daily basis. Thus, we can say that an online advisor can be a communicator, investor, and educator at the same time. While Robo-advisor is a machine, programmed to perform one task over and over again.
Pros & cons of Robo Advisor
Since we have discussed the difference between Robo and Online advisor, let get into the details on what advantages and disadvantage Robo-advisor offers.
Pros of Robo Advisor
· The first pro on our list is technical reliance. Robo advisors use algorithms for portfolio sorting, evaluation, and investment. Hence offer relevant results to the investor that completely matched their investment plan.
· Another pro of hiring a Robo advisor is, they can perform a quick optimization and evaluation on thousands of investment portfolios against the pre-filled requirement set by the investors. For this very reason, investment via Robo advisor yields low risk. Besides, it is as simple as set it and forget it.
· They need low investment and simultaneously charge a small fee as compared with an online advisor. Moreover, the interface of online investment is easy to use.
Cons of Hiring A Robo Advisor
· They lack the touch of the ‘human element.’ Although they can provide the best possible advice, yet, they cannot offer contextual support or condolence the way a human advisor needs.
· Another thing that makes a Robo advisor not-a-go-to is ‘bounding.’ Besides, unlike online advisors, Robo advisors can only make a decision based on the answers provided by the investor. Other than this they cannot make an intuitive decision.
· Lastly, to make investment relative and less risky, Robo advisor require access to personal information which online advisor never asks unless required.
Pros & Cons of Online Advisor
Meeting an online advisor is considered more rewarding than using an AI-powered investment application. Hence, after consulting with our users, we have crafted the following list of pros and cons that you should give a read before deciding on who to consult a Robo advisor or an online financial advisor. Let’s get it cracking.
Pros Of Consulting Online Advisor
· Unlike Robo advisors, online financial advisors make an investment based on the insights they receive from their contacts. This increases the probability of investment’s profit returns
· Second essential thing about online advisors is, they try to understand why you’re investing and make investment plans based on the clients’ short-, medium-, and long-term goals.
· Unlike Robo advisor, the online financial advisor doesn’t decide by using an algorithm only. Rather they utilize their knowledge, industry experience, leads, and intuitions, in addition to the algorithm. Additionally, online advisors are tech-savvy. This means they use multiple online resources to acquire knowledge about the profiles. Unlike this, Robo advisors only use past archival data and algorithms for profile sorting and evaluation.
· In addition to the investment, the financial advisor also manages wealth, assets, and funds. Also, investing with an online advisor is time and cost-efficient. As they have verified a list of properties, mutual funds, and assets with the possibility of high ROI.
· Lastly, the investment consultation fee of an online advisor or regular advisor is negotiable while the Robo advisor charges a fixed sum.
Cons Of Online Advisor
· The first con on our list is the limited investment option. Since the online investor invests a lot of time in property verification and hunting, therefore, they have limited investment options. However, with Robo advisors, one can invest in offshore profiles as well.
· Another con is, an online financial advisor charges a fixed amount for consultation, therefore, if you need consultation other than investment, you have to pay an extra fee. This makes consultation expensive.
· Lastly, a financial advisor may possess a conflict of interest when investing, and has to follow peer or organizational pressure while selecting a profile to invest. Unlike this, Robo advisors offer impartiality while selecting or sorting a profile for investment. The only filter applied to this is the risk factor and investment ratio of users.
The technological revolution and advancement have link everything ranging from a local shop to the stocks of Google. But financial investment requires not only familiarity but also sound knowledge about the financial market. Still, this doesn’t mean you can’t invest, you just need to find a reliable robot investor to invest on your behalf. However, one thing you should know about Robo investors, they have fixed fees and the investment risk is predetermined. While financial investment fee of an online investor is negotiable and the probability of profit generate is subject to time.
So, if you have any concerns regarding where to invest, what to look for while selecting a Robo-investment application, or the pros and cons of offshore investment. Then feel free to contact AdvisiaHub financial advisor.