The financial crisis had many outcomes. One, it resulted in
people distrusting those on Wall Street. Second, people became more risk averse
when it comes to investing in the stock market. As a result of these two things
and the emergence of new technology, Robo Advisors were created. A Robo Advisor
is an online service that provides automated, algorithm based portfolio
management advice. The top Robo Advisors are Betterment.com and
Wealthfront.com.
Watch the two YouTube videos and read the last article below to get a good understanding
of this subject from both sides.
What do you think of Robo Advisors? What sort of people
would benefit most from these types of services? If there is another recession,
do you think people will continue to trust these automated services? Can
financial planners still play a role for people going forward? What if a financial planner offers more value than just a diversified portfolio that Robo Advisors offer?
This is a very interesting concept. I think that this new way of investing is very innovative and attractive to millennials who want to start investing. Millennials are over the face to face interactions and want everything to be done with a screen. I think this is a solid business investment. Both those videos have positive things to say about Robo Advisors which makes me think that this is great. However, I am going to have to do some digging in order to form my own opinion. I do not know too much about investing and I would like to talk face to face with someone to gain that knowledge. I am not sure if I 100% trust this with my money, as of now with the little knowledge I have about Robo Advisors and investing I would rather talk to a person.
ReplyDeletePersonally I find the idea of Robo advisors very interesting and I think that it could be very beneficial for new investors. The fact that these Robo advisors help potential investors create portfolios much quicker and cheaper than financial advisors is a huge benefit. However, the one negative to them is that it is much less personal than talking to another person and another recession could hurt it. Ideally I think that Robo investing is the best way for investors to start, but there should be people behind the Robo advisors who can answer some potential questions or concerns much faster and at a cheaper rate.
ReplyDeleteI think this is actually a really cool idea. As the article states: “I think robo-advisors fill a gap in the market by bringing low-cost, diversified investing with automatic rebalancing and tax loss harvesting to investors who have less than $100,000 to manage.” I think this could be a good idea for someone like me, who will be graduating and (hopefully) getting a full-time job soon, to start thinking about making someone investments for down the road even though I won't have a lot to start with. It's nice because of the low management costs, and it takes a lot of hassle out the process by being able to do it online.
ReplyDeleteThat being said, I think there are some downsides. For example, people with more wealth and higher investments might want something more tailored to them. Also, as the article mentions:
“I’m concerned that people will not find a website, computer, or software program reassuring when their portfolios have fallen 20 percent,” Elwell continues. “Managing investor behavior and avoiding mistakes are some of the most important services an advisor offers.”
I think it brings up a good point that it could be particularly scary if your portfolio is suffering and you have no-one to reassure you. In conclusion, I think these robo advisors certainly have a place in the market, and it seems like with time they will only get better as technology continues to improve.