A Robo advisor app offers investors some key benefits that they may not have considered.
The digital investment management industry, or “Robo advisors,” has experienced significant growth in the past two years. The betterment of investor returns is one reason for this trend, but cost savings, convenience, and diversification are also popular reasons for choosing a Robo advisor platform.
Let’s take a look at the key benefits of using an online investing advisory service.
Robo Advisory App Offers Lower Fees:
Robo advisory apps offer slightly lower fees than traditional financial advisors – typically ranging from 0.25% to 0.50%. However, the mutual fund companies who partner with these services often pay placement fees to be included within their offering. This is how Robo advisors make money and is the reason behind them not charging fees.
Robo Advisory App Offers Unlimited Access:
Because Robo advisor apps are typically available on mobile devices and tablets, they provide investors with 24/7 access to their accounts and financial guidance. This means that investors can see their account balance when they wake up in the morning or track their portfolio while commuting home from work – whenever it is most convenient for them. The ease of access allows for more informed decision-making about an investor’s finances.
Robo Advisory App Provides Diversification:
Traditional advisor services tend to place all of an individual’s assets into a single investment pool without regard to an individual’s personal preferences. This can be dangerous because all of an investor’s assets are exposed to the same risks, regardless of retirement savings or college tuition funds. A Robo advisor app allows for diversification by allowing investors to distribute risk across different asset classes – stocks, bonds, and alternative investments. For example, investors who don’t need their money for several decades could place more into riskier alternatives, while those close to using their money could invest more conservatively in safe treasury bonds and cash equivalents.
Robo Advisory App Provides Digital Security:
Although online security has improved over time, cyber-attacks regularly expose many individuals’ financial data and private information. These attacks often lead to unauthorized access to digital financial accounts and pose a security risk for investors.
Robo advisory apps protect investors’ assets by storing their information in an encrypted software platform that is protected behind multiple “firewalls.” The security measures are employed to ensure that any information deposited into the Robo advisor’s account remains safe and cannot be used by malicious third parties.
Robo Advisory App Provides Instant Access:
A Robo advisor app allows investors to get instant access to their money, unlike traditional advisors. Traditional advisors require customers to place funds into a separate custodial account before they can begin trading, which could take several days or even weeks. In addition, once an investor trades through a traditional advisor, he or she is unable to trade that Asset until the account is funded.
Robo Advisory App Focuses on One Asset:
While a Robo advisor app focuses on more than just stocks and bonds, it does not make investment recommendations across multiple assets as a traditional financial advisor does. This makes for better diversification and will not lead to unnecessary risk exposure.
Robo Advisory App Provides Financial Guidance:
Traditional financial advisors do not typically guide an individual’s income tax return or filing status, but a Robo advisor often provides advice related to this sensitive information.
While their fees are typically 0.25% to 0.50%, Robo advisor apps continue to gain popularity because they offer investors insight into their finances and easy access to their money at all times through a mobile device or tablet. Because the risk is spread across different types of investments, this allows for diversification, leading to better returns over time.