What is one advantage and one disadvantage of a robo-advisor?
What is Robo Investment Advice?
| Pros | Cons |
|---|---|
| Well designed investment portfolios | Lack the customization of financial advisor portfolios |
| Low minimums | Many lack face-to-face advisors |
| Low fees | Lack services like tax and estate planning |
| Easy to use | Most lack alternative investments & strategies |
What are the benefits of using a robo-advisor?
Benefits of Using A ‘Robo-Advisor’. The main advantage of robo-advisors is that they are low-cost alternatives to traditional advisors. By eliminating human labor, online platforms can offer the same services at a fraction of the cost. Most robo-advisors charge an annual flat fee of 0.2\% to 0.5\% of a client’s total account balance.
What are robo-advisors and FinTechs?
They are all referring to the same consumer shift towards using fintech (financial technology) applications for investment management. The majority of robo-advisors utilize modern portfolio theory (or some variant) in order to build passive, indexed portfolios for their users.
How do I use BrokerCheck to research robo-advisors?
Investors can use BrokerCheck to research robo-advisors the same way they would a human advisor. Assets managed by robo-advisors are not insured by the Federal Deposit Insurance Corporation (FDIC), as they are securities held for investment purposes, not bank deposits.
Are assets managed by Robo-advisors insured?
Assets managed by robo-advisors are not insured by the Federal Deposit Insurance Corporation (FDIC), as they are securities held for investment purposes, not bank deposits. This does not necessarily mean clients are unprotected, however, as there are many other avenues by which broker-dealers can insure assets.