What is a robo-advisor?
Robo-advisors are a rapidly growing addition to the finance market, but are they right for your business? This post will explore how robo-advisors work, and their pros and cons to help you make your decision.
What is a robo-advisor?
A robo-advisor is an online investment software platform. They are low-cost and use algorithms to create and oversee investment portfolios.
Robo-advisors are popular because of their low fees and low minimum balance requirements, which makes them a more accessible choice for investors with smaller budgets.
Since being initially developed in 2008, robo-advisors have exploded in popularity. From a market worth $7.39 billion in 2023, it’s estimated that it will be worth $72 billion in 2032
Pros and cons of Robo-Advisors
Robo-advisors have a number of benefits:
Robo-advisors are easy to set up. They run automatically and will automatically adjust your portfolio as your holdings develop. That makes them a good choice for anyone completely new to investing.
Robo-advisors can put together a portfolio completely tailored to your interests.
Robo-advisors are accessible online 24/7. Therefore, they are ideal for anyone who wants to check their portfolios at any time of the day or night.
However, the most significant drawback to robo-advisors is that they lack the flexibility and support that human financial advisors can provide. For those new to investing, this can be a big disadvantage.
How do robo-advisors work?
Getting started with a robo-advisor is very straightforward. All that you need to do is answer a questionnaire about your financial goals, income, and risk tolerance. This gives the robo-advisor enough information to build a personalised portfolio out of choices determined by an investment professional.
Is a robo-advisor right for you?
Robo-advisors can be a good option for businesses who want to build up their funds, provided that they have an initial investment. Using a directors personal guarantee can be a possible solution to accessing funds, but should be considered very carefully. Firms such as https://www.parachutelaw.co.uk/director-guarantee can provide independent legal advice to help directors and companies decide if this is the right course of action and any safeguards that need to be put in place.
Robo-advisors are a very exciting new system of investment management that could provide your company with a forward-thinking investment platform. There are pros and cons to using robo-advisors, however, so make sure to weigh up the benefits before you invest.
