Robo-Advisors – The future of Financial Advice?
There are a couple of approaches to Robo-Advice. The first is where a computer program will determine your individual circumstances and then offer advice on products and shares you should buy or insurances you should hold. The second is the slew of new budgeting apps that can analyse your spending and investments and provide you with the knowledge to make changes yourself.
While a relatively new entrant, the Robo-Advisor is fast removing the inefficiencies in Financial Planning, Insurance and share-trading industries. Robo-Advice is essentially advice that is provided by a computer program that follows predetermined rules to ensure that you receive the most relevant advice based on your circumstances. Obviously the programs are written to provide their service to the majority of the population and there will be outliers for which this technology is not yet relevant but for most of us we can use them to get better advice at a far better price. Removing expensive broker networks from these services and the prices can be as much as half those with broker originated models.
These new programs are offered as programs as well as apps and are designed to help you understand exactly where your funds are being spent to ensure that you’re aware your coffee habit is costing you $45 a week or by covering the postage on your sales is costing you 15% of your profit margin. Armed with the relevant knowledge you are able to adjust your spending to make the most of the income you have. The expensive business analyst or financial planner can be swapped for a low cost app that provides greater insights that you can see in real time. The banks are jumping on board with these new products so expect them to be become much more mainstream in the next year or so.