Robo-Advisors: Benefits

Robo-Advisors have captured much attention and have been the center of VC interest lately. With their ability to provide virtually the same services as traditional financial advisors ranging from investments to retirement planning. Will these automated investment vehicles eventually replace their human counterparts? Here are some of their strengths for you to consider:

  • Low cost

Traditional financial advisors usually charge 1% – 2% annual fees to manage your portfolios, while robo-advisors only charge 0.15% – 0.35%, depending on your investment size.

  • Low entry point

Most of the traditional financial advisors require a minimum of $500,000 in assets to manage your investments, while the starting-point for robo-advisors can be as low as $500.

  • User friendly and easy access

By combining highly sophisticated algorithm and Modern Portfolio Theory, it only takes a few questions to determine your risk profile and get you started. Running on mobile platforms, robo-advisors also allow users to adjust their portfolios anywhere anytime.

As the industry leaders, Wealthfront hit $2 billion AUM in just 3 years since its inception, and New York-based Betterment has recently reached $3 billion mark and received another $100 million in new round of funding. Following their initial success, traditional investment management firms such asCharles Schwab and Vanguard have also followed suit and launched their own automated apps. Let’s take a look at the list of robo-advisors currently on the marketplace:

  • Betterment
  • Charles Schwab
  • Financial Guard
  • FutureAdvisor
  • Hedgeable
  • LearnVest
  • MarketRiders
  • Motif
  • Personal Capital
  • Rebalance IRA
  • SigFig
  • TradeKing Advisors
  • Vanguard Personal Advisor Services
  • Wealthfront
  • WiseBanyan

Going automated is becoming more mainstream as more big asset management firms are jumping into the race. As a matter of fact,Northwestern Mutual recently acquired LearnVest and Blackrock acquiredFutureAdvisor.

Traditional asset management firms still maintain their edge over start-up robo-advisors in handling complex investments. Could the joined forces of seasoned investment professionals and the latest technology be the future of wealth management? This is becoming interesting.

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Hi. We're not around right now. But you can send us an email and we'll get back to you, asap.

Thanks, Ken

Ken Margolis | Managing Partner Castle Placement, LLC
1460 Broadway Street, Rte 400
New York, New York 10036
(212) 418-1188 | C: (516) 712-7784
kmargolis@castleplacement.com

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