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Help! Should I go to a Robo Advisory or a Human Advisor?!

Updated: Oct 6, 2021

Automation is the new norm. The introduction of robo-advisor has changed the landscape of the service element in the financial industry. And with technology advancing at a greater speed through the years, robo-advisors have surpassed the basic functionalities of simple investments.

Robot-advisors, also known as robo-advisors in short, are digital platforms that provide automated, algorithm-driven financial planning services with little to no human supervision. (Robo-Advisor. (2021, March 30). Investopedia).

Operating with a similar objective as a human advisor, both advisors help clients build and manage their investment portfolio.

Today, we introduce two experienced financial advisors to give us more insight on the differences between a Robo Advisory vs A Human Advisor, and who should you go to.

With more than 10 years in the financial industry, Zong Jie pointed out one of the core differences – the lack of human touch and empathy to understand the purpose and the reviewing process of the individual needs of the client. Indeed, robo-advisors are essentially automated system that are designed to solve the needs of customers based on an ideal algorithm. However, when it comes to advanced services like estate planning, trust fund administration, retirement planning, a financial advisor is better suited to tailor to the holistic outlook of client.

Adding on, Benjamin highlights the relevance of going through the step-by-step process between an advisor and a client to understand their goals needs, and wants, in order to provide a comprehensive portfolio.

Benjamin, who has experience investing in the US stock market, went on to share a similar encounter during his reservist with one of his junior 10 years younger than him. The 22-year-old recruit seeks out a robo-advisor for investment advice. Millennials are catching on with robo-advisors due to the low barrier of entry. Automated investment also means limited investment knowledge and capital are required to kick start an investment journey. Moreover, robo-advisor rates are a fraction of the cost (0.2%-0.5%) in comparison to the standard rates of 1%-2% from a financial advisor.

Robo-advisor offers investment services, including socially responsible investing (SRI), Hallal investing, or tactical strategies that mimic hedge funds. But in terms of a more in-depth portfolio management, a financial advisor would be highly recommended. Today’s market is very volatile. Despite a robo-advisor being able to make a quick switch when the market collapse, sometimes it is more advisable to wait or re-invest more. And only a financial advisor with experience can advised on that.

But be it through a robo-advisor or a human advisor, both Zong Jie’s and Benjamin’s experiences taught them the importance of starting out investment at a young age. So, whether you are starting out small or through a robo-advisor, it is always good to start somewhere.

Disclaimer: The information is meant purely for informational purposes and should not be relied upon as financial advice.

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