Robo-adviser: How does a robo-advisor work?
A robo advisor or robo advisor is an online financial advisor that uses sophisticated software to help people manage their money and investments properly. People in the UAE are starting to talk about robo-advisors as an alternative to traditional financial advisors. But what is a robot advisor? How did he gain such popularity?
What exactly is an automated advisor?
A robo advisor or robo advisor is a professional robot advisor in the field of investments, as it enables investors to enjoy many of the benefits of having an advisor without having to incur the high fees that it requires.
How does a bot advisor work?
There are 3 basic stages to the process by which a robo advisor manages your money:
Like a traditional financial advisor, a robo-adviser helps you decide how to invest by asking a few questions that enable them to learn about your financial goals and your risk tolerance.
Once a Robo Advisor has a solid understanding of your requirements, it uses technology to allocate your money into investments that are right for you.
The robot advisor manages your investments over time, adjusting them to your financial goals and as underlying market conditions change.
What makes a robo-advisor special?
When investing, it is important to consider the fees that advisors require to manage your money and investments, which although they may seem small, can contribute to the erosion of your returns over time and prevent you from achieving the wealth you have always wanted to achieve. A traditional financial advisor who charges a 1% fee to build a £100,000 portfolio will raise £1,000 every year regardless of how your investments perform.
The special thing about the robo-advisor is that it gives you good quality investment advice at reasonable rates. This is because they use scalable technologies to reduce the high overheads associated with managing a traditional investment (expensive offices, costly flights…), and they also tend to invest in exchange-traded funds, which is a cost-effective method.
A robo advisor is a more convenient option than traditional advisors, as it enables investors to monitor their investments in real time without the need to make phone calls or attend face-to-face meetings, in addition to that they open the door to investment to a completely new audience such as younger people, and enable them to benefit from The possibility of their wealth growing in the long term.
The future of the robotic advisor
The Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM) recently published a regulatory framework for a robot advisor. This step is important to raise awareness about the robo-advisor in the Middle East and help ensure that investors receive a high-quality service, without having to pay exorbitant fees.
Disclaimer: The content of this article is for informational purposes only. The information provided should absolutely not be considered as an investment advice or recommendation. There is no express or implied warranty as to the accuracy of the information or data contained herein. Users of this article agree that Money Secrets does not accept responsibility for any of their investment decisions. Not every investment or trading strategy is suitable for anyone. See the risk warning statement.