November 4, 2016updated 09 Nov 2016 3:01pm

Lower Income and Technical Know-How Push Millennials to Robo-Advisors

By Ana Gyorkos

Millennials, sometimes known as Digital Natives, are seeking to invest thanks to these growing FinTech options.

Since the first series of Robo-Advisors hit the financial advisory scene in 2008, these automated investment services are rapidly gaining traction.

Unlike traditional methods of wealth management that depend on human interaction, Robo-Advisors are online resources. Representing an automated aspect of emerging financial technology, their asset management relies on algorithms.

Basically, they’re wealth planners without a pulse.

Robo-Advisors represent user-friendly and relatively economic solutions for simple goals such as portfolio management. Since most tech savvy millennials have bank accounts that are dwarfed by the likes of Bill Gates’, their needs are also straightforward, and therefore don’t require help from a human consultant.

In fact, the Robo-Advisor platform appears to be the key to unlocking a previously difficult to open millennial market. Before these automated financial tools, investment advice was doled out by a human advisor whose hefty fees disallowed handling the limited resources of younger individuals.

Now however, the ease by which Digital Natives wield smartphones, tablets, and computers renders interaction with another person unnecessary, and Robo-Advisors are an ideal option.

Although millennials are eager to utilise automated financial software, such services are available to anyone who isn’t afraid of getting their hands digitally dirty.

Even though their pros are significant, Robo-Advisors aren’t yet capable of processing sophisticated needs further than portfolio management.

They lack the rapport and expertise of a human wealth manager, qualities that are necessary for aims such as saving for a first home, funding a child’s education, easing investment worries, estate planning, or preparing income during retirement. Consulting with a knowledgeable professional on wealth allocation is the personal appeal that motivates most high net worth (HNW) individuals. Some have even fostered long-standing relationships with their financial advisors due to their varied economic needs.

Since Robo-Advisors are still novel forms of FinTech, there are no regulations imposed on them as of yet; meaning, there aren’t any definitive features that characterise them. Therefore, different companies may offer different solutions to their customers, and consumers need to be mindful of this point.

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