By staff columnist, Alexandra Deluise
2017 begins as an eventful year in many industries, and the robo-advisor field is no different. As a whole, robo-advisors are still on the up, with more assets being invested than in years past. Robos continue to become more accessible, with specific robo-advisors being created for particular groups of investors, based on age, gender, income and more. The robo-advisor news is impacting not only individual investors but financial advisors as well.
Top 5 Robo-Advisor News Articles
The following five articles provide a look at the current world of robo-advising platforms and give an overview of what you should know, what changes to expect, and some glimpses at this evolving technology.
1. Why Silicon Valley Believes Robo-Advisors Can Save Investors from Themselves by Max Taves at CNET.
Taves presents a balanced look at the future of robo-advisors, and, so far, it’s looking good. The robo advising market has grown exponentially since its inception, and it’s only getting better. Traditional investing firms are even creating algorithm-based investment platforms to keep up with the demand for these lower-cost “everyman” options. Taves says, “If a future of computers handling your nest egg freaks you out, then start building a time machine and return to the past.”
2. How do Startup Robo-Advisers Stack Up Against the Big Banks? by Alessandra Malito at MarketWatch.
Malito echoes Taves in that she too has noticed traditional banks and investment firms creating their own versions of robo-advisors, which bodes well for the industry. She notices three types of robo advisors that clients should keep in mind: startups, ones backed by financial institutions and hybrids. Startups are beneficial in that they challenge the status quo of investing and add something unique to the market. Existing institutions add stability to the digital market with their reputation, which lends credibility to their robo-advisors. Hybrid robo-advisors are unique in that they give you the best of both worlds: a computer’s brain with a human touch.
3. Robo-Advisers: Not Just for Millennials Anymore? by Richard Eisenberg at Forbes.
There are now robo-advising platforms designed for baby boomers. According to Eisenberg, services such as True Link Financial and Hearts & Wallets have created algorithms for retirees and pre-retirees to address these clients’ specific financial needs. This comes at an important time, when it seems like the younger generations are getting all the benefits of robo-advisors. Some baby boomers still want a person to interact with them, so True Link compensates by offering hybrid services, like representatives available by telephone. One amazing new feature to look for: Emotional Advisors, which use Artificial Intelligence to connect with clients based on their usage of the robo-advisor.
4. Is Robo Investing Right for You? Here are the 5 People Who Are Likely to Use Them by Andrew Meola at Business Insider
Meola’s article covers five groups of people who frequently use robo-advisors, and covers the different ways they can benefit from going robo. The most surprising group might be human financial advisors; as Meola points out, they can benefit greatly by partnering with robo-advisors because the combination makes a powerful team. Other groups recommended for robo-advisors include the expected millennials, the up and coming cohort-retirees and another unexpected group, high net worth investors. Overall, robo-advisors can be beneficial to everyone.
5. Spotlight on Robo Advisers’ Returns by Daisy Maxey at The Wall Street Journal
Maxey explains an interesting study done by Condor Capital Management, which invested in 11 robo advising platforms in order to measure their success rates. While some robo-advisors adamantly claimed that Condor measured investment periods that were too short to see the long-term benefits of the algorithms, some robo-advisors performed quite well in the short-term study. In fact, some robo-advisors gained over 9% during the specific time period. One important thing to note: because all robo-advisors are different, it was impossible for Condor to open completely uniform accounts at all 11 robo advisors, so the results may be skewed slightly. As a side note, we’ll be delving into this report in a future Robo-Advisor Pros.com article.
Robo-Advisor News Wrap Up
In summary, robo-advisors are still extremely accessible and aren’t going anywhere anytime soon. Since their creation, these platforms have only grown in popularity, with algorithms designed for millennials and baby boomers alike. In addition, the hybrid robo-advisor trend is getting a facelift with the addition of artificial intelligence designed to help investors make the most of their portfolios right from the beginning. These things add up to a promising start to 2017.
Read all of our Robo-Advisor News and Updates
Staff columnist Alexandra DeLuise combines her banking experience with real-world financial advice to provide simple money tips to everyday people.