Nowadays, people use the internet for almost everything. Therefore, it should not come as a surprise that they would want to access investment advice online.
Robo-advisors are gaining popularity due to their accessibility and convenience. Their practices are shaping the future of financial planning.
Of course, if you have an extensive portfolio and require guidance on complex areas, a traditional investment adviser would be an excellent option.
Online investment advisors cater to different types of wallets but are better suited for people with modest portfolios.
Here are ways in which online financial advice is changing the industry.
1. Reduction in the Cost of Financial Advice
Online platforms offer affordable rates for their investment advice.
With the current economy, office buildings are costly, and the clients cover the cost of renting or buying.
Besides, the operational costs are also high.
Therefore, financial advisors must charge higher fees to cover the expenses. Online investment advisors require a fancy website, which is relatively cheap to design. The use of technology allows automation in various processes reducing the operational cost.
With affordable rates, you still get the best investment advice.
2. Accessibility and Convenience
Everyone has tight schedules and sometimes squeezing in an appointment with a financial advisor is impossible. That does not mean you give up on your investment plans. Online investment advisors are available around the clock to provide investment services.
The convenience of accessing the information from anywhere at any time is appealing to many clients. Apart from advice, online platforms offer many resources to help you in your financial decisions. They often have stock quotes, news, and analytical tools.
3. Increased Use of Technology
Most online investment processes are automatic. Therefore, once you set up an account and answer a few questions, you are good to go.
The use of technology increases efficiency in investing and portfolio management. You can utilize the research and analytical tools to diversify your portfolio.
If you are contributing towards a pension plan, you can use a pension calculator to determine how much you need to invest. With an automated system, there are minimal errors, and you can execute trades quickly.
Apart from trading in major asset classes, including stocks and bonds, online investment advisors also offer tax-loss harvesting services.
4. Targeting Young Investors
Due to their high rates, traditional investment advisors appeal to wealthy clients with large portfolios. Therefore, the less-wealthy investors with low financial literacy are bound to make poor investments since they cannot afford a financial planner.
Most of the young investors can only spare money from their private pension. Therefore, they need a low-risk portfolio with high returns.
Online investment platforms mostly invest in exchange-traded funds (ETFs), which require minimal management.
5. Unbiased investment advice
While traditional advisers are competent in offering personalized services, they may be biased against specific individuals. Financial advisors may derail an individual’s plans to promote their products.
Online investments give advice based on the customers’ needs. Their only concern is to ensure you get the best financial information.