A robo-advisor is a type of online software designed to automate and streamline investment management. Such platforms use advanced technology to create and manage investment portfolios based on the client’s financial goals, risk tolerance, and time horizon. Here are the key ways in which a robo-advisor can complement the work of a traditional wealth manager:
Efficient Execution of Routine Tasks
Robo-advisors can efficiently handle routine and administrative tasks, such as rebalancing portfolios, tax-loss harvesting, dividend reinvestment, asset performance monitoring, and diversification analysis in line with clients’ risk tolerance, financial goals, and market conditions. With this often mundane legwork handled by algorithms, human wealth managers are better able to focus on the more complex and strategic aspects of their jobs.
More Personalisation for More Clients
A typical wealth management firm serves a diverse range of clients, each one with different goals and circumstances. With a robo-advisor in its corner, such a firm can efficiently provide a larger number of clients with more personalised investment strategies.
Automated Data Access and Analytics
Robo-advisors leverage advanced technology and data analytics to provide insights into market trends and investment opportunities. This information, especially when presented in easy-to-understand dashboards, can serve as a valuable source of investment ideas for wealth managers and provide data-driven rationales for recommendations to clients.
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Enhanced Client Experience
Robo-advisors typically offer user-friendly interfaces that clients can use to access basic information. With an easy way to answer basic questions and potentially seek guidance on more complicated ones, clients can often feel more satisfied with their overall wealth management experience. At the same time, human advisors’ time is freed up to focus on building relationships and understanding clients’ unique needs that cannot be articulated with technology.
In closing, wealth managers should not view robo-advisors as a threat but rather as a tool for doing their business better. The more wealthy a client is, the more likely they are to expect high-touch service – and a robo-advisor can help a wealth manager to provide this service where it truly counts.
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