Robo-Advisors – Friend or foe? Investors’ perception

Robo-Advisors – Friend or foe? Investors’ perception

Robo-advisors are at the crossing of different strong trends: lowered management fees, digital distribution and machine-enhanced decision making. Their ability to reduce the production costs through automation over the long term and to enable large economies of scale also allow for setting the minimum investment in robo-advised funds lower than for traditional investments. Thus robo-advisors present a seducing alternative investment solution for many people who wouldn’t be qualifying for tapping the high-end products available in traditional private banking or asset management. All these reasons would explain why recent studies1,2 would project robo-advised funds AUM to grow at a consistent rate of 33 to 37% annually over the next 3 years, thus bringing their amount to roughly 4 times what they used to be beginning of 2017.

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The intelligent Investor and Robo Advisors.

The intelligent Investor and Robo Advisors.

Robo advisors and to some extent Artificial Intelligence (AI) are today at the heart of vast discussions and may create a lot of opportunities but also threats. The use of robo-advisors and AI is also a strategic decision for many companies in virtually every sector. Artificial Intelligence is present everywhere: in medicine, law and the financial sector, in particular in banking and insurance. 

But what about approaching the problem differently and like Simon Sinek did in his book “Start with why”; we can start this article by asking "why"? Why should investors use Robo advisors in their financial decisions?

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