FinTech and Robo-Advisors Are Changing Investing

 

We all know that machines and technology have dramatically changed the work world, speeding up our production (and leading to the dawn of mass production) and eliminating human jobs in one area while creating new ones in a different area. Until recent years, however, this radical change has mainly been felt in the manufacturing section of the work world. Many office workers have enjoyed the bonuses that came with technology while believing that a computer could never replace the human aspect of their job.

Enter robo-advisors, programs designed to analyze your needs and wants and then invest your money according to that algorithm. This new FinTech version of investment is attracting a large amount of attention from businesses and investors.

Favored by millennials and other tech-savvy generations, robo-advisors are much more economical and private, perfect for those who want to enter the market but do not want to pay the fees associated with wealth management firms. Perhaps the even greater value (in today’s busy 24/7 society) is the availability of robo-advisors. As the system exists online, it is reachable at all hours of the day and can be accessed anywhere there is internet access, giving people the chance to check in everywhere from the board room to the bedroom. For young and/or first-time investors, another bonus is the fact that robo-advisors tend to have no minimum balance, meaning those with limited capital can still start creating a portfolio.

Betterment entered the market as one of the first robo-advisors. Although the fee depends on the size of the account, there is no minimum deposit. One of the major pluses of this robo-advisor is the presence of easy to use tools to help make the stocks/bonds allocation decision.

WiseBanyan is another robo-advisor. This option has the bonus of charging no base fee, stating that “investing should be a right—not a privilege.” Add-ons cost extra, but this option allows users the chance to specifically tailor their advisor to suit their needs.

Perhaps the most unique option is Blooom. Specializing in retirement accounts, users connect their 401(k) to the system, which analyses their investments. The conclusions are shown through the image of a flower: A flower in full bloom means the investments are healthy, while a wilted flower suggests changes need to be made.

For the younger generations just entering the investment field or seasoned investors who have been burned by advisors, robo-advisors are an innovative new way to look at the stock market. Yet again, FinTech is coming in and changing the game for the better.