The Reasons, Benefits, and Opportunities of Robo-Investing

Robots are becoming more and more commonplace. In fact, it is rare to go a day without encountering some type of robo-technology that replaces or supplements human involvement. They can be found in loan processing, at grocery store checkouts, during bill payment and in many other automated systems thanks to analytics and artificial intelligence.

Robots have also made an appearance in wealth management with the invention and wider use of robo-advisors. View our video where Greg Wait explains how we have married responsible investing with robo-advising.

Investing Becomes More Efficient

Robo-advisors are sophisticated computer programs that rely on algorithms and data to make the same types of decisions that traditional investors do. This means they design portfolios of stocks and bonds based on risk tolerance, goals, a time horizon, and other information provided by the client from a questionnaire. Fund allocation, along with rebalancing, application processing, and other services, are all automated. This allows investors to “set and forget” their portfolios, knowing that they are managed by hard numbers, but can update their preferences as needed.

Investors are in Control

Robo-advisors allow investors to manage their own investments rather than meet annually with an advisor. They present an alternative or supplement to traditional services that appeal to a broader market who seeks more flexibility and options for their money. Since the 2008 inception of robo-advising, the service gives investors transparency in addition to automation and support.

This development is particularly important to millennial investors. Millennials are now the largest generational labor segment, but many of them aren’t investing their money. They lived through the 2000s and, as a result, don’t trust “big banks” to take care of their money. They’re accustomed to technology and crave transparency and control in their money management. It is logical that they crave being able to access their portfolio on a smart device is only logical.

Lower Costs for Investors

Allowing computers to do work traditionally performed by humans saves investors money. Robo-advisor services cost less than traditional human investment advisors do while offering a similar return on investment. Traditional investors charge fees of around 1% or more based on the assets under their management; robo-advisor fees tend to range from .15% to .35%.

Lowering costs helps reduce the barrier of entry for investors, which means more people can begin investing.

Robo-advisors also tend to have a lower minimum asset level, where human advisors often have minimums that range from $250,000 to $500,000 or more. These minimums encourage people who might not otherwise invest to start doing so. More investors means more engagement with the economy and, for impactful investment vehicles, more positive change in the world.

Investing with Prophecy Impact Investments

Impact investors are drawn to innovation, whether it’s in the form of the investment vehicles their money goes towards or the services that help them invest. As robo-investing becomes the standard in wealth management, investing will become more accessible.

As forward-thinking and socially-conscious people invest thoughtfully, their impact increases, and we can make the changes we want to see in the world. Whether you’re new to investments or looking for a different way to manage your assets, Prophecy Impact Investments offers automated investment options that fit your needs. Learn more about our process and get started today.