Human v/s Robo Advisor

Google has become an integral part of our daily life. Any question which we don’t have an answer to – we search it on Google. Due to time constraint, we at times, even make our grocery purchases online. We can’t just spend a day depositing cheque, paying utility bills or visiting our local baniya. Technology has made us dependent on gadgets. We rely on them even for our smallest jobs. We prefer traveling in an online booked cab talking with our old friend over online media site working on our office presentation. 

The glossy online world has made us lazy to walk out in hot sun. Our financial lives are also not left untouched from this growing influence of internet. From transferring funds to making payments through online wallets, we prefer to do all online. With multiple applications and customized software designed to help us we can now sell, purchase and view our holdings together at one place. Gone are the days when we scanned the business newspaper to search the market price of our stocks and mutual funds. Financial entities now send regular updates to their clients informing them about even any smallest amendment or announcement in the company. We read online reviews by analyst about the market expectations, RBI announcements or even how the global markets would perform. We have become experts in our own terms and to supplement our knowledge, we subscribe to various paid advice. 

Welcome to the world of “Online Advisors” or shall we say “Robo-Advisors”. These Robo–advisors are all round us giving us an easy access to manage our investments. They filter our search requirements on a global basis and the solutions given are customized to suit our queries. So, should this new age advisor replace the traditional financial planner,agent and brokers, who visited us to suggest the latest product info or collect our premium cheques? Lets’ decide with a simple list of pros-cons to make the decision.

Robo –Advisors	Human Advisors
Benefits
a) Large chunk of information can be stored online and advice is made available in best possible manner. E.g. mutual funds recommendation  b) Increase in speed and reduction in time wastage. E.g. stock price quotes with algorithm trading c) Reduction in mathematical errors. The software design is capable of handling complex calculation with pre fed formulas. d) Multiple reports can be generated easily on click of button. E.g. Profit & Loss, Stock Valuation etc. e) Unbiased recommendation of products and advice. f) Easy change in recommendations and regularly updated consolidated view of holding with goal earmarking.	a) Easy to express thoughts to make him understand your needs and wants. b) A plan advised by human being is flexible to personalized needs. c) Every client has his own different story. The advisor can empathize with him to suggest a proper plan. d) Not limiting his interactions to financial dealings, an advisor can even help the client with life planning. e) Any customized report specific to client needs can be made available o demand. f) There is no over dependency on technology making it a simpler process. g) Practical solutions rather than outputs on formulas and ratios.
Disadvantages
a) Data input is necessary and most crucial step, since any mistake at this level could lead to dubious output. b) Constant need for technical support. c) Rigidity in data formats and output. All the information given has pre-defined results and hence, one has to follow it. E.g. Client might want to invest in equity but his risk profile shows that he is a conservative investor and hence, it might not allow him. d) No scope for flexible two – three solutions to let the client select one as per his convenience. e) Generalized recommendation on pre-decided variables.	a) Limited access to advisor unlike 24x7 support online. b) Chance of biased recommendations is high over here. c) Limited number of reports referred to give solutions to client. d) High chances of mathematical errors. e) Sometimes, over empathy with clients’ situation can give rise to biased advice seeking positivity for client.

   

Thus the choice might be simple for some who have already plunged in to technology based advice. It is a basic understanding although, machines can aid human beings it cannot replace them. It has always been a helping hand and should remain the same. It would never replace the human impact.  

For your human advisor requirement, feel free to contact us at saarthifp@gmail.com