Robo Advisors in Wealth Management

Financial technology is spreading its roots across the globe in different economic segments. Fintech has picked up a tremendous pace and is now snowballing with rapid intensity. The traditional financial industry comprises many subdivisions, like banking, payments, remittances, crowdfunding, investments, and many more. Its digitalized counterpart is rapidly catching up with all its augmentations.

One of the most promising segments of fintech is wealth management. Digital solutions for traditional and digital wealth management have picked up steam, in recent years. One of the wealth management services provided by companies nowadays is Robo advisory. Robo advisors are a fancy accession to traditional financial advisory services. 

What are Robo Advisors?

Robo advisors are digital agents and platforms providing financial advisory services for investments. The advisory services are automated and based on algorithms that process information in real-time, to provide financial planning and asset management advisory services to users.

The Robo advisory industry started almost a decade back with basic automation that helped people with financial asset management. Today, the industry has grown immensely and has already helped manage funds worth more than a trillion dollars.

How does Robo Advisory Work?

The automated advisory services are algorithm-based processes, feeding on information provided by the user and its resources. For availing of Robo advisory services, users first need to register and sign up on a platform that offers such services. For signing up, the user must feed in information about their investment portfolio, short and long-term goals, etc.

Once the user has signed up, the Robo Advisor starts processing information provided by the user to organize it into different categories. The platforms offering Robo Advisory services have several resources feeding them information about current trends, the news, and other factors influencing wealth management decisions. 

Robo advisors earn through the fees paid by users. Apart from the fee, the advisory functions also earn through marketing, the interest earned on investments, etc. Such earning streams make them lucrative service offerings for companies.

Benefits of Robo Advisors

Robo advisory services have helped transform the wealth management industry. Investors have found an efficient way to attain knowledge and information about investments which has helped them understand financial markets and management at a deeper level. Some of the advantages of Robo advisors are:

Lower Cost

Robo advisors cost lesser than traditional advisors. Human advisory services have been a part of the system for many years, which has given them critical leverage in helping investors. Robo advisors have proven to be a cheaper alternative to traditional advisory because of the differences in investment.

Efficient System

Robo advisors have also proven more effective and efficient than traditional advisors because of their upfront services, non-influence of external factors, etc.

No Bias

Robo advisory services have no biases because they automatically process information by algorithms and the information fed to them. No human bias influences the decision-making process from the Robo advisor’s side.


Unlike human advisors, Robo advisors are based on the internet, making them easily accessible. Such accessibility allows longer windows and more convenience for users to avail of their services. 

Versatile Functions

Robo advisory services provide immense customization and scalability to users. Such attributes render it more user-friendly.

Constraints in Robo Advisory

Although Robo advisory services are a futuristic concept that is revolutionizing the wealth management industry however, it has some limitations because it is still lingering in its developmental phase. 

Robo advisory is not standardized across all platforms, countries, and companies. Such technological limitations make it difficult for users to make choices, leading to mistrust in the industry.

Unlike human interactions, Robo advisors follow a step-by-step system, which makes it difficult for users with large investment portfolios to explore them.


Robo advisory started more than a decade back, and the services have finally become quite popular in recent years because of the financial knowledge, wealth management tips, and advice they offer. With the growth of fintech, several accessions within fintech have stumbled upon a new mountain of opportunities. People are now getting accustomed to technological advancements, empowering more trust in technology.

Employing a robo advisor is an important decision for an investor. Even though there have been many developments, people are still not comfortable with entrusting their personal and financial information with technology, like Robo advisors. An investor should spend time exploring the benefits, risks, motivations, etc., before making an affirmative decision.  

Wealth management is one of the most important streams in the financial sector. Leveraging technological capabilities to systematize the decision-making process is proving beneficial. The road for Robo advisors remains an ongoing learning process that promises the best use of technology.

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