Why Choose a Robo Advisor Over an Online Trading Platform
Today’s technological advancements have given ordinary folks the confidence to invest on stocks and securities in order to grow whatever little money they’ve saved.
Digital investing for most millennials means using the trading platforms of investment brokers. On the other hand, the Gen Xers and lately even the Baby Boomers, who are admittedly less savvy when it comes to digital technology, prefer to entrust their savings to digital investment managers who offer investing services via an online platform called robo-advisor.
The younger generation of investors prefer the online trading technology of online brokerages because they are more comfortable managing and controlling their investing and trading activities. The older generation of investors, on the other hand, prefer letting digital wealth managers do the investing on their behalf but based on their risk tolerance as investors.
Yet not many are confused when deciding between online trading platforms and robo advisors. The wealthier ones though just stick to traditional human wealth managers who contend that robo advisors, lack empathy and sophistication in analyzing investing options.
What is a Robo-Advisor and What Makes it Different from an Online Trading Platform
First off, a robo-advisor is a web-based digital technology that allows simple folks with minimal amounts to connect with a wealth manager — for the latter to make sound investing decisions on their behalf. Robo-advisors offer algorithm-driven financial planning and investing services based on the individual’s personal finance, goals and risk-tolerance of clients.
Although robo-advisors furnish financial advice, they automatically invest the assets (cash, stocks, securities, etc.) of their clients. In doing so, they furnish their clients with online tools to use in monitoring where and how their assets are being invested. Generally, robo-advisors invest only in traditional investment products, like stocks, bonds, mutual funds or exchange traded funds (ETFs).
Online trading platforms on the other hand, are digital platforms provided by financial market intermediaries who act not as investment managers, but as brokers. The users of the broker’s trading platform make Investing decisions and take trading positions by following and analyzing trading signals, and other critical market data furnished by the broker-cum-platform provider.
Another main difference of online trading platforms is that they also offer trading opportunities for financial derivatives like contracts for differences (CFDs) on EFTs, precocious commodities, foreign currencies and even cryptocurrencies.
The Advantages of Using Robo Advisors
The advantage of using robo-advisors is that it eliminates the need for investors to do the analyzing, similar to the financial services provided by the traditional human wealth managers, but at lower costs.
Generally, robo advisors charge annual fees based on the total account balance of customers, usually between 0.2% and 0.5%. As opposed to traditional wealth managers, who in the first place, require large amounts of investment money, charge fixed fees as well as collect commissions from the profits gained by their clients.
Why Choose True Potential Investor and Its Robo-Advisor
True Potential Investor has been part of the automated financial services industry since the early adoption of digital investing platforms known today as robo-advisors. If one is to ask “is True Potential any good?, the following awards received by this digital investment manager, since its founding in 2007, will provide the answer.
- 2011 Best Use of Technology by an Advisor Award from the Money Marketing Awards
- Best Support Service Award and Best Use of Technology from Money Marketing Awards for 6 consecutive years;
- 2015 Best for Innovation and Best for User Experience from the Direct Platform Awards
- 2017 and 2018 Best Platform Provider AUM Under £25 Billion Award from the Schroder Platform Awards
- 2017 European Business of the Year Award
- 2017 Business Partnership Award from The Guardian
- 2018 European Public Vote Award from the European Business Awards, and
- 2018 Best Platform for Innovation Award from the Platform Awards