What is a Robo-advisor?

Posted by Robert Reece on April 17th, 2021

Organizations are fast adopting digital technology in their processes to gain a competitive advantage. The financial advisory and wealth management industry is no different. Financial advisory organizations have now employed Robo-advisors to aid their investment advisors in delivering financial advisory services to their clients.

Robo-advisors are digital financial planning tools that provide financial advice based on algorithms, with little to no human involvement. The Robo-advisors put forward investment advice after gathering information from clients, which facilitates error-free and customized investment recommendations that are consistent with their goals and risk tolerance.

Advantages of a Robo-Advisor:

Robo-advisors allow financial advisory firms to provide their services at a low cost as employing them means paying only monthly subscription fees in exchange for automated financial advisory services. This makes it much easier to grow and scale and allows millennials to have more control, something surveys have shown many have requested. Wealth advisors usually charge different fees such as hourly fees, percentage of assets under management and fixed fees, which makes the services of human wealth advisors several times costlier than a Robo-advisor. An investment in a Robo-advisor makes sense and is feasible.

With Robo-advisors, clients can get financial advice 24/7, which is not possible in the case of human wealth advisors. Robo-advisors can manage a large number of portfolios simultaneously using AI and preprogrammed algorithms. The portfolios are managed within the risk and compliance framework as recommended by the regulatory authorities and the investment philosophy set by the firm.

Robo-advisors allow  RIAs to focus on other important tasks that require human expertise, such as client acquisition, customer satisfaction, investment research and holistic wealth management. Also, Robo-advisors keep the clients updated about the latest position of their accounts, allowing financial advisory firms to allocate their human resources to other critical areas of the firm’s operations.

How can you use modern technology?

You can leverage the strengths of Robo-advisors in the following ways:

1- Digital wealth management can increase your firm’s productivity and efficiency as you can automate most of your activities to a paperless environment. Digital onboarding, quick account opening process, e-signature ability, and online document management facility, greatly improves the customer experience and improves overall efficiency of the firm’s operations.

2- Robo-advisors can also work as a Client Relationship Management (CRM) platform, that will manage your client management needs. Your clients will be able to interact with the Robo-advisor CRM platform to generate different reports, perform common tasks, and resolve their regular queries related to their accounts.

3- Robo-advisors can greatly reduce the RIA’s burden by maintaining regulatory and risk management standards while managing portfolios.

4- Robo-advisor platforms give you access to the online secure vault where you can store important documents of your clients with just a click of a button. You can share documents with your clients with just a few clicks, allowing seamless communication with clients.


Automated financial planning is the future of financial advice as it blends modern technology with human intellect, which can create synergy and maximize value for both the firm as well as clients. If you’re an RIA looking to setup a robo-advisor there are many options like AdvisorEngine which is specially designed to fulfill the needs of wealth management and advisory firms. Investing in a robo-advisor system can prove to be a good return on investment because of the countless benefits you get: more engaged clients, more revenue and more time to focus on what matters. Robo-advisors have a place in the future, and now is the best time to implement them in your organizations to get a critical advantage.

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Robert Reece

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Robert Reece
Joined: April 16th, 2021
Articles Posted: 4

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