A recent report from the UK-based Juniper Research projected that fully-automated Robo advisors will manage approximately $1 trillion assets by 2022. The figure represents 25 percent of total Robo advisor asset under management (AUM) market in 2022. It is significant to highlight that the Robo advisor market will peak at 155 percent annually on an average whereas the overall market will grow at 69 percent.
For the knowledge of novice investors, Robo advisor is the newest outcome of artificial intelligence (AI). To put it in plain words, robo advisor is a tool of computer-aided investment. It uses a computer algorithm to automatically allocate assets. This type of automated portfolio management is termed ‘fully automated robo advisors’.
At times, the process may include human assistance, which generally happens at taxes, retirement or estate planning. This financial service is called ‘hybrid robo advisors’.
DRIVERS OF ROBO ADVISORS GROWTH
As per Juniper’s report, consumer trust will play a dominant role in shaping the automated portfolio management market. Mass awareness of the automated investment advisor, economic uncertainty and changing demographics would escalate preference for fully-automated robo advisors over a time.
“Digital-savvy millennials are rapidly reaching the age where the idea of financial planning is an important consideration,” wrote research author Steffen Sorrell. “This demographics’ greater inherent trust in algorithms, alongside demand for ‘fire-and-forget’ convenience will drive take-up for AI fully-managed services.”
Robo advisors minimize investment mistakes, save huge money spent on human investment advisor and reduce time spent on financial planning.
The list here throws a spotlight on the best fully automated robo advisors of 2018.
BEST FULLY AUTOMATED ROBO ADVISORS OF 2018
Best Fully Automated Robo Advisor: Acorns
The California-based Acorns app is best for those who want to begin financial planning and need some guidance. The investor just needs to link the credit card and checking account, while the rest is done by Acorns. This popular robo advisor rounds up the subscriber’s spending to the nearest dollar and then invests the difference. The app is available for iOS, Android and Apple Watch along with website presence.
With zero minimum investment, Acorns provides a sort of micro saving service. Its major target market is college students and crowd under 24 years age group to whom it does not charge any fees. For others, the charges are scheduled as – $1/month under $1 million; 0.25%/year over $1 million; Individual Retirement Accounts (IRA) are an additional $1/month; $3/month for Spend.
Best Fully Automated Robo Advisor: Wealthfront
Wealthfront is another popular automated investment advisor that covers majorly taxable accounts. It has over $10 billion AUM and charges a minimal management fee of 0.25 percent annually.
To start an account in Wealthfront, a client needs to deposit $500 as a minimum investment. The assets are kept under the custody of Royal Bank of Canada (RBC), whereas Wealthfront manages them. The software-based financial advisor then puts out questions related to savings goals. It then creates an automated asset allocation, considering the client’s risk tolerance and financial needs. The service continually makes sure that the allotment is accurate with automatic rebalancing.
Best Fully Automated Robo Advisor: WiseBanyan
WiseBanyan is one of the mature players as an automated financial advisor. It’s all basic services are free and charges nominal for selected products. WiseBanyan works on a simple concept – it invests everything that is deposited in the account.
“Automation and simplification are important,” says Simon Lee, a finance specialist for WiseBanyan. “We also offer a personalized touch by pairing each of our clients with a personal finance expert. On top of this, we don’t have a required minimum portfolio balance, allowing investors of all levels to start investing for their future sooner. Essentially, we removed all the annoying parts of investing and improving upon the good stuff,” he added.
Best Fully Automated Robo Advisor: Fidelity Go
Fidelity Go’s robo advisor is aimed to help individuals who were previously savers transitioning into investors. Fidelity prefers to call them “Emerging Investors.” It is a one-stop-shopping investment firm targeting millennial. The account can be opened with zero balance but for start investing, the account holder has to deposit $10. The management fees of Fidelity Go is 0.35%, includes investment expenses.
Best Fully Automated Robo Advisor: Schwab Intelligent Portfolios
Schwab Intelligent Portfolios is the robo advisor service from Charles Schwab family, one of the biggest investment companies in the United States. Schwab has $23 billion under robo-advising AUM. It’s a one-stop solution where the investor can rely on Intelligent Portfolio to automatically manage the fund as well as can take the benefits of other services of Schwab.
It is a fee-free investment service, but the minimum balance to be maintained in the account is $5,000. To open the account, first of all, the investor completes a questionnaire including twelve questions with correspondence to investment risk profile, time horizon and financial goals.