Robo-advisors are online platforms that use artificial intelligence or algorithms to process information on clients’ investment preferences, risk tolerance and loss-absorption capacity, to determine an investor profile and make a personalised and often product-specific investment recommendation.
This research shows the wide range of benefits that come with Robo-advice, such as considerably lower fees, increased accessibility (lower investment thresholds and online distribution), wider availability, speediness, and often unbiased advice free of conflicts of interest (since most Robo advisors do not get commissions from fund providers; all robo-advisors taken up in BETTER FINANCE’s report, provide independent advice).
Robo-advisors were expected to grow quickly to significant scales (in terms of users and assets under management), but data show this has not been the case.[1] The fast evolution of the robo-advice market has been hampered by a generalised distrust in financial services, limited awareness of this business model and a low level of financial literacy.
BETTER FINANCE continued its research series into the Robo advice with this fifth annual edition, mapping start-up platforms that provide robo-advisory and investing services, and analysing their user-friendliness, transparency, costs as well as the suitability of their recommendations (through mystery shopping). This year the research team selected 17 platforms registered as financial advisers in 11 countries across Europe, Australia, USA and Singapore. However, the comparison of the results with research from the previous 2 years is done using a sample of 9 platforms from Europe and the USA.