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Robo advisor or human adviser?

A computer program called robo-advisor can make a comprehensive financial plan for you

There’s no escaping technology these days. From online banking to booking airplane and cinema tickets, your life has shifted online. Your financial adviser has moved online too; a computer program called robo-advisor can make your comprehensive financial plan, help you invest and then keep track of your finances, all online. But are they for you? Kayezad E. Adajania helps you to find out.

Small investibles

Financial advisers charge about Rs5,000-25,000 for on-boarding. They also charge a fee on the percentage of the corpus. If you invest a small amount, an adviser may not want to take you on. Robo-advisors, however, take up everyone. Their cost can be 0.1% to 0.5% of the annual assets. Some charge only a flat fee, say Rs1,000 a year.

Robo-advisor: good

Human adviser: not good

Interaction

Suppose that equity markets fall sharply. Who do you turn to? A human adviser can counsel you and comfort you about the validity of the plan. Robo-advisors will merely send you an email. If you want to make a Will and bequeath your assets, your adviser can counsel you. In such sensitive matters, a human touch works better.

Robo-advisor: not good

Human adviser: good

Track record

On account of being around for many years, human advisers come with a track record. Though new advisers keep joining the force, there are enough who come with a track record. There are about 70,000 distributors in the country, and about 510 Sebi-registered investment advisers. There are roughly 40 robo-advisors.

Robo advisor: not good

Human advisor: good

Goal planning

These are early days for robo-advisors, so most of them allow you to plan for a finite set of goals. Once you select one or few goals, it asks you for some details and then suggests a portfolio. A human adviser can work on specific goals that may not fit under the popular templates, to give you a tailor-make a plan and counsel you as well.

Robo-advisor: not good

Human advisor: good

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