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How robo advisers work and compare with regular advisers

Robo advisers are either regulated as Sebi -registered investment advisers (RIAs) or as mutual fund distributors registered with Sebi offering incidental advice. (Photo: iStock)Premium
Robo advisers are either regulated as Sebi -registered investment advisers (RIAs) or as mutual fund distributors registered with Sebi offering incidental advice. (Photo: iStock)

  • Robo advisers are used more by millennials and tech savvy clients than older investors, as of now
  • Due to their tech-heavy model, they may provide advisory services at a lower cost and at locations which are unviable for physical advisers

Robo advisers or robo advisory platforms are a new breed of investment advisers which use data and algorithms to provide financial advice. Such platforms often suggest mutual funds or help build entire mutual fund or stock portfolios. They might also help you optimize your existing portfolio.

Robo advisers are used more by millennials and tech savvy clients than older investors, as of now.

They are either regulated as Sebi -registered investment advisers (RIAs) or as mutual fund distributors registered with Sebi offering incidental advice. The ones that are regulated as RIAs, typically, offer direct plans of mutual funds which are free of distributor commissions. Try to figure out which model the robo adviser is following and how it is regulated before you invest.

Due to their tech-heavy model, they may provide advisory services at a lower cost and at locations which are unviable for physical advisers.

Their ability to analyse data can sometimes be superior to human advisers. While keeping these benefits in mind, you should also exercise some caution while using their services. The robo advisory model may not incorporate circumstances particular to you such as an illness or family problem which you can explain to a human adviser.

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