Examine and appraise the differences of robo advisor over traditional wealth managers

Expert Solution

As the name suggests, a robo advisor is a digital channel which can be a programmed spreadsheet or an interactive website which takes input from the users regarding the investible surplus, risk appetite, investment horizons and other such details and provide a financial planning advisory. There is almost no interaction between the client and any human agent while deriving or suggesting the financial plan.

A sophisticated robo advisor usually is able to churn out customised solutions for different clients based on their requirements and input provided. It is also not influenced by human emotions or biases.

A traditional wealth management service is usually provided by human financial planners who interact with their client to understand their propensity for risks and their investment goals and then after much discussions , are able to produce a financial plan for a given horizon. Since a human is involved there is the chance of emotions and biases distorting the final output.

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