Financial technology, or fintech, is revolutionising the financial world in terms of processes and services, and one of the products of fintech is the robo-advisory. On the investment front, robo-advisories, or robo-advisors, would help you craft your investment portfolio according to your needs, preferences, and risk profiles. The robo-advisor would then, if you want, automatically maintain your investment portfolio, which includes rebalancing.
If you are a passive Bedokian Portfolio investor, this would mean an even more hassle-free maintenance of your portfolio. However, before jumping into this, there are a few points that you may need to consider.
Robo-advisors do charge a small fee in managing your portfolio, and this fee is usually a percentage of your portfolio and may include an annual fee. On top of it, there could be transaction costs in transacting the securities in your portfolio as well during rebalancing. Do make a comparison of these costs among the robo-advisors.
Transparency of Financial Instruments
Robo-advisors tend to use ETFs to build your portfolio, which is a good thing for passive Bedokian Portfolio investors, but it is better to know what are the ETFs used in building up your portfolio. With the knowledge of what ETFs are used, you could research further in the underlying securities of the ETFs, as well as their expense ratios.
Flexibility and Control
Although your portfolio may be automated, there are some investors who would like to have some flexibility and control over it, like the frequency of rebalancing, the choice of asset classes and sectors/regions, and their respective allocation percentages.
Do I Need A Robo-Advisor
Finally, the mother of all considerations on robo-advisors would be “Do I need them in the first place?”. If you prefer a more hands-on approach in managing your Bedokian Portfolio (and enjoying it), then you do not need them.