Roboadvising has seen major growth in recent years. The automated financial advising service is popular among millennial investors and those who want low cost advice. Consulting firm A.T. Kearney predicts that by 2020 two trillion dollars will be managed under robo advisors.
In 2015, BlackRock (NYSE:BLK), the world’s largest asset manager, purchased roboadvising platform FutureAdvisor,sending a message to skeptics that roboadvising is here to stay.
FOXBusiness.com sat down with Future Advisor’s CEO Bo Lu to talk about roboadvising.
FOXBusiness.com: So tell us what is a roboadvisor?
BL: “It’s a software platform first and foremost that allows you to get an overall view of how your existing investments are doing and get some insights into how you might do better. And then it can take those over for you and actually implement those changes and manage your assets on a day to day, week to week, month to month basis as time rolls on so you can continue to stay on track with your goals.”
FOXBusiness.com: What’s the benefit to using a roboadvisor?
BL: “The first one is oftentimes they either have no or little minimums and you can get started right away without having had to build up a large nest egg of wealth first before you can get the attention of some of the more experienced and higher minimum asset management firms but the other thing to think about is it’s always there. You can do it in your pajamas, on your iPad at home, you can do it on your phone while walking the streets of New York, so it’s always there.”
FOXBusiness.com: Now for someone who does want to start roboadvising, what should they think about in this process, how should they go about selecting the right roboadvisor for them?
BL: “First and foremost you want to go with a firm that you’ve heard of and that you trust. It’s still the very early days of the evolution of this software platform and so it’s not necessary to jump in there to find the most advanced or one that has the shiniest website because over time we believe that all of the firms we work with today, the banks and broker dealers, that we already have relationships with will offer one if they haven’t offered one already.”
“Then look for a roboadvisory platform that combines both humans and machine because you always want someone there to call if you have questions and look to make sure that the platform takes into account as whole a sense of your life and as whole a sense of your financial picture as possible.”