I have come across this question few times. Below is my response.
The ultimate goal of an digital investing service should be what is also the actual expectation of a typical customer.
The ultimate goal of an automated investment management service is to provide the best long-term, risk-optimized returns to the client net-of-fees. This is what a typical client wants —What is the return that I am going to enjoy in the long term for a specific portfolio risk that I am willing to take?
Every thing else, such as an intuitive user interface, great customer support, informative marketing material, sleek mobile app, etc., is secondary.
Our firm QuietGrowth believes that investing in a highly diversified, low-cost portfolio for the long term in most suitable financial instruments, (typically, index or smart-beta funds unless there is a specific case that a particular individual stock is mis-priced over an extended period of time) gives superlative returns. These returns are almost always in the top 10% of the risk-optimised portfolio performers in the investing universe. This tenet drives our portfolio construction and this is our main value proposition.
Value of robo advice to different segments
Robo advice provides considerable value to the following three client segments:
- Those who prefer receiving automated discretionary investment management service from a robo adviser for a lower price compared to traditional wealth manager;
- Those who don’t need face-to-face comprehensive financial advice from a traditional financial advisor because their life situation is not complex; and
- Those who can’t afford a traditional financial adviser.
Related information
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