Virtual advisors, also known as “Robo-advisors” are the latest trend in the world of investing. These “advisors” are not actual human financial advisors, but are instead a technology-based platform that automates the process of investing. Investors still feel as if they retain control over their investments, but are not required to be extremely knowledgeable about investments. Instead of working with a financial advisor in person, the investor answers questions about his or her investment risk tolerance, age, etc. via an online questionnaire. The investor is then presented a portfolio suggestion determined by a computer algorithm. This provides the ability for anyone to invest, regardless of their total portfolio picture or the amount of assets they are planning to invest.
The idea of virtual, or Robo-advisors, is still new for most investors. When asked to rate their familiarity of various investment terms on a scale of 0 to 100 where 0 is not at all familiar and 100 is very familiar, wealthy investors only rated their knowledge of the term “Robo-advisor” as a 15.47, and the term “Virtual advisor” as a 19.27. They were very familiar with the term independent financial planner, however, rating it at a 76.92
For the terms Robo-advisor and Virtual advisor, the younger the investor, the more likely they were to indicate being familiar with these terms. Those 35 and younger rated highest on the knowledge scale for these terms.
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