--- title: "What is a Robo-Advisor and Should I Use One?" description: "The fees charged to use a particular robo-advisor are very reasonable. There is typically an annual fee of between 0.2% and 0.5% of your total account" author: "seo noman" published: 2018-06-29 updated: 2018-06-29 canonical: https://www.mindstick.com/blog/11840/what-is-a-robo-advisor-and-should-i-use-one category: "business" tags: ["business"] reading_time: 3 minutes --- # What is a Robo-Advisor and Should I Use One? ![What is a Robo-Advisor and Should I Use One?](https://www.volleypost.com/wp-content/uploads/2018/05/robo.jpg)\ Are you a financial whiz kid? The answer is probably not, which means making financial decisions can often be very confusing. [Understanding](https://www.mindstick.com/articles/12918/cat-5e-vs-cat-6a-understanding-the-major-differences) how the different options work, being aware of all the alternatives and deciding on the best type of investment can take a lot of time and effort. Being able to work out how much to invest and when also requires a certain amount of specialist knowledge. A course of action that many ordinary people take is to employ a [financial advisor](https://www.mindstick.com/blog/63922/mistakes-you-should-avoid-when-choosing-a-financial-advisor). Unfortunately, this type of service is often very expensive. There is some good [news](https://www.mindstick.com/developersection/news), however, for those wanting some help with their [investment portfolio](https://answers.mindstick.com/qa/105680/how-to-build-a-balanced-and-diversified-investment-portfolio). An alternative is available that costs far less; it is known as a robo-advisor.\ ## What is a Robo-Advisor? Not so very long ago, anyone who wanted help with their investments would have to use the services of a financial advisor. A real-life financial or investment advisor would use his or her own knowledge, together with specialist software to manage clients assets and make investment recommendations. In return, they charge a fee which is generally 1% to 2% of the client's account balance. In 2008, it became possible for ordinary investors to buy the same technology the advisors were using and make their own [investment decisions](https://answers.mindstick.com/qa/103122/how-does-economic-policy-affect-investment-decisions). A robo-advisor is a clever type of online software that selects investments automatically and builds a portfolio for the person using it. ## How Do They Work? A number of different tools are used to manage a clients portfolio, and these differ depending on the software being used. However, they do operate in a very similar way and offer the same end result. The robo-advisor uses mathematical rules or algorithms to provide financial advice. It is software, rather than a human, that allocates, manages and optimizes the user's assets, based on their preferences. There are currently more than 100 different services to choose from, which makes finding the best one a bit of a challenge. ## The Benefits of a Robo-advisor There are a number of different benefits, but the most obvious one is cost. The fees charged to use a particular robo-advisor are very reasonable. There is typically an annual fee of between 0.2% and 0.5% of your total account balance which can be paid monthly or annually. Expenses associated with the type of investment used may also have to be paid. You may find a number of robo-advisors offering promotions. For example, a Betterment portfolio can currently be enjoyed for up to one year [free of charge](https://answers.mindstick.com/qa/38240/according-to-recent-rbi-directives-to-banks-how-many-pieces-of-soiled-currency-notes-with-a-maximum-value-of-rs-5-000-can-be-exchanged-at-banks-free-of-charge). Other advantages include: • Accessibility – a robo-advisor is on call to assist you with your investments 24 hours a day, provided you have an [internet connection](https://www.mindstick.com/blog/299301/how-to-test-your-internet-connection-s-quality-over-time). Furthermore, anyone can use the service. • Requires less capital to start – many have no account minimum, meaning anyone with any amount of capital can use it. • Efficient – just a couple of clicks is all it takes, and some even have a handy app for [your phone](https://answers.mindstick.com/qa/108492/what-to-do-if-your-phone-is-frozen). • Convenience – business can be conducted from the comfort of your own home. No need for meetings or expensive [phone calls](https://answers.mindstick.com/qa/50584/how-to-fix-static-or-crackling-noise-coming-from-the-iphone-8-earpiece-during-facetime-and-phone-calls). • Less stress – once you have opened an account, everything can be managed automatically by the robo-advisor. For anyone who is new to investments, a robo-advisor can be a fantastic solution. They are also superb for investors who have little time to keep on top of their portfolio. We have become a society that uses technology to our advantage. Why should [financial planning](https://www.mindstick.com/articles/12260/why-it-is-essential-to-be-proactive-about-your-retirement-financial-planning) and investments be any different? \ --- Original Source: https://www.mindstick.com/blog/11840/what-is-a-robo-advisor-and-should-i-use-one Copyright © MindStick Software Pvt. Ltd. This Markdown version is provided for developers, AI systems, and offline reading.