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6 Reasons Online Advisors Can Work For You

by Invisor Last updated on March 15, 2016 Tags: Save Well

If you’re reading this, you’re probably intrigued by the idea of an online advisor if you’re not using one already. There are many benefits to using an online advisor or “robo-advisor,” an online portfolio management firm that builds and manages your investment portfolio. We outline 6 reasons using an online advisor can make sense for your portfolio.


1. Online advisors are not robots

The idea of receiving automated financial advice is daunting to some - but the process of online investing is not entirely on autopilot. The technology acts as an aid to advisors, making them even smarter.  You can still communicate with a human by phone, email, and video conference, which is why the term “robo-advisor” can be misleading. When you use an online advisor, you get the best of both worlds: the intelligence and convenience of technology and the sensitivity of the human touch. Robo-advising is simply a way to leverage technology to make the investing process smoother. The combination of automatic rebalancing and human judgement makes them effective. Rest assured: they do not rely solely on an algorithm to manage your investments.

2. They appeal to different generations

What is great about online advisors is their wide appeal. They assist people who are not confident taking care of their own portfolios but don’t want a traditional investor who may require a minimum investment or in-person meetings. Baby boomers value a personal relationship with their advisor but are also happy with the sufficient advice or guidance that an online advisor can provide. The next generation of investors values more than just the screen, too. They are more critical of financial advice and comfortable with the idea of a more automated investing process. Wealthy investors have taken to online advisors to experiment with their money at a fraction of the cost they pay traditional advisors, while the tech-savvy millennials who are comfortable making informed decisions online are known to have little interaction with their advisors anyway. Clients who are just starting off may not be meeting the investing minimum, be paying high fees, and not getting much attention from their advisors as new investors. Online advisors appeal to a range of generations for many reasons.

3. They do their research

Just like traditional advisors do their research to provide you with the best advice, online advisors use carefully crafted technology to make recommendations. Most online advisors, like Invisor, ask clients a series of questions to build portfolios aligned with their goals and take care of the rebalancing to ensure your desired asset allocation. These questionnaires also help determine your risk tolerance - and this is where humans would usually come in. While someone can check a box on a questionnaire, it’s important to help someone understand their emotional tolerance and whether or not they are carefully considering the implications of their answer before they respond. Here, data speaks, not subjectivity. While software determines investment plans, advisors are there along the way to work with you. As always, the best interest of the clients come first.

4. They save you fees

The online advisor hybrid model combines technology with a traditional advisor to save you money and focus on the real big bucks: your investments. Having automated procedures eliminates a lot of overhead costs. For example, the initial questionnaire saves time and allows companies to give financial advice on a larger scale. Fees are typically less than half of traditional management: our fees at Invisor range from 0.30%-0.60%, depending on your investment per household. Plus, there’s no minimum investment to get started with us. Learn more about fees at https://invisor.ca/faqs/.

5. They save you time

Online advisors offer more convenience because you can interact with your advisor from anywhere. You don’t have to meet in person if you don’t want to. Get started from the comfort of your home and complete the questionnaire in your PJs, or come back to finish it off later. Get up to date on the status of your portfolio online, and even arrange video calls to speak with your advisor face to face if you’d prefer.

6. You are still protected

The risk of holding assets with an online advisor is no different than the risk of holding them with a traditional advisor. The real market related risk lies in the nature of investments held within the portfolios. When you use an online advisor, your investments are still protected by the Canadian Investor Protection Fund insurance, which covers up to $1 million in securities for each type of account. Most online advisors have recognized professional designations and use third-party custodians to safely house client assets. Invisor, for example, holds your investments in an account at Credential Securities Inc., one of Canada’s leading custodial service providers. The advising representatives at Invisor can not deposit or withdraw funds from your account without your specific instructions.

With protection, convenience, lower fees, and technological advancements drawing people into online advisors, it’s no wonder this new way of investing is catching on. If you’re unsure if online investing is right for you, speak with one of our advisors or try our fully guided online session to share your goals and expectations.

Invisor offers Canadian investors personalized investment management solutions at a fraction of the cost of traditional advisor models, without requiring any minimum investment amounts. Get started now to tell us a little about yourself and your goals, and we’ll find an investment solution just right for you.

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