Robo-advisor vs Human Advisor - Which is better?

Nutan Gupta

23 Mar 2017

Robo-advisory as an investment method has gained momentum in the last couple of years. While a lot of people these days are preferring robo-advisors for financial advice, many are still comfortable with the traditional method for seeking investment advice.

Here are the major differences between a robo-advisor and human advisor:

Characteristics Robo-advisor Human Advisor
Financial Advice Fully automated based on the answers you provide to their questionnaire Personal advice which can be customised as per an individual’s situation
Communication Human contact is limited to skype and email An individual is able to seek advice personally - face-to-face or on the telephone
Services Investment services only Can seek advice related to investment planning, insurance etc
Asset Management Provides only passive management services Provides both active and passive management
Cost Provides low-cost advisory services As human advisor provides personalised services, the cost is high
Technology Uses advanced technology Technology is not very advanced

Choosing a robo-advisor or a human advisor depends on the choice and convenience of an individual. If an individual is not comfortable investing in a portfolio which is assessed online, and he prefers to have some control over his investment, human advisor suits him the best. If an individual is looking for a low-cost investment advisory platform, he can choose to invest through robo-advisory. It is always better to weigh both your investment options depending on your investing style before investing.

With 5paisa, experience 100% automated personalised solutions for both your insurance (Insurance Advisor) and mutual fund ( Auto Investor ) needs. Just answer a set of very simple questions, and our automated results will suggest the best portfolio that suits your needs.

Have Referral Code?

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mutual-fund

Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 


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Robo-advisor vs Human Advisor - Which is better?

Nutan Gupta

23 Mar 2017

Robo-advisory as an investment method has gained momentum in the last couple of years. While a lot of people these days are preferring robo-advisors for financial advice, many are still comfortable with the traditional method for seeking investment advice.

Here are the major differences between a robo-advisor and human advisor:

Characteristics Robo-advisor Human Advisor
Financial Advice Fully automated based on the answers you provide to their questionnaire Personal advice which can be customised as per an individual’s situation
Communication Human contact is limited to skype and email An individual is able to seek advice personally - face-to-face or on the telephone
Services Investment services only Can seek advice related to investment planning, insurance etc
Asset Management Provides only passive management services Provides both active and passive management
Cost Provides low-cost advisory services As human advisor provides personalised services, the cost is high
Technology Uses advanced technology Technology is not very advanced

Choosing a robo-advisor or a human advisor depends on the choice and convenience of an individual. If an individual is not comfortable investing in a portfolio which is assessed online, and he prefers to have some control over his investment, human advisor suits him the best. If an individual is looking for a low-cost investment advisory platform, he can choose to invest through robo-advisory. It is always better to weigh both your investment options depending on your investing style before investing.

With 5paisa, experience 100% automated personalised solutions for both your insurance (Insurance Advisor) and mutual fund ( Auto Investor ) needs. Just answer a set of very simple questions, and our automated results will suggest the best portfolio that suits your needs.

Have Referral Code?