Marketing & Communication: Leveraging Automated Investment Management and Fee Benchmarking

All businesses worldwide are transforming in some way due to technological advancements. How do you think the investment management sector is thriving? In reality, the days of restricted investing alternatives and vague costs are gone. Enter the era of robo-advisors, automated investing platforms that democratise wealth management and provide unrivalled transparency. But how can financial consultants use this shift to empower themselves and their clients? The solution consists of strategically combining automated investment management and fee benchmarking. This blog aims to assist financial consultants in using automatic investing platforms with fee benchmarking for their customers, which enhances efficiency.

The Rise of Robo-Advisors

The term robo-advisors emerged in the 2000s following the financial crisis. Initially, they were rudimentary tools designed to offer simple investment advice. However, those platforms grew with artificial intelligence (AI) and machine learning.

Today, robo-advisors are sophisticated algorithms capable of analysing vast amounts of data to make precise financial decisions, marking a significant shift in how people manage their finances.

Robo-advisors are automatic financial solutions that provide lower-priced and efficient investment advice. Their popularity is developing swiftly, with the industry anticipated to reach $1.4 trillion by 2028 (1). Technological improvements and the conversion of investor options for consumer-pleasant, low-fee solutions push this growth.

Advantages for Financial Consultants: 

A. Data-driven Insights

Robo-advisors use data analytics to transform the decision-making system in investment management. These systems can analyse sizable marketplace patterns and investor behaviours using smart algorithms and large data. This considerable research permits robo-advisors to create extraordinarily adaptable investment plans tailor-made to each consumer's specific needs.

For instance, if marketplace situations change, robo-advisors can also automatically alter portfolios to maximise performance and reduce risks. Predictive analytics improves this process by projecting feasible market volatility, allowing proactive risk control and innovative portfolio changes.

B. Lower Costs and Fees

One of the unique advantages of robo-advisors is their cost efficiency. Traditional economic advisors usually charge management fees starting from 1% to 2% of the property under management. 

In contrast, robo-advisors generally charge a majority drop-in fee, averaging around 0.25%. This vast discount in costs reflects significant cost savings for customers. 

Lower expenses are mainly beneficial for people with smaller portfolios, who are hesitant to pay the higher fees of traditional advisors. By decreasing the fee barrier, robo-advisors democratise access to outstanding investment management services.Additionally, the minimal charges mean that clients retain a larger portion of their investment returns, increasing the overall growth potential of their portfolios.

C. Increased Transparency

Transparency is a significant gain for robo-advisors, giving customers an unprecedented perception of their assets. These platforms offer real-time performance tracking, allowing clients to analyse their portfolios anytime. 

Detailed reporting provides complete information on portfolio holdings, transaction histories, and charge structures. This kind of openness creates trust since clients can see exactly where their money is invested and how it is doing.  Furthermore, robo-advisors communicate investing strategies and results transparently, ensuring that customers understand the reasons for investment decisions. This straightforward communication gives customers the information they need to make educated decisions about their financial future, increasing their confidence and pleasure with the investing process.

IV) Broader Adoption and Integration

A. Institutional Adoption

Robo-advisors aren't restricted to individual investors; they are also gaining traction among institutions. A PwC survey indicates that 73% of wealth control companies are using or considering robo-advisors (2) (PricewaterhouseCoopers. 2023). Business benefits encompass price performance, scalability, and improved client services.

B. Human Touch Combined with Automation

Hybrid models that integrate automation with human knowledge are becoming more popular. These models integrate human advisors for complicated queries, offering the best of both worlds: the convenience of automation and the personalised recommendation of human professionals. Clients enjoy the flexibility of gaining access to advice based totally on their preferences. Clients gain from the ability to get assistance according to their preferences.

C.  Security & Risk Management
Robo-advisors prioritise strong security safeguards to secure data privacy and protection. They use powerful encryption techniques and multi-factor authentication systems to protect customer data. Additionally, robo-advisors follow financial rules, ensuring compliance and developing client confidence.

Case Study: Bunq: Democratizing Sustainable Investing with Easy Investments

Bunq, a leading online financial institution, recognised the growing demand for easy-to-use and sustainable funding solutions. To address this, they launched their unique "Easy Investments" service in collaboration with Gambit's Wealth-as-a-Service technology. This case study explores how Bunq leverages automated investment management and price benchmarking to empower its customers and democratise sustainable investments.

B) About Easy Investments:

• Effortless Investing: Easy Investments streamlines funding strategies, permitting customers to position their money to work smoothly towards a greener future.
• Sustainable Focus: Aligned with bunq's values, Easy Investments prioritises environmentally friendly funds, catering to eco-aware investors.
• Risk-Based Portfolios: 3 pre-described portfolios, Less Risk, Some Risk, and Vegas Baby, cater to different chance tolerances. They are suitable for conservative and boom-orientated buyers.

• Accessibility: Bunq uses Gambit's robo-advisor era, eliminating the need for extensive financial knowledge. This makes investing available to a much broader audience.
• Personalised Approach: Clients select a portfolio based on their risk appetite via a gamified method, fostering engagement and information.
• Transparency and Efficiency: Easy Investments offers actual-time performance monitoring and automatic rebalancing, empowering clients to monitor their investments and ensuring optimal asset allocation.

• Competitive Advantage: Bunq leverages robo-advisors' commonly lower expenses compared to standard advisors. This value-powerful method allows clients to maintain greater funding returns.Easy Investments has a clear cost structure, making it easy to compare with other investment alternatives.

• High Conversion Rate: Easy Investments' user-to-investor conversion rate exceeds 50% (3) (Gambit x bunq. (2022), demonstrating its ability to attract and engage clients.
• Increased Accessibility: The service allows a more extensive consumer base to engage in the market, which promotes financial inclusion.

• Improved Client Experience: The user-friendly interface and personalised approach allow clients to better comprehend the choices and processes involved in their investment, allowing them to make more educated investment decisions. 

Conclusion:

bunq Easy Investments enables a new generation of investors by effortlessly merging automated investment management and fee benchmarking. This case study shows how FinTech technologies can democratise sustainable investment, making it more accessible, less expensive (compared to traditional financial advice), and more transparent to everyone.

Closing Thoughts

Incorporating automated investment management and fee benchmarking into your business is more significant than including new services; it is also about adopting a new business manner. 
By harnessing the qualities of robo-advisors while preserving your own knowledge, you can empower your customers and strengthen your relationships. The future of financial services is collaborative, and people embracing the FinTech revolution can be best positioned to succeed in this evolving landscape.
Begin researching the best robo-advisor platform for your business. If necessary, look into creating a tailored robo-adviser platform. You need an expert to navigate the digital maze. This proactive strategy will ensure you can use the Robo Revolution to empower yourself and your customers in the thrilling world of FinTech.

Bibliography: 

1. Artificial Intelligence Market Size, Share & Trends Analysis Report By Solution, By Technology (Deep Learning, Machine Learning, NLP, Machine Vision, Generative AI), By Function, By End-use, By Region, And Segment Forecasts, 2024 – 2030
2. PricewaterhouseCoopers. (2023). One in six asset and wealth management companies will be swallowed up or fall by the wayside in the next five years: PWC Global Asset & Wealth Management Survey. PwC. https://www.pwc.com/gx/en/news-room/press-releases/2023/pwc-2023-global-asset-and-wealth-management-survey.html 
3. Gambit X bunq. Gambit x bunq. (2022). https://gambit-finance.com/case-studies/bunq