When BlackRock, the world’s largest asset manager with USD 5.7 trillion in AUM, decided to layoff talented stock pickers in favor of machines for portfolio management in March, it was a sure sign that times are changing. In the asset management industry, the tide is turning toward software-driven robo advisory services and away from financial advisors as the sole form of advice.
Robo advisory is an automated form of financial advice that reflects an investor’s risk/reward profile but commands no real human touch. As a result, this approach significantly decreases the likelihood of human error. Fees are lower, with robo advisory firms attaching fees as cheap as 0.5% or less of total assets invested. Financial advisors are known to charge fees of 1-2%.
