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What Are B2B Robo-Advisors?

Introduction

Automated investment management and algorithm-driven solutions are expanding in today’s market. There are a few major players in both the business-to-consumer (B2C) and business-to-business (B2B) markets for digital financial adviser applications and services, which together make up a sizable portion of the overall wealth-management market.

We’ve compiled a hand-picked set of organizations that have developed revolutionary B2C and B2B WealthTech platforms.

Read: Logicalis Launches Intelligent Connectivity with Cisco-powered Managed Services

 Everything You Need to Know About Robo-Advisors

Financial institutions such as banks, insurance providers, and wealth managers can use a white-labeled version of a robo-advisory service. Robotic investment advisors (robo-advisors) that cater to business-to-business (B2B) transactions are becoming increasingly popular.

These digital platforms use algorithms and big data to provide tailored answers, rather than human consultants. Below is a small comparison chart for robo advisors versus human advisors. It is a snapshot representing the major differences.

Financial advisors and institutions can benefit from the flexibility and efficiency of algorithm-driven guidance provided by B2B Robo-advisors. Their scalability and generally reduced costs make them a good fit for organizations of all sizes, particularly startups on a tight budget.

Robo-advisors for businesses and consumers range in terms of their intended users, level of complexity, degree of personalization, level of regulatory compliance, degree of integration, and cost structures. Financial advisers may not be completely phased out by B2B Robo-advisors, despite the benefits of automation and insights they provide.

Read: Alteryx Launches New Alteryx AiDIN Innovations to Fuel Enterprise-wide Adoption of Generative AI

All types of financial institutions (banks, insurance companies, wealth managers, financial consulting firms, broker pools, and non-banks) are included.

The Essential Checklist for Robo-Advisors

Why Should B2B Robo-Advisors Replace Humans?

The automation, efficiency, and, in many cases, cost savings provided by B2B Robo-Advisors are substantial. They are capable of processing massive amounts of data and fast delivering insightful analyses.

However, they may not be able to completely replace human advisors, especially in situations that call for compassionate decision-making or in-depth knowledge of the corporate environment.

Personalization, empathy, and nuance are three things that human advisors bring to the table that may be lost on computers. Many situations could benefit from a system that brings together the best features of B2B Robo-Advisors and human advisors.

The Devastating Impact of Robo-Advisors on Businesses

Most robo-advisors base their fee on the total value of your investment portfolio. It might range from 0.25 percent each year to 0.89 percent per year, depending on the platform and the balance.

A human financial counselor might ask about 2% to 3% of your investment capital. Your mutual funds and exchange-traded funds (ETFs) may also have their own fees.

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Navigating the Risks of Robo-Advisors

You may have doubts about entrusting your money to a computer program if you’re thinking about using a robo-advisor. Robo-advising appears to be as r******** as consulting a traditional financial advisor. However, just as people are fallible, the platform on which a robo-advisor operates could contain biases or faults that prohibit it from maximizing investment returns. One possible negative is that robo-advisors, being constructed from historical data, may be slower to react to emerging market trends.

Conclusion

Robo-advisors, who are essentially FinTechs, have the expertise and resources to fill a need in the wealth management industry that traditional wealth managers typically lack.

It’s true that many factors have contributed to the rise of FinTech, but the fact remains that even though wealth managers are allocating more funds to their technology, they typically lack the manpower and expertise to create a product that can effectively compete with the offerings of focused FinTech companies, despite the fact that many of them insist they can. 

[To share your insights with us, please write to sghosh@martechseries.com]

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