Most brand new, young investors are turning to Robo-Advisors. This trend is starting to raise serious questions, like how will this automated method of investing affect the traditional style of financial investments? There are many reasons why millennials are choosing Robo-Advisors. Despite being young, these inexperienced investors are much less prone to taking risks and they nurture a substantial amount of financial conservatism.

This kind of mindset is directly related to their starting period, when they were all witnessing huge negative returns that were around 50 % per month. Furthermore, the Lehman Brothers collapse and the high unemployment rates also played their part. Millennials lost a lot when they started investing in stocks and many of them lost their jobs, while at the same time trying to pay off their record-high student debts.

Is there future in real estate for Robo-Advisors?  

The industry of financial advising is primarily built on trust. There was always a personal relationship between real estate investors and trustworthy, branded financial advice firms and that’s how most of the financial planning took place. However, things have changed significantly and, after the 2000s, the necessary trust was simply lost due to heavy losses.

Still, one “institution” managed to remain a trustworthy partner and grow over the last 20 years, together with the millennials. This institution is called “personal technology”. Millennials grew up with smartphones and computers and their business mindset was shaped with on-demand content and video games. Many people consider millennials to be disconnected from the people around them, drawn to their little screens in silence.

On the outside, this may seem completely true, however, reality is much different. Our devices allow us to stay connected with each other at all times, while processing a huge amount of information with ease. This is something that shows that technology-enabled real estate financial advice firms like Robo-Advisors have a bright future ahead of them.

The time has come for wealth management firms to connect with millennials through modern technology  

Not only do companies invest heavily in branding, but today every individual does some personal branding of their own. This means that everybody has an Instagram or Facebook profile, where they can see statistics on engagement and usage. Because of this everyday practice, most millennials have developed skills that allow them to differentiate between an authentic brand image and a pure marketing construct aimed at pampering to a target audience.

Robo-Advisors use all of this modern personal technology and apply it to the financial advice industry. Another good thing about Robo-Advisors is that they also use traditional methods, such as efficient exchange trade funds, risk tolerance, the modern portfolio theory, etc. By incorporating old and new ways, these technology-based companies can solve three different issues that the younger generations face.

Nowadays, thousands of new investors hire online wealth management companies such as Betterment to help them with their investments. It is important to find as much information as you can on the topic and read some of the reviews written about these firms, so that you can choose an offer that suits your particular needs.

Why do Robo-Advisors have the upper hand?

Given the fact that millennials are in a tight spot when it comes to finances, things like transaction fees and account minimums are something that doesn’t suit them at all. Their investments are much lower and are not suited to the traditional financial industry, as there are no good solutions for them, besides simply telling them to get more money.

This obviously doesn’t suit young investors, especially when you know that the majority of financial advisors have very little time to spare, making it very hard to scale a certain business model to a couple of clients with lower assets. That’s why some other millennials have come up with the idea of creating a technology-based solution that is very accessible, customizable and personal.

Furthermore, these brand new Robo-Advisor companies have a dose of empathy, and they relate to their customers. There is technology behind the service, but the messaging, the vision and the branding are all human, meaning that trust has remained a vital part of the industry.

It seems that Robo-Advisors are here to stay. Most brand new investors are turning to them and it’s just a matter of time before the real estate sector recognizes their value.