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From budgeting apps to crowdfunding and mobile payments, there’s no shortage of developments in fintech that have altered the landscape of the financial industry in recent years. But is another fintech innovation — the robo-advisor — poised to become the future of investing?

How Robo-Advisors Have Changed Investing

Robo-advisors, which manage your money using smart software and a team of professionals, have certainly had an impact on the experience of investing by making it more accessible.

Investing used to mean interviewing a number of potential financial advisors, setting up appointments, driving across town, and talking to them about your financial goals and dreams.

While many robo-advisors do offer phone support with financial professionals to help you with your portfolio, one of the benefits of robo-advisors is that you don't need to talk to a person to get your account set up — you can get started quickly and easily online. Learn more about robo-advisors with our article “What’s a robo-advisor?”.

With a robo-advisor, you log onto your computer, answer a short questionnaire and your personalized portfolio is generated for you. We’ve got a step by step guide here if you prefer. Then all you have to do is transfer money into your new account and you're set! You can even sign up for a robo-advisor in your pajamas.

The investment pros behind robo-advisors invest your money and utilize smart technology to rebalance your portfolio based on your risk profile. Technology is an important element of robo-advisors so you can check the details of your portfolio and its performance online at any time.

Another benefit of robo-advisors is that they tend to be cost-effective. Traditional investment options can charge a fee equal to 2% or more of your balance. Robo-advisors like RBC InvestEase usually have a simple annual management fee, plus the MERs associated with the ETFs used to construct your portfolio.

So, Are Robo-Advisors the Future of Investing?

As of 2019, robo-advisors are currently managing $5.4 billion of Canadians' money. That's expected to go up to $16.6 billion by 2023.

The average amount invested across the robo-advisor industry is $19,838, but this is expected to grow as Canadians invest a higher percentage of their portfolios with a robo-advisor, or as their net worth grows.

The Bottom Line

Robo-advisors are an important step in the evolution of investing as they provide an easy way for Canadians who are still on the sidelines. Robo-advisors provide value to Canadians through many avenues such as ease of use, lower fees, and automatic rebalancing of portfolios. While it will be some time before we know if robo-advisors are the future of investing, we can confidently say the future of investing will include robo-advisors.

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RBC InvestEase Inc. provides online discretionary investment management services. Other products and services may be offered by one or more separate corporate entities that are affiliated to RBC InvestEase Inc., including without limitation: Royal Bank of Canada, RBC Direct Investing Inc., RBC Dominion Securities Inc., RBC Global Asset Management Inc., Royal Trust Corporation of Canada and The Royal Trust Company. RBC InvestEase Inc. is a wholly-owned subsidiary of Royal Bank of Canada and uses the business name RBC InvestEase. In addition, the RBC iShares ETFs in which RBC InvestEase Inc. clients invest are managed by BlackRock Asset Management Canada Limited. RBC Global Asset Management Inc. and BlackRock Asset Management Canada Limited have entered into a strategic alliance to bring together their respective ETF products under the RBC iShares ETF brand, and to offer a unified distribution support and service model for RBC iShares ETFs.
The services provided by RBC InvestEase are only available in Canada.