The Rise Of Robo Advisors In Malaysia, A Beginner’s Investing Guide
Automated fund management services or “Robo-Advisors” is one of the biggest breakthroughs in our financial ecosystem and has reached Malaysia when Securities Commission Malaysia (SC) first introduced their regulatory framework for it in 2017.
A robo-advisor refers to a series of systems in providing financial planning or investment management services to the investors with minimal human involvement. This means people no longer have to go through the trouble of engaging with a personal financial advisor to tailor a bespoke financial plan to cater to their needs based on their financial situation and goals.
To put it simply, robo-advisors can be as good as human financial advisors. They replicate what human financial advisors can do at the basic level, but at a larger scale. Robo-advisors provide primary financial advice to investors in respect of asset portfolio allocation.
Based on clients’ preferences, robo-advisors can select investments, allocate and re-balance an investment portfolio automatically; they can also gather client information through just online questionnaires without the human element.
There are 4 benefits of using robo-advisors, one of the obvious ones being it is low in fees, as it cuts out the middle-man; it has low entry requirement, unlike human financial advisors that usually cater to people with in the “high net-worth” range; there are no specialised financial knowledge required and there are no emotions involved in the sense that investment processes are fully automated as it follows pre-set rules which does not include human emotions to cloud its judgement to affect decision-making.
Benefiting more of young investors, the rise of robo-advisors will eventually transform the Nation’s traditional fund management services. We will just have to wait and see.