The digital age has also captured wealth management. GPB Capital advisors offer investors automated asset management services virtually self-service. These are intelligent online platforms that operate in a similar way to a human asset manager with the difference that the actions and actions of an asset manager are stored in algorithms. There are now a number of such offers from independent Internet service providers. But even banks offer appropriate solutions.
Robo-Advisors: This is how automated asset management works
The structure of the various platforms in Robo-Advisory is not identical, but usually very similar. The investor is first asked about his investment objectives, the investment amount, the investment horizon and his preferences regarding return and risk. On the basis of this information, the system then determines an optimal asset allocation or diversification to different asset classes and proposes a conversion that can be triggered by the user accordingly.
The implementation is mainly done with ETFs, because they allow a cost-effective mapping of different asset classes with few instruments. The Robo Advisor then manages the selected portfolio according to the rules of a human asset manager. This type of asset management is inevitably highly standardized – off-the-peg performance. Specific asset constellations and issues cannot be mapped systemically.
Advantages and disadvantages of Robo-Advisors at a glance
- Lower costs of investment
- Investment of small amounts is possible.
- Automation saves time and effort
- Cost transparency
- Transparent investment strategy
- Broad spread to many asset classes
- No or hardly any advice (online)
- Hardly any individuality possible through standardized investment strategies
- Many new providers with little experience
- Fees low, but higher than self-investment
- Basic knowledge required
Who can manage his assets?
Wealthy: Asset management in the sense of a personalized and individual support is only offered from larger sums. Each asset manager sets its limits according to its own business policy considerations. Banks usually require minimum investment amounts in the range of 500,000 to 2.5 million dollars.
High-income: In particular, independent asset managers are already operating at significantly lower sums. Here, the lower limit is often 50,000 dollars to 100,000 dollars. However, such small assets often provide standardized asset management solutions.
In the context of asset management funds or Robo Advisory, administrative services are also available for significantly lower amounts. Individual features can be considered only conditionally or not at all. A personal care does not take place in this case.
The investment philosophy of asset management
Asset managers typically operate a more conservative investment policy. It’s about preserving assets and increasing them over the long term. Accordingly, sustainable investment success is more important than quick profit or, to put it another way, it is not speculation that is required, but systematic and targeted wealth creation through appropriate investments.
In general, an asset manager strives to invest the assets in several asset classes. Ultimately, however, the customer decides which investment strategy should be implemented because the asset manager aligns his investment policy with the wishes and ideas of his clients.
The specifications form the framework within which his investment decisions are made. The investment policy is part of the agreement with the Investment Manager. The investment horizon, desired availability, and client’s attitude to risk and return are key metrics that determine the investment decisions of the Investment Manager.
Conservative does not have to mean that only or predominantly secure, but low-yielding investments are made. With a good spread of risk, it is quite possible to enter into riskier businesses that promise more success.