I am not a financial advisor & this blog post content is not financial advice & does not give recommendations. The blog content is for educational purposes only & encourages the readers to do their own independent research from other blog content on PublishOx & content outside of PublishOx before making any financial decisions.
Active Portfolio Management & Passive Portfolio Management
Traditional investment portfolio management services known as active investing comes with prerequisites for entry so a fund/asset manager can actively oversee your investment portfolio which is:
1. A high balance
2. Going into the bank
3. Paying high mutual fund fees.
Seeking an in-person portfolio manager means seeking a portfolio manager who is a registered investment advisor or ideally a certified financial planner.
There are 2 types of portfolio management:
1. Active
2. Passive
But robo advisors (which are also called automated investing services) brought to the table a cost-effective, user friendly & automated way of investing another popular term used for this is low-cost index investing. But the question investors ask is what is the return on investment (R.O.I)? But a robo-advisor fits the category of passive portfolio management.
What is a Portfolio?
Most are acquainted with digital assets such as cryptocurrencies but in addition to digital assets there are financial assets which include:
• Mutual Funds
• Real Estate
• Gold & Silver
• Diamonds (Precious Stones)
A collection of an individual's or institution's financial & digital assets is called a portfolio.
In-Person Asset Managers
The simple definition of portfolio management is the service of overseeing a client's assets.
Portfolio management involves:
• Identifying the financial goals of a client
• Working to accomplish the client's financial goals through portfolio management - buying & overseeing bonds, funds & stocks.
An asset manager is a financial professional overseeing the assets of a client with the aim of growing the value of the client's assets.
Asset managers are also known as:
• Investment Advisors
• Wealth Managers
• Institutional Wealth Managers
• Registered Investment Advisors
• Stockbrokers
• Robo-Advisors
Automated Investment Services Registration Process
1. Fill an in-app questionnaire: the algorithm computes the answers you provide as data & depending on your answers the automated investment services company will determine a suggested portfolio dependant on how the they view your situation according to the answers you provided on the questionnaire which is a form of data collection & personalization & obviously another form is personalized ads which is to suggest (or determine) recommendations based on your personal information that has been gathered. But the algorithm once it has computed the answers you provided on the questionnaire, determines your risk level & then fits you into an investor category, for instance, Wealthsimple generate a graphic which will show (based on your level of risk) the user their investor category as being a conservative investor or an aggressive investor.
In addition to a high balance requirement traditional in-person active investing portfolio management services incur high portfolio management fees where an asset manager will manage your portfolio which include:
• Active Investment Advisory Fees: for instance an investment portfolio that is worth CAD$100,000 would incur CAD$1,000 in annual active investment fees.
• Annual Passive Management Fees: this could range from 0.20% to 0.50%.
• Brokerage Fees: Investment traders making trades on behalf of a financial client may charge what's called a per-trade transaction fee.
• Annual Account Fees.
Robo-Advisor Centralized Crypto Exchanges
As an illustration I will use Wealthsimple which is a robo-advisor where users of the platform can also buy, sell, hold, stake & transfer cryptocurrencies.
There are no fees to set up a Wealthsimple Crypto account which is part of Wealthsimple's other Invest & Trade products, there is no minimum balance requirement & fees but there is the existence of operational trading fees of 1.5% to 2% per transaction which is a bit high. Staking coins brings 4.5% earnings on staked coins.
The Wealthsimple app allows users to in-app portfolio management with real-time performance tracking.
Should You Use Robo-Advisor as a Cryptocurrency Exchange?
Since this blog post is not give financial advice I cannot tell the readers of this article what decision to make & what decision not to make & it's the responsibility of the readers of this blog to do their own research by reading other excellent blog content by other bloggers on PublishOx, vloggers on YouTube & other blog content to gather as much information as possible & make an informed decision & I cannot provide an answer in relation to whether or not you should use a robo-advisor as a cryptocurrency exchange but what I will do is provide educational content.
First automated investment services are much more affordable in comparison to in-person financial planners. Oftentimes there is no transaction fees with automates investment services, with a standard brokerage account if you buy or sell investments & even when you make a withdrawal you may need to pay a commission but automated investment services or robo-advisors oftentimes waive these charges. But some automated investment services require an initial investment of around $5,000, others require investment minimums of $100-$500 & some automated investment services have no minimum balance requirement.
The idea of a crypto exchange is decentralization, Wealthsimple is regulated with the Investment Industry Regulatory Organization of Canada (IIROC) & the Canadian Investor Protection Fund which protects money in investment accounts but cryptocurrency is not covered. But Wealthsimple is a robo-advisor & crypto exchange that is regulated & the idea of a crypto exchange is decentralization. Revolut can fit the category of a robo-advisor & crypto exchange which like Wealthsimple is regulated.
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