Why Online Financial Advisors?
You may not have heard about Online Financial Advisors (OFAs), that are also known as Automated Investment Managers, eRIAs, and several other names. You will hear a lot about them in the future. They are backed by major Venture Capital firms that have already committed more than $300 million to fund their development and digital marketing efforts. More are on the way.
OFAs deliver financial planning and investment advisory services over the Internet. Download our free eBook: What is a Robo Advisor?
The VCs believe you are fed-up with Wall Street's greed and corruption. You are no longer willing to pay excessive fees for bad advice and bad results. You are tired of reading one headline after another that documents Wall Street business practices that damage investors.
An even bigger VC bet is on younger investors who will embrace computer driven, onine services for the investment of their assets. The OFAs will grow as the Millenials and Gen-Y's accumulate increasing amounts of invested wealth.
A third OFA market is investors with smaller asset amounts, under $100,000, who have been ripped-off by Wall Street for decades. They are usually served by commission sales representatives who masquerade as financial advisors. And, they frequently pay exorbitant fees for low quality investments that produce bad results for excessive risk and expense.
OFAs have a major marketing challenge. They have to convince you to change the way you invest your assets in the securities markets. Perhaps an even bigger challenge is weaning you away from Traditional Financial Advisors who control several trillion dollars compared to OFAs' that control several billion dollars.
It is safe to assume that some of the OFAs will not survive the rigors of the most competitive market on earth. Internet marketing is incredibly complex, competitive, and expensive. And, they have taken on Wall Street's 700,000 advisors and reps in their quest to gather substantial assets, revenues, and profits.
Some OFAs are a lower cost alternative for investors with smaller asset amounts and relatively simple financial situations. OFAs are not viable alternatives for investors with larger asset amounts who require more comprehensive, complex solutions that may include integrated planning, investment, insurance, tax, and legal services.