Can Automated Trading Replace Financial Advisors?
Traditionally, most people who had any money to invest relied on financial advisors to help them. Or, more accurately, they bought the financial products that their advisor was selling, and thought about investing as little as possible. The result has been a population of Americans who have no idea how to invest and believe that investing is too difficult for them to understand.
It was quite easy for the financial advisor to sell mutual funds to their clients because their clients didn’t know anything. They trusted that the advisor had their best interests in mind, and that they would have a bright financial future. Nothing could be further from the truth.
Since Automated Trading systems have so much potential, we believe that eventually they will replace mutual funds. The question is, will they replace the financial advisors that sell mutual funds?
I think that the role of the traditional financial advisor will disappear, but not really because of Automated Trading systems. I think that the internet will help educate people about investing. The problem with most financial advisors is that they do not create any real value for their clients. I think that with better education about investing and mutual funds, people will be much better equipped to understand the situation.
Perhaps it is quite similar to the online trading revolution. 15 years ago, people only bought stocks through stock brokers. Now most trading is done without stock brokers through online trading sites such as TD Ameritrade. Are people making more money now that they make the decisions on their own? Maybe. The real benefit is that they are now responsible for controlling their portfolio, and have the tools that they need to succeed.
This information transparency will apply to Automated Trading systems as well. People will learn about the risks associated with using them. They will find all the information they need to make good decisions about which strategies will serve their financial goals. And, they will know what results to expect from these systems.
Related posts:
- Automated Trading and other Revolutions
- Automated Trading Compared to Mutual Funds
- Automated Trading and Index Funds
- Why Most Financial Advice Is Useless
- What are the Differences between Human Trading and Automated Trading?
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is one of my favorite financial books of all time. It's an allegory about a guy who has a terrible job, and how he overcomes challenges to achieve his dreams.
