Technology has been disruptive across many economic sectors, and the next group to be affected is the mortgage broker. Robo-advisors won’t make the mortgage broker obsolete, but they will provide savings for consumers.
The process is a simplification of the current system that the majority of Canadians are amenable to, but it comes with a caveat. Borrowers say that they still want some human contact with a mortgage broker to help them with the significant decision of buying a home.
Robo-advisors will link customers to lenders, finding lower rates, and assist with refinancing for a current mortgage. Through the use of technology, identifying a lender faster can dramatically accelerate the approval process.
The affordability factor is the most significant impact in the mortgage sector, and the ability to source the most inexpensive repayment plan is what is driving the new technology.
What is a robo-advisor, and what does it do?
In short, a robo-advisor is an algorithm that provides investment advice and portfolio management to first-time and professional investors. The service provided is automatic, and it eliminates the need for an investment broker. Robo-advisors provide accessibility in the investment marketplace.
Reducing the Cost of Investing
Before the advent of digital advisors, the only way to invest was to hire a financial advisor. This system favours the well-heeled, and based on volume, the financial manager makes more money from larger portfolios. Robo-advisors work for significantly less, and because there is less overhead than a traditional investment house will have, the savings become significant.
Equal Access to Advice
A firm offering financial advice will help people save money with a plan to organize their finances based on lifestyle and other factors. The firm will provide the tools to make the best financial decisions ensuring the success of the client.
Robo-investing provides the same services, but at a fraction of the cost. You will have access to certified financial planners and receive access to educational tools free of charge.
Brings Expertise to All
New investors face a crisis of confidence, handing over a large chunk of their savings to someone without in-depth knowledge of how the money is used. The complications of the investment market leave people feeling that they have little or no control of their finances, and it deters many.
Also, the cost of using traditional investment strategies is a cost too high for some to bear, and making investments on their own is a scary proposition. Through the use of technology, anyone can acquire sound financial knowledge. It starts with the amount to invest and then moves to the best place to allocate your money – a seamless process from start to finish.
Institutional investors and well-off people utilize social and environmental strategies to balance their portfolio on their social commitment to the world. Small investors have a difficult time making investments based on the complex nature of the investments. Working with a robo-advisor will allow small investors to create a profile, and investments align with their point of view.
Robo-advisors are here to stay because they offer a wide variety of investment options and bring more people into the investment pool. It gives the little guy equal footing to grow their finances and save money in the process using a combination of a robo-advisor and a certified financial planner. Financial services that are open and accessible for everyone is a great solution that drives wealth for the masses.
To learn more about how robo-advisors are impacting mortgage brokers, call Northwood Mortgage™ at 416-969-8130 or contact us here.