What is a Robo-Advisor? Robo-Advisor Investment Pros, Cons, Review for Beginners (2022 Updated)

What is a Robo-Advisor? Hong Kong Robo-Advisor Review for Beginners (2022 Updated)

We’re in the era of investing, especially since inflation has climbed to 8.3% this year. We can’t just sit there and watch our money get burned by inflation. If you’re too busy to learn about investing, or you will get a headache when you hear words like inflation, rate hikes, energy crisis… Don’t worry! Robo-advisors are here to help! They are perfect and simple enough for the average Joe who doesn’t want the hassle.

Here we have prepared a robo-advisor beginner’s guide for you, showing you how robo-advisors work, whether they are suitable for you, and an overview of Hong Kong robo-advisors.

What Is A Robo-Advisor? Why Choose Them?
Hong Kong Robo-Advisors Comparison for Beginners
6 Advantages of Robo-Advisors
3 Disadvantages of Robo-Advisors
Are Robo-Advisors Suitable For You?
Are Robo-Advisors Regulated in Hong Kong? Are They Safe?

What Is A Robo-Advisor? Why Choose Them?

Robo-advisor is a digital wealth management platform that offers financial advice like a human advisor, but they recommend a personalized investment strategy based on well-tested algorithms instead of human judgement.

Most robo-advisors offer a diversified combination of assets covering global ETFs, equities, and commodities. They are perfect investment choices if you’re up for passive investing with a long-term portfolio growth strategy.

How does Robo-Advisor work?

To begin, your A.I. advisor will ask for information like your investment goal, capital size, expected investment time, and risk tolerance, then it will develop a customized investment plan for you. If you are satisfied with their recommendations, you can put your money on their platform and start investing. As simple as that!

Of course, you can also check your portfolio or adjust your strategy anytime because they work around the clock.

Hong Kong Robo-Advisors Comparison for Beginners

Robo-advisor platform was first launched in Hong Kong in 2016. For now, more banks and fin-tech companies have joined this “Robo” trend. Here is an overview of the major robo-advisor options available in Hong Kong.

Robo-Advisor Annual Fee* Min.Investment Min. Deposit
Syfe 0.35%-0.65% None HK$10,000
Stashaway 0.2% – 0.8% None HK$10,000 
WeLab GoWealth one-time subscription fee 

+

management fee from the fund manager

HK$100 None
SoFi Hong Kong HK$30/month US$100 HK$10,000

*Robo-advisor fees are charged according to different tiers, plus minor ETF fees that might not be reflected in the annual fee.

Syfe

Syfe is a popular choice among investors because of its perks:

  • Portfolios will be automatically rebalanced, and dividends can be reinvested at no extra cost. You can put your hands off and enjoy your time now, my friend!
  • No minimum balance requirement, no lock-in period, and competitive management fees. You try it with a small amount, no more worrying that you will lose a fortune!
  • Various available investment options, including 4 core portfolio options for long-term wealth generation and 5 thematic ETF portfolios, including ESG and clean energy, healthcare innovation, etc.

Syfe is having a welcome offer for their new clients until 31 Dec 2022. You can now earn up to a HK$600 cash bonus when you invest with Syfe!

Syfe  logo
Welcome Offer
Minimum investment amount
HK$0
Annual Management Fee
0.35 - 0.65%
First Deposit Minimum
HK$10,000
Welcome Offer:
【New Client Promotion】
Earn up to HK$600 cash bonus when you invest with Syfe! Simply enter the code “MSSYFE” at sign up to be eligible for either 1 of the following rewards.

1. Get HK$200 when you first deposit HK$25,000 into Cash+ (limited to first 1,000 clients. Til Nov 30th Only)
2. Get HK$250 when you first deposit HK$20,000 into any Investment Portfolios
3. Get HK$600 when you first deposit HK$100,000 into any Investment Portfolios

T&Cs:
1. The code can be used once only
2. The reward is applicable only to the first portfolio new users invested with
Valid until 31 Dec 2022

SoFi Hong Kong

SoFi Hong Kong launched the robo-advisor Auto Invest in 2016. Being one of the “OGs” in the field, it is competitive enough to be your choice:

  • Robo-advisor portfolio management costs a low fee of HK$30 per month, regardless of how much you invest.
  • It provides a globally diversified portfolio of over 13,000 stocks across 35 countries.
  • You can start with as little as US$100.
  • Portfolio risk will be managed by 24-hour monitoring and auto-rebalancing when the market situation changes.

Sofi Hong Kong is having a welcoming campaign. You can buy or sell stocks without paying any commission.

SoFi Hong Kong logo
Online Promo
US Stocks & ETFs commission
US$0
HK Stocks & ETFs commission
HK$0
Brokerage & Robo advisor
2-in-1 App
Online Promo:
【Account Opening Welcome Rewards】
Offer ends 30 Nov 2022
New members Get 1 free NYSE:AIG share for each successful account opening (worth ~US$54).

Interest rate
Enjoy a 5.875% interest rate on your margin loan 
Valid until 30 Nov 2022

6 Advantages of Robo-Advisors

You may wonder what the goods of robo-advisors are; here we have done the homework for you, and there are many of them.

1. Time-saving With Automated Investing Executions

Simplicity is one of robo-advisors’ advantages. They save you a lot of time, from doing research to monitoring the stock market, not to mention the paperwork.

With the automated algorithm, robo-advisors can assist us in executing trades without our instructions and also rebalancing the portfolio when necessary based on the market trend.

2. Personalised Investment Strategy

To a certain degree, robo-advisors can offer customizations to suit your personal investment needs. Putting your investment target, investment period, risk tolerance, monthly deposit, and withdrawal amount into consideration, robo-advisors can help you form a personalized rewarding portfolio.

3. Low Entrance Barrier

Don’t worry about thinking that robo-advisors are only for millionaires. You don’t need much to invest with a robo-advisor. Some robo advisors in Hong Kong, like Syfe, offer their service with a minimum deposit of HK$10000 to set up an account without a minimum investment requirement.

4. Low Management Fee

Just like traditional financial advisors, robo-advisors charge a percentage of the total as a management fee. Comparatively, robo-advisors have a lower fee (0.5%-0.8%) than traditional financial advisors (1%-1.5%).

5. Easy Exit

If you feel like liquidating your robo-advisor investments, you can do that at any time without paying any extra fees. There are no lock-up periods like the other conventional investment funds or savings deposits. So, feel free to withdraw your funds at your convenience.

6. Risk Diversified Strategy

Risk diversification is one of the golden rules of successful investing.

Instead of investing in only one or two special picks of equities, robo-advisors maintain a diversified portfolio with a combination of assets from international ETFs, equities, and commodities.

3 Disadvantages of Robo-Advisors

Nothing is perfect, and robo-advisors are no exception. Here are their restrictions:

1. Not Fully Customizable Settings

Robo-advisors are perfect for beginner investors, as they provide a set of investment rules according to the algorithms.

However, suppose you’ve had enough experience to tailor-make your own investment rules. In that case, robo-advisors can’t help because they are programmed to follow the written parameters, which can’t be changed.

2. Not A Trading App

Unfortunately, robo-advisors aren’t brokers—you can’t tell them to trade whatever you want, like executing trades on a sudden occurrence— they only work with pre-programmed logic. You can’t do day trading with a robo-advisor!

3. More Costly Than Personal Investing

Even robo-advisors do not charge an expensive management fee compared to traditional managed funds, but still, it costs a part of your returns.

Compared to investing on your own, you don’t need to pay any management fee; only the transaction fee of trades is charged. That could be an advantage if you’re trading on your own in the long run.

Are Robo-Advisors Suitable For You?

Okie dokie, we now know the good and bad of robo-advisors, but how do you know if robo-advisors are for you? You may want to look at the following for some references:

Robo-Advisors Are For Beginner Investors

Beginners, welcome to the world of investing! And we all know how complex it is.

Robo-advisors can be your first guide in your investing game. All you need to do is deposit money into your account and enter your personal investment information; the app will do the rest for you.

Robo-Advisors Are For a Busy (or Lazy) Investor

Yeah, we all have too much to do in life. If following up on the global financial news or studying a company’s financial reports are not the things for you, robo-advisors can be your best investment buddy.

They do all the hard work for you and you can hire them to grow your portfolio by simply lifting a finger.

Robo-Advisors Are For Those Searching For A “Cheaper” Investment Manager

Tired of paying a high management fee of up to 1.5% each year for your investment manager and even seeing your portfolio shrink? Robo-advisors are a less costly alternative, taking only at the lowest 0.5% of your portfolio.

Are Robo-Advisors Regulated in Hong Kong? Are They Safe?

In July 2019, the Securities and Future Commissions(SFCs) of Hong Kong issued a complete regulation on robo-advisors in the capital markets.

For robo-advisors to operate in Hong Kong, they are required to first be enlisted on the SFC’s public register and obtain licences for Dealing in Securities (Type 1), Advising on Securities (Type 4), and Asset Management (Type 9).

To be safely protected, remember to check whether your robo-advisors are regulated or not before you put your money on the platform.

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