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July 16, 2019
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Mainstream economists and financial advisors appear, for the most part, intent on advising people away from cryptocurrency. They say that crypto is too ‘volatile,’ that it’s used only for ‘illicit’ purposes, and that the crypto-market is the ‘perfect bubble’. Yet aside from Bitcoin proving itself to be fairly resilient in the face of recent market turbulence, there could be another reason why advisors may become likelier to recommend crypto in the near future.

That’s because their places are being increasingly taken by ROBIO-Advisors.

Recently, financial institutions and companies in the US and Europe have begun using such algorithm-based advisors more frequently, and given their lack of biases and emotions, their increasing use would imply that there’s a correspondingly increased chance that cryptocurrencies will be selected more freely on behalf of clients.

However, while such a prediction is plausible in theory, it hasn’t yet come true. Most robo-advisors haven’t been programmed to include cryptocurrencies in the range of assets they can add to portfolios, a situation which is likely to persist for as long as crypto remains an unregulated, ‘alternative’ investment.

Robo-advisors have enjoyed enviable growth among smaller investors – particularly millennials – who can’t afford to pay the higher fees of a human financial advisor. For example, the UK- and Italy-based MoneyFarm saw its customer base grow by 500% in 2018 to 75,000.

Generally, customers who want to take advantage of such robo-advice services pay a (relatively) small fixed monthly fee, or a percentage of their annual account size (e.g. anything from 0.15% to 7%).

That’s it, although in addition to the automated advisors being offered to consumers by startups, there is also a growth in the number of big financial institutions and banks offering them to ‘bigger’ clients.

In Sweden, for instance, Nordea bank is cutting 6,000 of its permanent positions as it introduces automation of asset management (and other services), while many banks throughout the globe are following suit with similar moves.

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