News Robo-Advisor can not replace banking advice yet
Thursday, 24.11.16 , written by Cora Christine Döhn The financial world is becoming increasingly complex, but the investment opportunities always easier. At least the numerous FinTechs with their offers make this appearance to the investment. Tanja Beller from the Association of German Banks explains in an interview why savers should not simply hand over their money to someone else, but
Tanja Beller of the Federal Association of German Banks
With so many ways in which consumers can make more out of their money, many of them lose track. Many people are overwhelmed with the question, which investment makes sense at what time . So-called Robo-Advisor promise savers for some time to take this decision partially off. They invest the money of the investor on the basis of a previously determined algorithm, which fits the wishes of the saver. However, Tanja Beller of the Association of German Banks warns against relying blindly on this comfort in investing. Rather, the Germans should understand exactly how they invest their money and what happens with it .
What is your opinion about the financial literacy of the Germans?
Tanja Beller: Unfortunately not so good. According to our surveys, which we regularly commission, Germans have significant gaps in their knowledge . However, a sound economic and financial education is the prerequisite for being able to make right or wrong monetary and investment decisions. According to our “Financial Planning Index”, two-thirds of Germans – that is 64 percent – think that they are well-versed in monetary and financial matters. But at the same time, every second person has to admit to having “no idea” about what happens on the stock market .
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Which form of investment would you recommend to someone who currently has 10,000 euros available?
Tanja Beller: Unfortunately, there is no universally valid answer. Because the decision depends on the individual situation :
- Which investment forms does the investor already have? (For example, stocks, bonds, real estate)
- How long can the money be invested?
- With what goal? For example, for a specific purpose, such as the purchase of a car or the repayment of a loan, or long-term for asset accumulation or retirement.
In addition, of course, one’s own risk appetite is crucial, which is why banks consult investment advisors about their risk profile.
How should retail investors today best choose the right investment?
Tanja Beller: You should use and compare many sources of information. In addition, you should take the time to be clear about your own investment goals and personal finances . What sums do investors dispose of once or on a regular basis? Over what period of time should the asset investment extend? Do savers want to invest in the short, medium or long term? How important is it that savers can access their invested capital at any time ? How big is the risk appetite?
Basically, you should only buy those financial products whose operation and risks you understand . As a rule of thumb: Spend savings and wealth wide. Never put everything on one card unilaterally , even if an offer seems so attractive, and cover a sufficient amount for unforeseen expenses quickly available – for example, on a money market account.
What savings tips do you have for employees who have around 200 euros per month and want to invest the money profitably?
Tanja Beller: You can not pass shares for a chance at profit or return. For investors who can regularly save a smaller amount, offer fund savings plans. For a broad diversification of risk funds with high profit companies from different sectors and regions are a good choice . At present, index funds that replicate stock market indices, so-called ETFs, are often recommended as being particularly cost-effective. They depict an index such as the German stock index DAX or the European benchmark index EuroStoxx. But also managed funds are eligible. As an investor you are spoiled for choice, as the selection is very large. For managed funds, account should be taken of the regular costs .
What advantages and disadvantages do you see in classic savings options such as call money and time deposit accounts?
Tanja Beller: At the moment there is a big disadvantage: savers get only minimal or no interest. It was a good idea for many years to park money that you did not want to invest in the long term on daily or fixed-term accounts . Especially the call money account offers as a plus the availability at all times. Both offers are considered very safe if the investor has previously checked the deposit guarantee.
For small investors meanwhile numerous alternative forms of investment are offered. How suitable in your eyes, for example, financial investments offered by FinTechs?
Tanja Beller: The very different offers can not be assessed flat rate. And also “the retail investor” does not exist. For example, the so-called Robo-Advice also has different characteristics, which are aimed at different types of investors : from online tools that support self- decision makers in the selection of suitable products, to digital asset management, in which the customer depot is automatically assembled and updated becomes. What characterizes the Robo-Advice is that it is always an algorithm that identifies the right products for the customer. A personal discussion with an investment advisor, who asks specific questions about the investor’s personal situation, can certainly not (yet) replace this .
Deposit insurance: Most are 100,000 euros insured by banks
The deposit insurance is a guarantee of the bank to its customers. She assures that even in the event of bankruptcy, the bank will recover its money up to a maximum of 100,000 euros.
In your opinion, does the investment world become ever simpler or less transparent through the innovations of FinTechs?
Tanja Beller: FinTechs aim to develop applications that are as simple and comfortable as possible. And banks are also working with FinTechs or have set up their own companies to develop new products. Digitalization is changing investor behavior and customers’ demands for the convenience and clarity of online services are also increasing. Small investors can certainly benefit from this trend.
At the same time, however, there is an ever-increasing supply on the financial services market, making it no easier for the consumer to keep track of and compare. Ultimately, it is up to everyone to take action and make the right decision: Do I want to get advice from my bank, can I inform myself and make the investment decision via online banking, or do I use new services like Robo-Advice? There is no such thing as a blanket, all-inclusive answer to these questions.
- Thank you for the interview, Ms. Beller.
- Here are tips and more information about the investment. >
- Cora Christine Döhn
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