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The big banks are closely following a new way of investing that threatens to steal a good part of their customer base — robo-advisors. Investing through these tools usually costs less and yields more than many of the financial products of traditional banks, and does not require financial knowledge from the customer.

Automated financial advisor apps and services are expected to manage approximately 10% of all global assets under management (AUM) by 2020. Let’s take a closer look at the robo-advisor segment in Brazil:

Find out more here.

Advantages in relation to banks

While in a bank, the management fee can reach 4%; with any of the FinTechs, the cost goes below 1%. Another advantageous factor for FinTechs is that they have no conflict of interest with the client, as in the case of financial institutions. “Advisors from broker firms and bank managers earn commission on the products they indicate, so a customer can get a product that is much better for who is selling than for himself,” explained Warren CEO Tito Gusmão.

It is worth emphasizing that, although the robot automates the choice of investments, its success depends on the people who build the algorithm. “Although the robo-advisor investments are automated, the strategy behind the algorithms is necessarily human,” explains Magnetis’ Luciano Tavares.

The size of the market

Brazilian robo-advisors are eyeing people who keep money in applications that yield little or are costly. Today, Brazilians together hold over BRL 600 billion in savings, with Treasury Direct applications as well as private securities with a higher net income and similar security. Still, there are private firms challenging big banks with higher profitability.

Who are the robo-advisors in Brazil?

Continue exploring robo-advisors in Brazil here.

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MEDICI

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MEDICI

MEDICI accelerates global impact for all members of the FinTech ecosystem through memberships, research, advisory, and insights.

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