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Why traders can get by with AI-driven platforms, but long-term investors need real advisors

For purely data-based execution artificial intelligence (AI) platforms are the best. Customized personal finance solutions need human advisors.

November 19, 2021 / 11:10 AM IST

While humans remain a significant element of the trading equation, artificial intelligence is becoming increasingly important.

The future of stock trading is being shaped by artificial intelligence (AI). Now, AI-driven advisers use their artificial intelligence to examine millions of data points and execute transactions at the best price by analysing markets more accurately, and trading companies effectively by delivering better risk-return reward.

Here are some of the reasons why artificial intelligence platforms may be such a strong tool.

Emotions have no place in this world: Human reactions allow for creativity, but also have emotions such as biases and mood attach to it. Thus, people can, however, make mistakes as a result of emotional strain. But you do not have to be concerned about such concerns with AI because it is based solely on logic and built-in algorithms.

Auto Mode: AI systems can be used to execute routine and automated jobs, such as stock trading; you do not need to continually supervise or coordinate. You can incorporate the AI, put it on autopilot, and go about your business.


Pattern Recognition and Forecasting: Trading requires a lot of forecasting. We normally conduct technical and fundamental analysis prior to making a buy. Both assessments can be done by AI. It can look back at historical data to see if there are any trends in the stock market that repeat themselves. It can also get information from news headlines, social media, and blog entries, as well as track stock price movements. This information can be used to get a price advantage and develop a better strategy.

Reduces the total cost: The majority of the effort associated with trading will be automated if AI is used. Computer programs do have costs associated with them like salaries, though it has maintenance and upgrades cost, but they significantly cut the cost of brokers.

But financial advisors do still remain the heart for long-term investing planning due to following reasons:

Tailored Services: On the market, there are ready-to-use options. However, we believe custom-built solutions are more secure, comfortable, and personal goal oriented.

Reduce Stress: Expert financial planners devote a lot of their time and resources to understand their customers. Their functional talents can be quite beneficial, as their contact and interaction, not just monetarily but also mentally (the human touch) makes us feel safe.

Regular review of your portfolio: A hired advisor will go above and beyond to implement investment techniques that you might not have considered. His knowledge of investments may also extend your horizons. They will assist you in making investing decisions that are in line with your whole portfolio and also regularly keep track of it by aligning it towards your goal.

An opportunity to learn and understand:  This benefit is particularly beneficial to those who are not professional investors and are just interested in learning financial investment strategies and approaches. Using a financial counsellor will assist you to comprehend the market’s structure and risk-reward ratio.

Responsive and accountable relationship: Independent advisors will acquire a strong awareness of your situation through regular and continuous interactions in order to provide advice that is closely aligned with your aims. You can hold them responsible for any mis-happenings

Trading is related to frequent daily trading (speculation) and investing is long term (goal-oriented) investment.

So, we can conclude that AI-platforms are better-suited to handling everyday stuff such as executing daily trades. While financial advisors are better a choice for long term investment planning as they’re better to examine, understand and execute your requirements and goals.
Sahen Karamchandani is a Chartered Wealth Manager
first published: Nov 19, 2021 11:10 am

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