These days you don’t need to appoint a stockbroker to invest in the stock market. Banks such as Revolut now offer low-cost investment options while Degiro and other platforms have offered online brokerage services to retail investors for many years. But are they the best way to grow your wealth? Do you feel comfortable putting your hard-earned money in the hands of a robot?
Today, thanks to technology and innovation, anyone can build their investment portfolio, says Leonardo Mazza, head of cross-asset strategy and fund manager at Cantor Fitzgerald Ireland: “These tools have democratised investing, enabling people to take responsibility for their financial futures without traditional intermediaries.”
Revolut and similar platforms have certainly made it easier and more accessible to the wider population, and the use of advertising and inducements such as “free first trades” and “investment credit” to entice investors from their account platform, says Nicholas Charalambous, managing director, Alpha Wealth.
“This really built traction through social media, with many influencers and investment ‘experts’ promoting themselves,” he says.
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Revolut is widely regarded as a safe platform for investing, as it operates under the regulation of financial authorities in multiple countries, says Charalambous. “Its user-friendly interface makes it appealing to beginners and it offers commission-free trading for stocks and ETFs in select markets.
“However, compared to traditional brokers, Revolut lacks advanced trading tools and in-depth research resources. It is important to familiarise yourself with platform features and understand the potential risks before making any investment decisions.”
Platforms like Revolut are excellent for investors who are tech-savvy, confident in making their own decisions and looking for low-cost solutions for straightforward investments, says Charalambous.
He is finding that a large proportion of individuals are using online platforms rather than stockbrokers. “The main reason is that there are fewer physical institutions as a lot of these offices closed or decompressed over the last number of years due to less demand,” he says. “Additionally, the social-media and tech-savvy – and, generally, Gen Y and Gen Z – are sensitive to fees, know the online brokers are significantly cheaper, and are not looking for advice.”
According to a survey by the Banking and Payments Federation Ireland, younger people are more likely to invest online, invest in cryptocurrencies and use informal information sources such as social media when investing. It reported that 60 per cent of under-35s prefer to invest online rather than in person or by phone – compared to 14 per cent of over-55s.
Robot vs human
With DIY investment platforms, you can directly buy and sell stocks, ETFs and other assets, often with minimal fees, Mazzo says. The benefits of using these platforms include that they typically charge lower fees than traditional brokers; you can trade at your fingertips, anytime and anywhere; and they offer a sense of control, where you decide which assets to buy and when to trade.
However, Mazzo says there are downsides. “Without prior knowledge, navigating the investment world can be daunting. Mistakes, such as over-trading or poor diversification, can erode returns.
“Secondly, individuals are prone to emotional reactions, such as panic selling during market downturns. And, finally, there is a lack of personalisation – as automated platforms offer limited personalised advice tailored to your financial goals and risk tolerance.”
Human vs robot
For investors seeking expert guidance, human financial advisers or professional stockbrokers remain a compelling option, says Mazzo. These professionals bring a wealth of experience and provide active management of your portfolio, ensuring decisions are informed by both data and market insight.
Mazzo outlines some of the benefits of using a human financial adviser, including delivering tailored advice, “where human advisers take the time to understand your specific financial goals, risk tolerance and life circumstances, providing customised investment strategies”.
Emotional guidance from these experienced professionals helps mitigate impulsive decisions, such as panic selling during market turbulence or overconfidence during bullish periods, he adds.
They also provide market and planning insights assistance where, “unlike robo-advisers, human professionals can address broader financial needs, including estate planning, tax optimisation and retirement strategies”.
Human advisers do come with some cons, of course. Mazzo believes the relatively higher cost, for example, is due to the enhanced service provided. Also, working with an adviser often requires a minimum portfolio size, potentially excluding smaller investors; and there is a longer account set-up process due to the regulatory requirements and the personalised approach.
There is an argument for combining the two ways of investing – using platforms for basic investments and an adviser for strategic planning can be an effective approach, says Charalambous.
“Statistics do show that a disciplined, long-term strategy often outperforms reactive, short-term decision making. This is true whether the strategy is implemented by a human or a robot. Iconic investors like Warren Buffett demonstrate it’s not just about having a strategy but also the wisdom to stick to it and adapt when necessary.
“Humans may sometimes make exceptional decisions outside a rigid framework due to intuition or market expertise, but this requires experience and judgment, which not all investors or advisers possess.”
