What is a Robo-Advisor?

[Milan]

 

[Sam]

Hi Milan,

Robo-Advisors refer to digitally-driven platforms that offer computerized financial services to investors. Robo-Advisors explicitly use data-driven algorithms to provide financial advice to human beings. The platforms offer financial planning services to their customers with little or no human supervision. The digital platforms provide affordable financial services to you by using specific techniques to develop the best advice.
First, Robo-Advisors gather your financial information using surveys and questionnaires. The data collection techniques focus on specific financial information, such as the value of your assets and investment opportunities. The report helps in the development of customized advice to the client. Furthermore, the Robo-Advisor asks you questions on financial objectives and goals that you might have. The questions target the generation of guidance that helps in the achievement of the prior set goals. Lastly, the advisor compiles the information and develops practical steps that you will use as a client. 
Consequently, the information gathered helps in developing advice on sophisticated tasks such as retirement planning, investment management, tax-loss harvesting, and optimized portfolios for social investing. The applications of Robo-Advisors are limitless since the growth of technology expands the abilities of the automated advisors. Currently, many Robo-Advisors utilize Modern Portfolio Theory (MPT) to exploit passive indexing strategies. MPT enables you to perform a myriad by maximizing the expected return from risk by assembling the portfolio of assets. As a result, MTP performs actions such as mimicking a hedge fund, halal investing, and the development of tactical strategies that meet today's investment strategies.  
Just a recap, a Robo-Advisor, simply helps you make investment decisions by using data collected through online surveys and questions. The advice is generated using Modern Portfolio Theory utilized in the passive indexing strategies. The use of data-driven algorithms simplifies the process of decision, making it fully automated. Lastly, Robo-Advisors perform various functions such as optimized social investing, halal investing, investment management, and retirement planning.