How will next generation Robo-Advisors help investors?
For years, the wealth management industry has been exclusively executed by humans, aided by software and mathematical models.
Today, however, the financial advisory industry is facing some key challenges through the rise of automated financial advice solutions (Robo-Advisors). And their growth rate is both rapid and accelerating.
They are not a new phenomenon, but existing Robo-Advisors have limited capabilities and are often based on rigid models. They can’t meet the needs of investors with even moderately complex financial lives.
In today’s changing investment world, investment decisions and portfolio selection must be built on innovative and sophisticated algorithms which are in line with the personal investment preferences of the customer. These individual information, such as, profit goals, risk appetite and liquidity aspects will enable the Robo-Advisor to determine their investment type, eg. cautious, adventurous, or somewhere in-between. Applied investment algorithms make use of sophisticated risk management models, advanced data gathering methods, and can dynamically shift money between asset classes subject to changing market conditions.
Thus, customers can directly access advanced investment and analysis tools without the need to fully understand the details of optimal portfolio selection, factor models, diversification, hedging, risk management, etc.
Another advantage is, that there is no need for time-consuming human interaction to manage the portfolio. Robo-Advisors will dramatically reduce fees and margins, while increasing transparency and scalability of the implemented strategies. Financial advice thus can be provided not only to high net worth individuals but can serve anybody interested in financial lifecycle planning.
We believe ALA OneLogic’s Robo-Advisor capabilities will have a profound and permanent effect in the way future advice is delivered. Automated advice will give wealth management firms access to a large new market, such as millennials. Isn’t it time to think about and prepare for it now?
Ask for information about how our sophisticated Robo-Advisor algorithms can help you access broader markets, contact us on email@example.com