Financial Robo-Advisor

What is a Financial Robo-Advisor?

Taking the place of an in-person managers, a financial robo-advisor provides personalized investment and wealth management services to individuals as well as small and medium-sized businesses.

Robo-advisors use deep learning and other artificial intelligence techniques to offer advice and even automate trades in a variety of industries and account types, from individuals with retirement accounts to small businesses with equity finance plans.

Why Is It Important to Have a Good Financial Robo-Advisor?

Robo-advisors provide constant, personalized financial services, from tailored advice to algorithmic trading, so anyone, no matter their circumstances, can reach their financial goals, at a lower cost than booking an appointment with a human advisor.

Many investors also feel that machine learning-led investing is more reliable than human-led investing. Robots use hard data, analyzing more of it than humans can, and they present the information without bias.

Finally, robo-advisors that are available via mobile app make investment and trading more convenient than anything previously known.

What Internal Data Should I Have for a Good Financial Robo-Advisor?

A good financial robo-advisor should be guided by personal data about the client. For individuals, this would include demographic information, net worth, assets, and personal goals. For companies, meanwhile, this would include industry classification, assets, and company financial goals.

What External Data Is Essential for a Good Robo-Advisor?

The artificial intelligence running robo-advisors must be skilled at detecting risk and incorporating historical market data into their assessments. This market data can be for the stock market, commodities market, cryptocurrencies, foreign exchange, and so on and so forth. As noted earlier, the AI uses the client’s goals to determine which markets to watch and move in.

What External Data May Prove Useful for a Good Robo-Advisor?

Other external data for a financial robo-advisor may include NLP to run chatbots for inexperienced users with questions or concerns.

Similarly, gamification data can add a lot to a robo-advisor, helping clients learn more about investing and trading, and making them feel more comfortable in the field overall.

What Are the Main Challenges of this Use Case?

One of the main challenges of financial robo-advisors is that the field is still new; creating a new advisor or just using the services of one can be risky. Additionally, as a service that makes, at times, risky financial decisions, developers must make absolutely certain that everything is perfect before launch. The data sources must be complete, clean, and update in as close to real time as possible while the algorithms and deep learning programs run without any bugs before clients start to use the advisors.

Interesting Case Studies and Blogs to Look Into

JP Morgan: Innovations in Finance with Machine Learning, Big Data and Artificial Intelligence: Summary of the Latest Research and Trends
Vamsi Talks Tech: Design and Architecture of A Robo-Advisor Platform..(3/3)

Tangible Examples of Impact

Making good on its year-old promise, the bank is beta testing a robo-advisor among its employees and is within months of publicly offering a digital retail wealth management service, per CNBC.
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The robo-advisor is part of Goldman’s strategy to make Marcus appealing to young and mass-affluent consumers. The bank will integrate Marcus Invest with its Marcus Insights personal finance management tools, which it made available to noncustomers and across digital platforms in October.

Business Insider: Goldman Sachs is putting the finishing touches on its new robo-advisor