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What is a robo-advisor and how does it work?

Curious about robo-advisor

What is a robo-advisor and how does it work?

A roboadvisor is an online platform that uses algorithms to provide automated investment advice to clients. These platforms use advanced algorithms and data analysis to provide personalized investment advice and portfolio management services at a much lower cost than traditional financial advisors.

To start using a roboadvisor, investors typically need to complete an online questionnaire that asks about their financial goals, risk tolerance, and investment horizon. Based on the information provided, the roboadvisor will recommend a portfolio of investments that aligns with the client's goals and risk tolerance.

Once the portfolio is created, the roboadvisor will manage the portfolio on an ongoing basis, automatically rebalancing the investments as needed and making adjustments based on market changes or changes in the client's financial situation.

One of the key benefits of using a roboadvisor is that it can provide access to professional investment management services at a lower cost than traditional financial advisors. Additionally, roboadvisors typically use a rulesbased approach to investing, which can help remove emotions and biases from the investment process. However, it's important to note that roboadvisors may not provide the same level of personalized advice as a human financial advisor, and they may not be appropriate for all investors.

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