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Robo-Advisors Research Paper

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In Hollywood, Robots are godlike figures made by pipe smoking, big-spectacled geeks, writing sophisticated mathematics on mirrors. While this image is overly exaggerated, it is not very far from the truth when it comes to robo-advisors. First, no human can match robo-advisors in speed and accuracy in analyzing and processing big data; second, they are made by the world sharpest minds, using the best possible computer technology available. Now that might appear godlike, but it is nowhere near Megatron.
Even though you do not have to smoke a pipe and write mathematical formulas on mirrors to join the team that makes robo-advisors, you need to have a Ph.D. in Mathematics, Engineering, Physics, or Economics. Developing a high quality robo-advisor requires team work from the best minds in the …show more content…
The rules are determined by analyzing the investment strategies of successful investors such as Benjamin Graham or Warren Buffet.
When making investment decisions, robo-advisors are designed to take into account the investor’s current financial status, Investment goals, and risk preference and recommend stocks basing on this.
Consequently, investors nearing or in retirement can invest through robo-advisors without worrying of liquidity. Likewise, millennials can get a well-calculated exposure to high risk-high return investment opportunities while maintaining the necessary liquidity.
The ability to strictly follow predefined rules, eliminate human emotion from trade and analyze the investor’s needs is what makes algorithmic investing more efficient and less risky to the traditional financial advisors.
Robo-advisors are also less costly than traditional financial advisors, with some charging absolutely nothing on management fees. In most instances, the traditional financial advisors charge a 2% management fee on investment irrespective of

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