You may have heard the term “robo-advisor” before. As more and more people are turning to their phones and tablets to handle their finances, it’s a word that’s getting a lot of use. But what are robo-advisors, and what do they do? Here’s an overview that can help you decide whether a robo-advisor might be a good fit for your life and finances.
A robo-advisor is an online platform that manages your investments automatically. It’s financial advice that comes from an algorithm instead of a person, and it can take a lot of the time, guesswork, and stress out of owning a portfolio.
When you sign up for a robo-advisor, it’ll ask for basic information about your goals, risk tolerance, and the length of time you want to stay invested.
Then technology takes over to suggest a portfolio for you—but it doesn’t stop there. A robo-advisor also does the actual investing for you, and it’ll manage those investments over time, rebalancing periodically to make sure your asset mix stays on the right track. All behind the scenes, all automatically. It’s pretty cool when you think about it.
Date: January 19th, 2023
Link to 2 minute video: https://investor.vanguard.com/investor-resources-education/news/what-is-a-robo-advisor
- In my business school, Finance is the second largest major after MIS. This video is targeted at Finance majors, as it shows that technology is replacing a career that many of them want to do.
I show this video in the digital transformation section of class.
I ask students: why would someone choose to have a robo-advisor manage their money?
- What are the downsides of having a robo-advisor manage your money?