Robo-advisor: why choose it?
Robo advisors
Posted by MoneyController on 09.02.2022
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Euclidea, an investment services company based in Milan, has published a fact sheet on robo-advisors. It is worthwhile to take up some considerations reported here as well.
What are robo-advisors and what advantages do they offer?
Robo-advisors are automated financial advisory programmes. Their use is quite simple. They consist of forms to be filled in, with a series of details to be entered, including the following: the capital to be invested, the time horizon of the investment and the degree of risk to be taken. Once you have entered these and other data, the programme provides an optimised investment portfolio according to the parameters entered. Unlike a simple calculation tool, this programme offers concrete investment proposals.
One of the most obvious advantages of a robo-advisor is that it saves the user time and money. The calculation tool provides the structure of a portfolio that would take more time and money to create manually by a live advisor.
Robo-advisors and financial advice
The use of robo-advisors does not automatically mean the exclusion of human advice. On the contrary, robo-advisors can be even more effective tools if they are used by financial advisors or consultancy firms to optimise their work. As stated on Euclidea's website: "The role of the human figure and its intervention in the robo-advisory offer varies according to the business model chosen and the services provided". In general, however, the construction of an investment portfolio follows a broader diagnosis of assets and is part of more general financial planning by a financial advisor.
Robo-advisors have to comply with all the rules that apply to traditional financial advisory services. Oversight of robo-advisors' activities is entrusted to the financial markets' supervisory authorities, including the SEC and FINRA in the United States, the FCA in the United Kingdom, Consob in Italy, BaFin in Germany, the Spanish Comisión Nacional del Mercado de Valores, the AMF (Autorité des Marchés Financiers) and the ACPR (Autorité de Contrôle Prudentiel et de Résolution) in France, and FINMA in Switzerland.