How does a robo-advisor work?

A roboadvisor is a digital platform that provides automated investment advice and portfolio management services to clients. The process begins with the client filling out an online questionnaire that assesses their financial situation, investment goals, and risk tolerance. Based on this information, the roboadvisor uses algorithms and computer models to create an investment portfolio that is tailored to the client's individual needs and preferences.

Once the portfolio is created, the roboadvisor automatically manages the investments, rebalancing the portfolio as needed to ensure that it stays aligned with the client's goals and risk tolerance. The platform uses advanced analytics and artificial intelligence to monitor market conditions, and it makes realtime adjustments to the portfolio to optimize returns and manage risk.

Roboadvisors typically use lowcost, passive investment strategies such as index funds and ETFs to build diversified portfolios. They are designed to be easy to use, with simple, intuitive interfaces that allow clients to view their investments and track their progress at any time. Some roboadvisors also offer additional financial planning tools and resources to help clients with budgeting, retirement planning, and other aspects of financial management.