Robo-advisers are online wealth management services that provide automated portfolio management and advice. These “robos” have been a popular topic of conversation within the last couple years and especially in 2015. Their goal is to make investing easier for those who don’t want to actively manage their own portfolio.
I realized the magnitude of the interest after writing an article in the AAII Journal called “What Exactly Do Online Advisory Services Offer?” Not only did I receive many inquiries from members, but I also had non-members contacting me via email and even LinkedIn. People wanted more information on robo-services and they were even interested in my personal experience with them while researching the article.
I attended the Morningstar ETF Conference at the end of September (which was awesome, by the way!), and robo-advisers were a hot topic there, too. Following a panel discussion, I attended a meeting in the press room that followed up on the topic of “the future of financial advisers.” Again, I was amazed at the interest in robo-advisers and impressed by the outlook of the representatives of prominent traditional financial advisory firms. These financial advisers were not upset about the robo-revolution, but almost… excited. They felt that the robo-advising companies were helping traditional firms by creating technology to propel the financial services industry forward and by reaching younger crowds of investors.
One of the financial managers described robo-advisers as a “disruption” in the industry, much like mutual funds and exchange-traded funds (ETFs) were once disruptions when they in turn became popular. These disruptions push the financial services industry to new levels and force those in the industry to evolve.
Although this is the outlook of many advisers, some are more resistant to the emerging robo-advising industry. I realized that this presented a great opportunity not only to research each of the robo-services, but also to uncover the different viewpoints on the new technology. These automated services should be as transparent as possible. My intent is to build up a new section for Computerized Investing members (and prospective members) where they can read about robo-advisers, learn about their methodologies and understand their technology.
To kick off the first Robo-Advisers column, I interviewed the CEO of Huygens Capital, Walt Vester. Huygens recently launched a robo-advising service that uses a different strategy from what most robo-advising services currently offer. The strategy involves predicting increases in market volatility to try to avoid those periods with a high risk of equity market losses. To read about Huygens’ approach, check out this month’s Robo-Advising article “Huygens Capital’s Active Approach to Robo-Advising.”
Also in month’s edition, we feature the PC Buyer’s Guide
Lastly, I want to thank everyone who attended the AAII Investor Conference in Las Vegas. It was my first AAII conference and, I must say, the amount of support and positive vibes I received was overwhelming! I’m happy to say I was not booed off stage. For those who didn’t get to make it to the conference, the audio recordings are for sale here. With your purchase you receive unlimited access to over 50 audio recordings and the PDF handouts of each presentation.
As always, I want to stress that I welcome questions, suggestions or comments from members. If there is software you want us to check out, people you want us to interview or concepts you want us to research, let us know!
If you have used a robo-advising service, perhaps you would be interested in writing an article for CI describing your experience. Other members can benefit from your insights, so please don’t hesitate to email us.
Since the next CI edition will be in December, I wish you all a happy Thanksgiving.
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Michael Daillak from CA posted over 10 years ago:
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