Robo advisers have been the buzzword in finance for years. As the name suggests, it is an adviser, which is not a human, but a robot. “Robo-advisers are essentially automated wealth managers. You need to input a goal, basic age/income profile, etc., it should throw up a reasonable list of products for you to invest in keeping your risk tolerance in mind,” says Kanika Agarrwal, co-founder of Upside AI, a portfolio management services (PMS) firm that is building AI-based investment products.
How they work: To begin with, a robo-adviser assesses a customer profile through a questionnaire, which would ask for details like goal, risk appetite and so on. With this data, it suggests portfolio recommendations, just as a human adviser would do.
However, it does so autonomously, by using algorithms and technologies like artificial intelligence and machine learning on the data.