By definition a robo-advisor is a digital platform that provides automated and algorithm-driven financial planning recommendations with little to no supervision. That means individual investors with little to no financial literacy can turn to robo-advisors to tell them which stocks to invest in, though experts argue it will not be a replacement to financial literacy.
Expert investors argue the idea of turning to a robot for tips on investments, then going forward to making it big in the investment world just sounds too simple to be true. Indeed, people who have been investing in stocks for a while will tell you a great deal of financial literate judgment goes into picking the right stock and at the right time. One would need a great deal of trust in the robo-advisor to use its recommendations.
How a Robo-advisor works
Would be ‘rookie investor’ access the the robo-advisor services via a website or an app; the gist of it is to eliminate need for human interaction. Then they are taken through the three steps below:
The initial investor screening, where the robo-advisor asks the client a series of questions …read more