Robo-advisors are digital platforms that provide automated, algorithm-driven financial planning services with minimal human intervention. These services typically involve online questionnaires that gather information about the client's financial situation, risk tolerance, and investment goals. Based on this data, the robo-advisor creates and manages a diversified investment portfolio tailored to the client's needs. Robo-advisors offer a cost-effective and convenient alternative to traditional financial advisors, often charging lower fees and requiring lower minimum investments. They utilize modern portfolio theory to optimize asset allocation and provide features such as automatic rebalancing and tax-loss harvesting. While robo-advisors are ideal for hands-off investors seeking a straightforward approach to investing, they may lack the personalized advice and complex financial planning services that human advisors offer.
