TY - JOUR T1 - Practical Applications of Individualization of Robo-Advice JF - Practical Applications SP - 1 LP - 4 DO - 10.3905/pa.5.4.262 VL - 5 IS - 4 AU - Michael Faloon AU - Bernd Scherer Y1 - 2018/04/30 UR - https://pm-research.com/content/5/4/1.8.abstract N2 - Automated asset management advisory firms, often called robo-advisors, assign portfolios to individual investors based on investment algorithms. These algorithms use investor characteristics such as age, net income, and assessments of individual risk aversion to recommend suitable asset allocations. Client interaction and delivery of portfolio advice are web-based and without human interaction. Robo-advice disintermediates the classical distribution model, which is now widely recognized as expensive, difficult to scale, and dependent on the individual advisor’s skill level. As a result, those with lower levels of wealth who do not meet minimum account limits are left stranded with little access to financial planning advice. This is where the robo-advisor comes in.In Individualization of Robo-Advice, published in the Summer 2017 issue of The Journal of Wealth Management, Michael Faloon and Bernd Scherer discuss the pros and cons of robo-advisors, highlighting their lack of sophistication in asset allocation based on investors’ individual needs. ER -