How AI develops robo-advisor to manage investment portfolio

Learning where to invest is itself a complicated skill that not only requires luck but also detailed and comprehensive analysis. What if I make a wrong decision? What if I lose all my money? Back in the old days, people used to ring brokers to get updates on stock. But soon, online trading platforms were developed that simplified the process of buying and selling stocks for users. Since the last decade, the use of robo-advisors for investment management has become a trend to manage investment portfolios and regulate automated portfolio management. The initial robo-advisor appeared in 2010, and the field has significantly expanded since then. A Deloitte report forecasts that it will oversee more than $16 trillion by 2025. This explosive growth signifies the immense potential of robo-advisors. At Webelight Solutions, we believe the future of wealth management lies in the hands of robo-advisors who offer advanced personalization and adaptability. So we can help you create personalized and adaptive robo-advisors that will easily integrate with your financial infrastructure. Get in touch with us to see how a custom robo-advisor can benefit you in coming up with sensible investment strategies. But is it worth creating your investment and wealth management plan using a robo-advisor? Are robo-advisors really that effective and secure? Will they help you get better returns on your invested money? How do they even work? We’re here to clear the air for you. 


How does a robo-advisor work?

a) It will ask you to fill out a small questionnaire form where you need to mention details about your goals, income, risk tolerance, and other necessary information.

b) It will provide you with a unique investment plan created by processing all your information and you will receive a diverse portfolio of funds.

c) To make sure your portfolio is suitably rebalanced by a sophisticated algorithm, experts continually monitor market activity and each underlying investment. Effective financial portfolio management requires regular monitoring and rebalancing to adapt to market changes and personal financial goals.

d) A certified financial planner or live consultant may be accessed through certain robo-advisors, offering guidance on setting priorities and suggestions for achieving them.

e) To monitor your progress, make changes, add contributions, and keep working toward new objectives, log in to your account.



Robo Advisor Steps



Is robo-advisor better than conventional investment advisory?


You can see your financial advisor in person and discuss all your money-related question marks, whether it is about doing your taxes, handling your assets, selling insurance, or planning your retirement. Advanced Artificial intelligence (AI) and machine learning technologies have found new pathways for portfolio management in merchant banking to facilitate smooth asset allocation and risk management strategies personalized to individual client needs. Many individuals make the common mistake of discussing their investment plans with so-called “financial advisors” who aren’t even authorized to open a consultancy to begin with. To achieve long-term financial goals, learning how to manage investment portfolio effectively is essential. Let’s say you take consultation from someone who’s a registered wealth management advisor. But still, are you sure that the financial goals they are setting up for you will get guaranteed returns on your investment? We highly doubt that. 


Contrary to that, a robo-advisor will know exactly what’s the right investment decision for you and generate its strategies just by having a look at your demographics. All you have to do is reply to some of the questions about your finances honestly, share your goals, liabilities, financial timeline and how much risk are you willing to take. Then just sit back and let the robo-advisor manage the investment portfolio and predict the best portfolio allocation for you. A robo advisor won’t even charge as much money as an official wealth manager would, for keeping an eye on the market, creating investment strategies, and handling your portfolio accordingly. For newbies who have just started investing, it is the perfect go-to option if they are planning to invest their money. There are also several free courses available on the internet on financial planning that include sections on risk management in portfolio management to prepare beginners for real-world investing. Algorithmic trading ensures that your investments are optimized based on real-time data and market trends which improves performance over time.


Robo-adviserHuman financial adviser
Lower fees and lower minimums to get startedGenerally a wider scope of services beyond only managing investments (estate planning, taxes, life insurance, and more)
Less paperwork and no need for scheduling appointmentsMore flexible in crafting a plan specific to your needs versus a list of generic options
Automatic rebalancing and tax-loss harvestingCosts may be higher











Become a smart investor by understanding robo-advisor benefits


1) Rational & precise thinking with no emotional bias

The chance that your robo-advisor would make an error is next to zero. Emotional judgment and irrational thinking are off the table when it comes to their decision-making in investment management. In case of fraudulent activities, these machine learning models will get to the root cause of the problem and let you know which transaction needs to be taken care of. Their user-friendly interface makes it easier to adapt for any individual irrespective of their investing experience.


2) Maximum returns by data-driven investment plans

Based on your income, goals, and spending habits, a robo-advisor would generate the most favorable investment plan for you by implementing its mathematical algorithm and conducting thorough data analysis. Apart from being a wise mentor for investing, a robo-advisor will also offer you a bunch of tools for portfolio management and data analysis so you can keep track of your investments and understand where your money is being allocated. Advancements made in Artificial intelligence (AI) and machine learning technology have greatly enhanced the tools available for financial portfolio management to seek the benefits of automated portfolio management.


3) Affordable & economical financial advice

As compared to traditional investing, you would be able to save your money if you resort to robo-advisors. Portfolio management services typically charge a fee based on a percentage of the assets under management. No need to worry if you have no assets to invest at the preliminary stages.  Due to lower overheads and zero human labor, the price for this valuable financial advice gets lowered by a big margin. Their affordability makes them stand out from all the other alternatives for making financial decisions.


4) Available & accessible anytime, anywhere

Unlike humans, robo-advisors don’t get bothered whenever you are seeking some financial advice, even at 2 AM. You can have 24/7 access to their services and operate on them from your mobile phones as well. If you remain busy most of the time and can’t make time to schedule meetings with human consultants, then this is the perfect reason why you should go for robo-advisors. Many high-net-worth individuals prefer discretionary fund management because it saves them time and leverages the expertise of financial professionals to manage investment portfolios. Many fintech companies offer discretionary fund management services as part of their wealth management solutions.


Don’t be overly dependent on Robo-advisor’s financial advice


1) Absence of human intuition & perception

Forming a healthy and professional relationship with your advisor is considered a good practice when you can freely reveal your income sources and future plans with them. However, Robo-advisors are emotionless agents that lack human intuition and perception. You can’t always edit your investment portfolio or explain your back-and-forth cash flow to your robo-advisor. Such issues can be resolved only if you chat with an experienced human consultant. Financial advisors will also emphasize the importance of risk management in portfolio management to ensure that portfolios can withstand market volatility. Many fintech companies specializing in portfolio management in merchant banking employ rigorous risk assessment frameworks to safeguard client investments against market volatility.


2) No emotional support during panic mode

A robo-advisor won’t be there to calm you down when you see a sudden drop in the market. It won’t stop you from making an irrational decision. While in panic mode, only a human consultant can give you the assurance that you are out of harm’s way and explain how the market works in simple terms. Multiple interactions and one-on-one conversations make it easier for wealth managers to understand their clients.   


3) Pre-set plans & limited customization options

Most of the robo-advisors have default plans set up on their system and have a portfolio of pre-selected stocks. There will just be a handful of options to choose from. They may not ask you about your pension funds or your partner’s financial status. If you are looking to sell call options on your current portfolio, almost every robo-advisor would have trouble figuring out that for you. 


Competitive future where every investor plans with Robo-advisors


Robo Advisor Market




1) Hybridization of human expertise with AI

Human financial advisors and robo-advisors developed by Artificial intelligence (AI) and machine learning would collaborate to form a hybrid model, that will have the combined strength of human intuition and machine accuracy to predict the best portfolio for its client. This model will be easily accessible, cheaper, and convenient to use for a newbie. 


2) Versatility and personalized portfolio plans

Many institutional investors rely on algorithmic trading to capitalize on market inefficiencies and fluctuations swiftly and efficiently. As compared to retail investors, people who have been investing for many years need a bit more comprehensive and personalized advice. Most retail investors can use robo advisors but they don’t have enough funds. A versatile robo-advisor will have the capability to serve both kinds of users on its platform. 


3) Long-term tunnel vision & predictability 

Existing models will only advise you for a particular plan or talk you out of a bad investment. But in the future, robo-advisors will think long-term by creating and analyzing reports and summarizing the market data. They’d make even more accurate predictions in the stock market. As the genZ gets older and makes up a larger portion of the market, they will likely invest in using Artificial intelligence (AI) technology.


Average Age Robo Advisor User



Real-life examples of robo-advisors helping people make millions


Vanguard Personal Advisor Services

The Vanguard Group, Inc. offers a hybrid approach with its Personal Advisor Services. It combines robo-advisor technology with access to human financial advisors. Investors benefit from its detailed financial plans. However, the service requires a minimum investment of $50,000. This may prohibit and restrict the people who have just started investing. Despite this high entry point, the integration of human advisors with automated technology offers an opportunity to those who can meet the minimum investment requirement.


Schwab Intelligent Portfolios

Operated by Charles Schwab Corporation, Schwab Intelligent Portfolios attract investors by eliminating advisory fees, commissions, and account service fees. It provides access to a broad range of investment options like ETFs, real estate, and commodities. However, the service requires a minimum investment of $5,000, which could be a barrier for some potential users. Despite this, the absence of advisory fees makes Schwab Intelligent Portfolios an attractive option for those with the required initial capital.



Betterment LLC stands out in the robo-advisor space with its unique goal-based investing strategies personalized to significant life events such as retirement or purchasing a home. The platform is renowned for its user-friendly interface, which simplifies the investment process for users. One of its key advantages is the provision of tax-loss harvesting across all accounts. However, it's worth noting that Betterment primarily focuses on ETFs, which might limit options for those interested in alternative investments for wealth management.



Wealthfront Corporation emphasizes passive investing strategies to maximize returns through a hands-off approach. A distinctive feature of Wealthfront is its tax-efficient Direct Indexing service which is beneficial for larger accounts. This platform supports 529 college savings plans and provides free financial planning tools as well.  Despite these benefits, Wealthfront does not offer options for investing in mutual funds or individual stocks, which might be a limitation for some investors who are seeking more diverse investment opportunities.





As the technology continues to evolve, integrating advanced Artificial intelligence (AI) with human expertise, the future promises even more sophisticated and personalized investment solutions. At Webelight Solutions, we specialize in developing state-of-the-art AI robo-advisors for portfolio management services that will help investors with automation tools to become even more prosperous with their personalization capabilities. Whether you are a full-time investor or just starting your financial journey, the investment strategies that our AI robo-advisors will generate will help you achieve your financial goals. 

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