Robo-advisory is the application of AI for automating each step of the financial value chain. The term robo-advisor consists of two parts, the “robo” and the “advisor.” Robo denotes an automated process that is free from the influence of humans. Advisor refers to the wealth management services which make use of mobile and regular channels. Together, robo advisory refers to an online portfolio management solution which invests client assets through automated client advisory.

The evolution of robo-advisors in the near future can be outlined in four distinct steps. In the first, clients receive single-product proposals which are based on the listed investment products. The decisions on investment purely depend on automated investment advisor which both monitor and satisfy investment strategies which are predefined. However, professional fund managers take the final oversight. The sophisticated risk management and the profiling questionnaires handed over to the clients help robo-advisors to suggest direct investments through self-learning investment-related algorithms.

The most common model which has emerged today is the hybrid robo financial advisor where a combination of investment managers and digital services help in asset allocation or portfolio rebalancing, which optimizes the quality of the advisory services within a short span of time. As digitalization progresses at a rapid pace, the demand for digitally integrated, accessible, and gamified offerings of the robo-advisors will only be on the rise.