Research projects

Project CEMAPRE internal

TitleRobo Advising: investor profiling and performance evaluation
ParticipantsRaquel Gaspar (Principal Investigator), Paulo M Silva
SummaryRobo advisor platforms claim to evaluate the risk profile of investors and to be able to prose
adequate tailor-made portfolios to each investor. Despite this claim, it is virtually impossible to
evaluate the accuracy of such statement.
The exact effectiveness of their risk profiling cannot be tested. Some platforms disclose
questionnaires, but not the way they map questionnaire answers to risk profiles. It is also not
clear the way investor profiles are mapped to portfolio solutions. Moreover, contrarily to the
traditionally fund industry obligations, robo platforms are not obliged to report their portfolio
compositions, making it virtually impossible to evaluate the absolute or relative performance of
their solutions.
The fact robo platforms are still allowed somehow to be "black-boxes" for investments, is against
transparency in the financial wealth management industry and the recent regulatory growth aiming at
investor protection.
In a world where robot advising is taking the role of human financial advisors, these issues need to
start being addressed both in the industry and in academia.