Project CEMAPRE internal
| Title | Robo Advising: investor profiling and performance evaluation |
| Participants | Raquel Gaspar (Principal Investigator), Paulo M Silva |
| Summary | Robo 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. |