What Types of Auto-online Financial Advisor or Robotic Financial Advisor We Need?
We are not going to talk about how AI works as financial advisor in this article. We are going to talk about reversing the traditional effort on seeking investment portfolio at conceptional level.
Theoretically, we could only acquire three results, upward (positive), the same, and downward(negative), when we are projecting market trending/economic trending/investment return.
Can you give me the fourth result? Bet you can’t.
An interesting question is that when we are investing significant time and resources on predicting a result which could include no many possible outcomes (dimensions) while its precision has no significant value to decision makers, then we are probably not picking a meaningful direction for predicting. This may ultimately be more awkward if another group of people, in contrast, only invest few resources and time on one of the few possible outcomes based on their preference but still gain extra benefit successfully.
So, how to allocate resource under such condition? Invest resource to optimize decision forward with few outcomes? Or maybe, pick one and do it best?
Investors care about maximizing the expected return of their portfolio and try to not be harmed by the losses resulted from both psychological and physical sides. And all of these are mostly hard to be quantified since it may vary along with daily life and a changing environment.
It is cruel that many of the professional financial service providers that are dedicated on pursuing building best quantitative precision and intelligent financial robot, have not yet proved the robotic financial advisor could gain extra profit for customers or assuage pressure under worldwide economic recession. Furthermore, the robotic financial advisor might take away the pressure and responsibility its users should take when they are making their own investment decision.
Most of the robotic financial advisors suggest investment portfolio based on trade-algorithm or investment algorithm cited from financial text books or financial theories. The process contains deep analysis of selecting the best portfolio out of thousands of funds. However, all of this just eliminates the process of asking users to digest information at macro economic level and rethink about investment purposes when the robot continually provides “perfect” portfolio to customers.
But if you can only face few results of economic condition, then would you take responsibility of making your own decision, thinking about your own portfolio, developing your personal judgement on economic cycles, instead of letting the robot to consume lots of energy and work to help you make a decision out of few options?
A better robotic financial advisor which can maximize customer’s expected return and assuage their pressure under economic recession shall be the one guides the user to develop their own judgement and take responsibility on their own investment rather than just providing them an optimized portfolio and ask them to accept it based on the risk level they would take. In other words, investors should use robotic financial advisor to train their investment strategy, that is what had been mentioned previously “picking one and do it best”
