Robo-Advisor System: An automated investment assistant that makes money management easier

In the present era, investing is no longer just for the wealthy. The emergence of new application technologies has created opportunities for ordinary people to access investment tools more conveniently. One of these is robo-advisor, a system that uses AI technology to help plan investments for users without the need for guidance from human advisors.

What is a Robo-Advisor?

Simply put, a robo-advisor is an application or platform that uses automation to analyze your financial data and then recommend investment strategies tailored to your goals and risk tolerance.

This system processes large amounts of data to create your investment profile, including income level, past investment history, future cash needs, and acceptable risk level. Based on these variables, it designs a portfolio that can adjust according to market conditions.

The History of Robo-Advisor

The first use of robo-advisors occurred in the United States in 2007 by Betterment, which started by helping to rebalance assets in (rebalance assets) funds automatically, so investors didn’t have to manually adjust their portfolios each time. They simply selected options through an easy-to-use online interface.

Today, robo-advisors have advanced significantly. They not only help rebalance portfolios but also manage assets across various markets such as stocks, forex, gold, and invest in financial products like ETFs and mutual funds through digital platforms.

How Does a Robo-Advisor Work?

Understanding the workflow of a robo-advisor can help you decide if it suits your needs.

Step 1: Data Collection

When you register on a robo-advisor platform, it will ask for your financial information, including monthly income, savings amount, debt level, existing assets, and future investment goals. It also includes questions about your comfort level with financial risk.

Step 2: Analysis and Profile Creation

Once the data is received, AI algorithms and analytical models process it to create a specific investment profile for you. The system considers factors such as risk level, investment horizon, and investment objectives.

Step 3: Recommendations and Asset Allocation

Based on the analysis, the system suggests which asset classes you should invest in and how much to allocate to each, for example, 60% stocks, 30% bonds, 10% cash.

Step 4: Management and Monitoring

After you approve the plan, the system will execute the asset purchases as recommended and continuously monitor market data. When market fluctuations cause your investment proportions to deviate from your target, it will automatically rebalance your portfolio.

Key Features of Robo-Advisor

Smart Technology - Robo-advisors utilize computers and algorithms to analyze your investment data, considering multiple factors to produce accurate and unbiased results.

Automatic Portfolio Management - The system can create, manage, and adjust your investment portfolio in response to market changes and personal circumstances.

Risk Assessment - Tools are available to help you understand the financial risks involved, making your investment decisions clearer.

Cost-Effective - Compared to human financial advisors, robo-advisors typically charge much lower fees because they do not require hiring many professionals.

Comparison of Robo-Advisor Platforms for Thai Investors

Why Are Robo-Advisors Attractive?

1. Accessible to Everyone - Investing with robo-advisors doesn’t require large capital and is suitable for those with limited time to study investment information.

2. Lower Costs - Fees are around 0.25-0.5%, much lower than human advisors who may charge an additional 1-2%. There are also no commissions on trades or portfolio adjustments.

3. One-Time Portfolio Rebalancing - The system automatically rebalances your investments to align with your goals without your manual intervention.

4. Emotion-Free Decisions - The system analyzes data and algorithms, unaffected by emotions or fears during market volatility.

Limitations to Be Aware Of

1. Limited Flexibility - Sometimes, you may want to control your investments directly, but robo-advisors do not allow this, as they follow pre-set strategies programmed into the system.

2. Asset Options Are Limited - You can only choose from the plans designed by the robo-advisor; selecting specific assets freely is not possible.

3. No Face-to-Face Consultation - If you have questions or concerns, you cannot speak directly with a specialist; only online channels are available.

Who Is a Robo-Advisor Suitable For?

This system is ideal for anyone who wants to invest, especially:

• Beginner investors with limited knowledge
• Those who lack time to study and monitor the market
• Investors seeking help to control emotions during investing
• Investors looking for low fees

The Situation of Robo-Advisor in Thailand

The robo-advisor technology market in Thailand is still in its early stages but is gaining interest from banks and fintech companies. Examples include INNOVESTX from SCBS, WEALTH PLUS by KSecurities, ODINI by Robowealth, and FINNOMINA, which are increasingly competing.

These services help Thai investors access quality robo-advisor applications, investing in both Thai and international stocks to diversify risk.

Additionally, investors can independently invest through other tools such as CFDs or stocks to study technical and fundamental analysis, with CFDs becoming a popular choice among investors today.

Costs of Robo-Advisor

The cost of using a robo-advisor varies depending on the company and service chosen. Some platforms use fixed fee structures, while others charge a percentage of the portfolio value.

Local Robo-Advisor Fee Table

Final Summary

Robo-Advisor has proven to be a useful tool for everyone’s investment journey, whether you are a beginner or experienced but lack time to manage your portfolio. Its strength lies in making investing simple and convenient through deep data analysis and automatic portfolio adjustments.

If you are looking for an efficient investment method without high costs, a robo-advisor is a compelling option. It’s like having a professional investment advisor by your side at all times, helping you feel more confident in your investment decisions.