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The Promises and Pitfalls of Robo-Advising
Report

The Promises and Pitfalls of Robo-Advising


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Editorial Rating

9

Qualities

  • Analytical
  • Innovative

Recommendation

Debate in the equities market focuses on the value of active versus passive investment management. Yet even when fund managers and individual investors control their portfolios, the question remains whether a smarter approach exists. Professors Francesco D’Acunto, Nagpurnanand Prabhala and Alberto G. Rossi explore robo-advising as a replacement for human guidance in this thorough examination of this potentially transformational fintech. While never giving investment advice, getAbstract recommends their robust report to investors and financial managers. 

Take-Aways

  • Robo-advising could help investors diversify their portfolios while eliminating the flawed thinking that can lead human financial advisers astray.
  • Investors are embracing robo-advising: One estimate says that algorithms controlled more than $98 billion in assets in 2016, with a 40% annual expansion rate.
  • Investors gravitate toward this fintech tool because it offers speed, low cost, flexibility and transparency.

About the Authors

Nagpurnanand Prabhala is a professor at the University of Maryland, where Francesco D’Acunto and Alberto G. Rossi are assistant professors.


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