IN­VEST­MENT AD­VICE?

YUP, THERE’S AN APP FOR THAT

Idealog - - IDEALOG / KIWIBANK -

How would you feel about trust­ing the man­age­ment of your in­vest­ment port­fo­lio to a ro­bot? That’s what’s on of­fer as‘ rob o-ad­vice’ starts to look more and more like a vi­able way of man­ag­ing in­vest­ment.

Fi­nan­cial ser­vices can be pretty com­plex prod­ucts. As banks find new ways to crunch cus­tomer data, and as self-learn­ing com­put­ers be­come more re­fined, many be­lieve that FinTech machines are rapidly be­com­ing ca­pa­ble of mak­ing faster, more ac­cu­rate judge­ments than hu­man ad­vi­sors.

This means much lower costs, hyper-per­son­alised ser­vice, and the open­ing of mar­kets to those with less to in­vest. And it’s imag­ined that, ul­ti­mately, you won’t even know if you’ re deal­ing with a hu­man or a ma­chine.

There’ s money be­hind the idea too. Global spend­ing on wealth man­age­ment ini­tia­tives is set to reach US $12 bil­lion by 2019, and that’ s due mainly to the po­ten­tial of rob o-ad­vice ser­vices.

While there are plenty of opin­ions when it comes to in­vest­ing, there are no guar­an­tees and mar­kets are not al­ways ra­tio­nal. As a rather skep­ti­cal story in the Fi­nan­cial Times said: “By at­tempt­ing to cre­ate tech­nol­ogy that em­u­lates hu­mans and then beats them at their own game, this new breed of [AI] fund may sim­ply end up ap­ing all of the worst char­ac­ter­is­tics of hu­man in­vestors … Com­put­ers will have an edge in pro­cess­ing large amounts of eco­nomic data, but may strug­gle with the more qual­i­ta­tive judg­ments [War­ren] Buf­fett has ex­celled in such as judg­ing the char­ac­ter of a chief ex­ec­u­tive or the dura­bil­ity of a brand.”

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