An “AI robo advisor” is a digital investment advisory and wealth management software solution that uses algorithms and AI methods (e.g., machine learning) to generate investment recommendations and manage portfolios automatically - supporting decisions such as rebalancing or risk adjustments in a rule-based manner. The goal is to deliver efficient, consistent, and scalable advice aligned with a client’s goals and risk profile—often integrated with custody/broker systems and designed to meet regulatory requirements.
Digital onboarding: Guided collection of client data, goals, time horizon, and preferences (e.g., ESG).
Risk profiling & suitability checks: Assessing risk capacity/tolerance and deriving suitable strategies (supporting suitability/appropriateness requirements).
Goal-based financial planning: Planning and simulating savings and withdrawal plans (e.g., retirement, wealth building, liquidity goals).
Data integration & account aggregation: Connecting portfolio, account, and market data (interfaces/APIs) for a consolidated view.
Portfolio construction: Building model portfolios (often ETF-based) and allocating assets based on risk/return and diversification rules.
AI-driven personalization: Adjusting recommendations using user patterns, signals, or preferences within defined guardrails.
Automated rebalancing: Rule- or event-based rebalancing back to target allocations, including threshold logic.
Order & execution connectivity: Passing/placing orders with brokers/custodians (routing, trading calendars, minimum sizes).
Risk management & monitoring: Ongoing monitoring of volatility, drawdown, concentration risk, and deviations from the risk profile.
Tax and cost optimization: Supporting, for example, tax-aware rebalancing or tax-loss harvesting (depending on jurisdiction/setup).
Explainability & transparency: Clear rationale for recommendations (e.g., “Why this portfolio?”) and disclosure of assumptions.
Reporting & client communication: Performance/risk/fee reports, portfolio insights, alerts, and document delivery.
Compliance, audit trail & model governance: Versioning of models/rules, decision logging, approval workflows, and controls.
Human-in-the-loop escalation: Hand-off to human advisors for complex cases, exceptions, or regulatory needs.
Betterment: Digital robo advisor with automated portfolio management and rebalancing.
Wealthfront: Automated wealth management with digital onboarding and portfolio optimization.
Schwab Intelligent Portfolios: Robo advisory offering with rules-based allocation and automated management.
Vanguard Digital Advisor: Digitally supported investment management with automated portfolio processes.
Scalable Capital: European robo advisor with digital wealth management and risk-based strategies.
Quirion: Robo advisor in the DACH market with ETF portfolios and automated workflows.
Nutmeg: UK robo advisor with digital investment management and portfolio steering.
Moneyfarm: European robo advisor with digital investment management and reporting.