In our previous article, we defined what a robo-advisor was. This week, let’s dive into what it is about and the three basic steps to consider in choosing one.
While the easy lure of robo advisors are its competitive prices and the tapping on of award-winning algorithms and statistical models with less human-factors, there are important factors to note when choosing one, especially because not all of them are created equal.

Let’s dive into what robo-advisors are about and the three basic steps to consider in choosing one.
Let’s Dive Into What Robo-advisors Are About and the Three Basic Steps to Consider in Choosing One.
1. There is always a human behind the robot
Be diligent in doing your homework. The best robots and algorithms in the world are still programmed and managed by humans. Be careful in evaluating their investment strategies and how they dynamically adapt to the ever-changing forces of the market. Some robos have different specialities and concentrations on certain products, or regions.
All these factors have to be comfortable to your palette and your risk nature, so be sure to have these aligned with yourself. It is also important to check their communication mediums with you, and how available or responsive their customer service is. Should the need arise to deal with robotic issues, the last thing you would want is having another robot help to solve them.
2. Track Record & Contingencies
Robos have not been around long enough to be thoroughly stress-tested by time, so it would be good to initiate a chat on their stand and strategy towards major market changes. Many will claim superior methodologies, but results speak for themselves. As mentioned above, look into the humans behind the robots and be sure their experience and expertise is at the level that can instil confidence in you.
Even robots should have resumes and report cards. Do your research on their historical performances since their genesis, with other sources apart from their websites, which tend to only show the good trends and short-term results. Go the extra step and look into how they implement systematic risk and crisis management. Should they not be able to answer you, that should be a red flag.