man and AR hands shaking

The world of robo-advisors 

26 February 2023


Robo-advisors are automated tools that use computer algorithms created by financial advisors or investment managers and data scientists to build and manage investment portfolios. They were introduced to introduce professional money management to the general population.

Robo-advisors offer a user-friendly experience in order to give users a perfect web browsing using  minimums investment. 

They are expanding thanks to the capability to offer high-quality tools. 


In 2008, during the financial crisis  was launched the first robo-advisor. 

Andy Rachleff and Dan Carroll wanted to pursue a goal: provide financial help to the tech community. Later, founders shifted their focus and wanted to automate the process of selecting and managing investments in order to make this procedure very simple to users. 

So, for the first time, general public has access to digital financial advisors. 

Since that year, customers have been using portfolio allocation software to help users portfolios to line up their financial goals.


Robo-advisors can’t replicate human interactions but they can employ strategies based on investment practices and knowledge accumulated over the years by human financial experts. 

These tools, can create portfolios for investors maintaining investments through rebalance and tax-loss harvesting. 

They follow the passive investing, which is a technique used to reduce risks. The most popular form of passive investing is the index fund. Robo- advisors check portfolios to ensure they maintain their value by setting specific limits not to be exceeded. 


Robo-advisors were product to make investing easier for everybody wanted to invest small amounts of money. 

Now, these tools are increasingly widespread to invest successfully on the market. 

Below, the most frequent users today:

1.Seasoned Investors seeking a hands-off approach: robo-advisors offer them automated services like the creation of a diversified portfolio;

2.Lower-wealth investors: robot-advisors stay behind them expecting they come up with a minimum investment;

3. Retirement investors: robo-advisors help users to be safe for retirement. 

4.Investors with specific goals: users can use robo-advisors to put their money to reach the goals;

5.Knowledgeable investors seeking efficiency: for investors that are following a passive investment strategy. 

Pay attention to frauds 

The head of the MiniFX Inc., a trading platform that is under Eddy Alexandre’s control, was victim of a fraud. 

Fraud stolen million of dollars and, according to the court, “Specifically, Alexandre falsely represented to investors that they would double their money within five months of investing by earning at least 5% weekly returns on their investment using a ‘robo-advisor assisted accoun’ to conduct trading”. 

The court added that there wasn’t secrets technologies: “Alexandre sustained millions of dollars in losses on the limited portion of funds that he did invest, which he did not disclose to his investors”. 

In the end, it concluded “Alexandre’s scam caused investors to lose millions of dollars, and this case should serve as yet another warning to cryptocurrency executives that the Southern District of New York is closely watching and ready to prosecute any and all misconduct in the crypto markets”. 

SOURCE: Financial Planning


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