Question

Do robo-advisors offer a good “value proposition”? In other words…

What do you pay them for their services? What are those services? How customized/specialized are they? Is there a better alternative, and if so, what is it, and why is it better?

Answer 1

Robo advisors here are assumed to be artificial intelligence based robots which offer advice in a business context to a customer basis interactions with the customers.

They do offer a good value proposition to businesses which have a low-intermediate business decisions that can be automated. E.g. Chatbots trying to understand customers visiting a website and their preference as they move between pages. The robo advisors can drect them to exactly what they are looking for (usually a purchase page ) and ensure purchases. Since they are electronic entities we do not have to worry about compensation for such entities. They are mere algorithms. There will always be human alternatives better in certain cases where heuristic decision making is needed and there is no prior data and learning associated with it. e.g. how to react on changing an asset allocation in the event of a global risk situation like the current corona virus pandemic. In such a situation a human response would be more intelligent and applicable.