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In a classic case of one plus one equalling three, two of the leading purveyors of wealth management advice tools have joined forces to create an industry powerhouse.

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Episode 7: How To Assess A Robo-Advisor

Episode 7: How To Assess A Robo-Advisor

Wednesday, October 07, 2015
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To assess a robo-advisor Paul Resnik argues that we must conduct our own due-diligence to determine if the Robo gives ‘suitable advice’.

Suitable advice is anchored on having a reasonable basis for making an appropriate investment decision. For robos, this means they must collect the relevant personal, financial and risk tolerance data then use that information as the basis for a recommendation that is appropriate for the client. A critical problem, of course, is that an error in any of those steps can result in an inappropriate recommendation, due to the ‘garbage-in/garbage-out’ nature of automated processes.

Paul believes many robo-advisors do not give suitable advice, as they fail to accurately measure risk tolerance using rigorous, scientific risk tolerance assessment tools such as those supplied by FinaMetrica.