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What Is A Robo-Advisor?


The term “robo-advisor” has gained buzzword momentum among financial consulters and investment experts, lately. So, it’s pretty safe to say that assumingly you’ve probably heard about robo-advisors, too. But maybe you’re one of the many people, who don’t quite know what to make of this: What is a robo-advisor, anyway? What does it do? How does it work? We’ll look into that right here.

The Definition Of A Robo-Advisor

The idea and concept of a robo-advisor arose during the latest developments in the financial technology sector. The name is a blend of the term robot and advisors, which results in robo-adviser. And this pretty much already contains the robo-adviser explanation: it acts — as robots are supposed to do — completely unemotional. Instead, it conforms to a given logarithm which allows for it to recommend certain types of investment. Basically, robo-advisers have digitalized and automized the tasks of financial consulters and asset managers.

How Robo-Advisors Work

A robo-adivsor’s logarithm is fed with historical data and mathematic formulas alike. From these empirically established figured and probability calculations, the automized consultant can compile profound investment and asset recommendations. But these information provide only the basic data. In order for them to propose individual investment types, further details are required.

So, with all his knowledge ready, a robo-advisor will ask you further questions: on your risk tolerance, income, solvency, and on your savings target, investment horizon, desired savings rate or one-off investment. It’s only with these data that a robo-adviser is able to allot your risk profile to various portfolios and fitting investment types.

A robo-advisor pretty much does, what any human consultant does, too. And it uses the same information resources that a human asset manager would rely on. Depending on how much, for how long, and how risky you’re willing to save and invest your money, a robo-advisor usually proposes you two different types of investments:

  1. It either recommends you invest in low-risk exchange traded funds (ETFs), which it automatically rebalances from time to time without you having to interfere or tell it to. This means, you won’t even have to follow the development of markets and indexes, if you don’t want to. This type of investment is considered a defined portfolio.
  2. Or it recommends a so-called dynamic asset allocation. In this case, the robo-advisor constantly adjusts your portfolio to the changes of the market developments.


No matter, which type of investment your robo-advisor recommends: It will at any moment make sure that your portfolio will be adjusted and re-balanced according to your personal risk tolerance. So, basically, the answer to the question „what is a robo-advisor?“ would be: an automized, digitalized combination of an investment consultant and an asset manager. We have provided more detailed info on how robo-advisors work in our glossary.

Why Are Robo-Advisors Good For Women Investors?

Or are they? Yes, they are. Because robo-advisers act in a completely unemotional and mere mathematical manner. They do not promise unrealistically high yields at minimum risk, but rather provide neutral, objective information on what can and what can’t possibly and realistically be achieved within your personal risk profile range.

You cannot fall for a robo-advisor. Because that’s not how robo-advisors work: they cannot lie. Due to it’s coding and programming, a robo-adviser explanation and recommendation cannot sugarcoat: it is a trustworthy, honest financial consultant. And that’s what makes a robo-adviser good.

It also saves you from making emotional decisions: it’s one thing to fall for false promises on high returns. But it’s by far not the only emotional trap that can danger your investments. Especially, if you choose to manage your investments yourself, volatility and market fluctuation can pose huge challenges. All the more, if you’re new to the world of stock markets, funds, and asset allocation. This insecurity might lead to you making rash decisions — say, selling stocks and shares too fast when markets are briefly down. A robo-adviser can prevent you from making such emotional mistakes out of sorrow, fear or lack of knowledge. That’s what makes a robo-advisor safe.

And there’s yet another advantage for you in working with a robo-advisor: they are a lot cheaper than a fund manager or an asset manager. The robo-advisor fees usually already contain the costs for deposit maintenance and re-balancing services. That’s how they keep your expenses at a minimum. Way to profit, don’t you think?

And eventually, a robo-advisor allows for you to invest at really low rates. This way, asset allocation is made available to women, too, who often earn less or come from a low-income background.

To Your Advantage: FinMarie Uses A Robo-Advisor

Now that you have gained a little more knowledge about robo-advisors, and hopefully found the reassuring answer to the question “what is a robo-advisor” along with some more tranquility on whether or not robo-advisers are safe, and how robo-advisors work — as long as you provide legit and true responses —, make sure to benefit from working with FinMarie:

There’s no way to imagine modern asset allocation without robo-advisors anymore. FinMarie has identified the signs of the times. So we’ve created a kind of a hybrid model by combining classic, human expertise with the advantages of a digital finances platform. This allows us to re-invent digital asset management.

You can let our platform create an overview of your entire fortune, while contemporarily, our asset experts will guide and accompany you as personal financial coaches. A first assessment with us is completely free of charge. Book an assessment now:

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We aim at making investments
✔ understandable,
✔ profitable, and
✔ safe,

providing an all-online service at a fair and transparent cost-benefit ratio. In order to grant this comfort and security, FinMarie decided to collaborate with one of Germany’s largest robo-advisors. Since October 2018, we’re working with growney, a robo-advisory service that provides our investors an easily and transparently comprehensible access to their individual asset allocation.

growney detects the individual risk profiles of our customers and, based on the respective data, proposes a fitting portfolio. Usually, our FinMarie portfolios consist of a mix of ETFs and actively managed funds. Having concluded an investment with FinMarie, robo-advisor growney supervises and manages said portfolio. This means, the robo-adviser continuingly substitutes shares that do not develop according to your expectancies with more suitable values.

All this happens in complete automation, so that our customers do not have to act or interfere at any time.

If you wish to find out more on robo-advisors, investment, and financial products, just follow our blog and FinMarie will send you each and every new article and post via e-mail:

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