{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2026,1,17]],"date-time":"2026-01-17T03:17:22Z","timestamp":1768619842582,"version":"3.49.0"},"reference-count":36,"publisher":"MDPI AG","issue":"1","license":[{"start":{"date-parts":[[2024,2,3]],"date-time":"2024-02-03T00:00:00Z","timestamp":1706918400000},"content-version":"vor","delay-in-days":0,"URL":"https:\/\/creativecommons.org\/licenses\/by\/4.0\/"}],"funder":[{"name":"FCT\/MCTES (the Portuguese Science Foundation)","award":["CEMAPRE\/REM\u2014UIDB\/05069\/2020"],"award-info":[{"award-number":["CEMAPRE\/REM\u2014UIDB\/05069\/2020"]}]}],"content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":["FinTech"],"abstract":"<jats:p>The rise of digital technology and artificial intelligence has led to a significant change in the way financial services are delivered. One such development is the emergence of robo advising, which is an automated investment advisory service that utilizes algorithms to provide investment advice and portfolio management to investors. Robo advisors gather information about clients\u2019 preferences, financial situations, and future goals through questionnaires. Subsequently, they recommend ETF-based portfolios tailored to match the investor\u2019s risk profile. However, these questionnaires often appear vague, and robo advisors seldom disclose the methodologies employed for investor profiling or asset allocation. This study aims to contribute by introducing an investor profiling method relying solely on investors\u2019 relative risk aversion (RRA), which, in addition, allows for the determination of optimal allocations. We also show that, for the period under analysis and using the same ETF universe, our RRA portfolios consistently outperform those recommended by the Riskalyze platform, which may suffer from ultraconservadorism in terms of the proposed volatility.<\/jats:p>","DOI":"10.3390\/fintech3010007","type":"journal-article","created":{"date-parts":[[2024,2,7]],"date-time":"2024-02-07T06:12:58Z","timestamp":1707286378000},"page":"102-115","update-policy":"https:\/\/doi.org\/10.3390\/mdpi_crossmark_policy","source":"Crossref","is-referenced-by-count":7,"title":["Robo Advising and Investor Profiling"],"prefix":"10.3390","volume":"3","author":[{"ORCID":"https:\/\/orcid.org\/0000-0003-3294-3962","authenticated-orcid":false,"given":"Raquel M.","family":"Gaspar","sequence":"first","affiliation":[{"name":"ISEG, Universidade de Lisboa and REM\/Cemapre Research Center, 1200-781 Lisboa, Portugal"}]},{"given":"Madalena","family":"Oliveira","sequence":"additional","affiliation":[{"name":"AXCO Consulting, 4150-174 Porto, Portugal"}]}],"member":"1968","published-online":{"date-parts":[[2024,2,3]]},"reference":[{"key":"ref_1","first-page":"261","article-title":"The Fintech Revolution and the Changing Role of Financial Advisors","volume":"4","author":"Coffi","year":"2022","journal-title":"J. Appl. Theor. Soc. Sci."},{"key":"ref_2","doi-asserted-by":"crossref","unstructured":"Agnew, J., and Mitchell, O. (2019). The Disruptive Impact of FinTech on Retirement Systems, Oxford University Press Oxford. Chapter 2.","DOI":"10.1093\/oso\/9780198845553.001.0001"},{"key":"ref_3","unstructured":"Ben-David, D., and Sade, O. (2023, October 01). Robo-Advisor Adoption, Willingness to Pay, and Trust\u2014Before and at the Outbreak of the COVID-19 Pandemic; SSRN Working Paper Series. Available online: https:\/\/www.semanticscholar.org\/paper\/Robo-Advisor-Adoption%2C-Willingness-to-Pay%2C-and-and-Ben-David-Sade\/bdbc204c426e6ef74508ee8004715efeefa10bff."},{"key":"ref_4","doi-asserted-by":"crossref","first-page":"120421","DOI":"10.1016\/j.techfore.2020.120421","article-title":"Robo advisors, algorithmic trading and investment management: Wonders of fourth industrial revolution in financial markets","volume":"163","author":"Tao","year":"2021","journal-title":"Technol. Forecast. Soc. Chang."},{"key":"ref_5","doi-asserted-by":"crossref","first-page":"70","DOI":"10.3905\/jwm.2018.21.2.070","article-title":"To advise, or not to advise\u2014how robo-advisors evaluate the risk preferences of private investors","volume":"21","author":"Tertilt","year":"2018","journal-title":"J. Wealth Manag."},{"key":"ref_6","doi-asserted-by":"crossref","first-page":"803","DOI":"10.1038\/s41562-017-0219-x","article-title":"The risk elicitation puzzle","volume":"1","author":"Pedroni","year":"2017","journal-title":"Nat. Hum. Behav."},{"key":"ref_7","unstructured":"Gill, A., Sinha, A., Azim, F., Silva, P.M., and Bernal, J. (2017). The Evolution of Robo-Advising, NYU Stern. Technical Report."},{"key":"ref_8","doi-asserted-by":"crossref","first-page":"2188","DOI":"10.1086\/705716","article-title":"Robots and jobs: Evidence from US labor markets","volume":"128","author":"Acemoglu","year":"2020","journal-title":"J. Political Econ."},{"key":"ref_9","unstructured":"Deloitte (2019). Executive Summary World Robotics 2019, Deloitte. Deloitte Technical Report."},{"key":"ref_10","doi-asserted-by":"crossref","unstructured":"Al Nawayseh, M.K. (2020). Fintech in COVID-19 and beyond: What factors are affecting customers\u2019 choice of fintech applications?. J. Open Innov. Technol. Mark. Complex., 6.","DOI":"10.3390\/joitmc6040153"},{"key":"ref_11","doi-asserted-by":"crossref","first-page":"79","DOI":"10.3905\/jai.2018.20.3.079","article-title":"Robo-advisors and wealth management","volume":"20","author":"Phoon","year":"2017","journal-title":"J. Altern. Investig."},{"key":"ref_12","doi-asserted-by":"crossref","first-page":"1983","DOI":"10.1093\/rfs\/hhz014","article-title":"The promises and pitfalls of robo-advising","volume":"32","author":"Prabhala","year":"2019","journal-title":"Rev. Financ. Stud."},{"key":"ref_13","doi-asserted-by":"crossref","first-page":"101984","DOI":"10.1016\/j.socec.2023.101984","article-title":"When do robo-advisors make us better investors? The impact of social design elements on investor behavior","volume":"103","author":"Back","year":"2023","journal-title":"J. Behav. Exp. Econ."},{"key":"ref_14","doi-asserted-by":"crossref","first-page":"693","DOI":"10.1108\/IJIS-10-2020-0245","article-title":"Digital innovation in wealth management landscape: The moderating role of robo advisors in behavioural biases and investment decision-making","volume":"14","author":"Bhatia","year":"2022","journal-title":"Int. J. Innov. Sci."},{"key":"ref_15","doi-asserted-by":"crossref","first-page":"100275","DOI":"10.1016\/j.jbef.2020.100275","article-title":"Robo-advisors: A substitute for human financial advice?","volume":"25","author":"Brenner","year":"2020","journal-title":"J. Behav. Exp. Financ."},{"key":"ref_16","first-page":"647","article-title":"Trust in financial markets: The role of the human element","volume":"22","author":"Gaspar","year":"2020","journal-title":"Rev. Bras. Gest. Negocios"},{"key":"ref_17","first-page":"128","article-title":"Sustainable Finance and Fintech: Can Technology Contribute to Achieving Environmental Goals? A Preliminary Assessment of \u2018Green Fintech\u2019and \u2018Sustainable Digital Finance\u2019","volume":"19","author":"Macchiavello","year":"2022","journal-title":"Eur. Financ. Law Rev."},{"key":"ref_18","unstructured":"Maume, P. (2021). Robo-Advisors: How Do They Fit in the Existing EU Regulatory Framework, in Particular with Regard to Investor Protection?: Study Requested by the ECON Committee."},{"key":"ref_19","doi-asserted-by":"crossref","first-page":"60","DOI":"10.3389\/frai.2020.00060","article-title":"How risk profiles of investors affect robo-advised portfolios","volume":"3","author":"Boreiko","year":"2020","journal-title":"Front. Artif. Intell."},{"key":"ref_20","doi-asserted-by":"crossref","first-page":"81","DOI":"10.1007\/s12599-018-0521-9","article-title":"Robo-advisory: Digitalization and automation of financial advisory","volume":"60","author":"Jung","year":"2018","journal-title":"Bus. Inf. Syst. Eng."},{"key":"ref_21","doi-asserted-by":"crossref","unstructured":"M\u00e9ndez-Su\u00e1rez, M., Garc\u00eda-Fern\u00e1ndez, F., and Gallardo, F. (2019). Artificial intelligence modelling framework for financial automated advising in the copper market. J. Open Innov. Technol. Mark. Complex., 5.","DOI":"10.3390\/joitmc5040081"},{"key":"ref_22","doi-asserted-by":"crossref","unstructured":"Baek, S., Lee, K.Y., Uctum, M., and Oh, S.H. (2020). Robo-Advisors: Machine Learning in Trend-Following ETF Investments. Sustainability, 12.","DOI":"10.3390\/su12166399"},{"key":"ref_23","unstructured":"Perrin, S., and Roncalli, T. (2020). Machine Learning for Asset Management: New Developments and Financial Applications, John Wiley & Sons."},{"key":"ref_24","doi-asserted-by":"crossref","unstructured":"Anshari, M., Almunawar, M.N., and Masri, M. (2022). Digital twin: Financial technology\u2019s next frontier of robo-advisor. J. Risk Financ. Manag., 15.","DOI":"10.3390\/jrfm15040163"},{"key":"ref_25","unstructured":"Neumann, J.v., and Morgenstern, O. (1947). Theory of Games and Economic Behavior, Princeton University Press Princeton."},{"key":"ref_26","unstructured":"Gai, P., and Vause, N. (2023, October 01). Measuring Investors\u2019 Risk Appetite; Bank of England Working Paper Series. Available online: https:\/\/www.ecb.europa.eu\/pub\/pdf\/fsr\/art\/ecb.fsrart200706_04.en.pdf."},{"key":"ref_27","first-page":"53","article-title":"A measure of risk tolerance based on economic theory","volume":"12","author":"Hanna","year":"2001","journal-title":"J. Financ. Couns. Plan."},{"key":"ref_28","first-page":"369","article-title":"Robo-advising: Learning investors\u2019 risk preferences via portfolio choices","volume":"19","author":"Alsabah","year":"2021","journal-title":"J. Financ. Econom."},{"key":"ref_29","doi-asserted-by":"crossref","first-page":"2485","DOI":"10.1287\/mnsc.2021.4014","article-title":"Personalized robo-advising: Enhancing investment through client interaction","volume":"68","author":"Capponi","year":"2022","journal-title":"Manag. Sci."},{"key":"ref_30","doi-asserted-by":"crossref","first-page":"21","DOI":"10.3390\/fintech2010002","article-title":"Factors affecting fintech adoption: A systematic literature review","volume":"2","author":"Firmansyah","year":"2022","journal-title":"FinTech"},{"key":"ref_31","doi-asserted-by":"crossref","unstructured":"Suryono, R.R., Budi, I., and Purwandari, B. (2020). Challenges and trends of financial technology (Fintech): A systematic literature review. Information, 11.","DOI":"10.3390\/info11120590"},{"key":"ref_32","unstructured":"Lam, J.W. (2016). Robo-Advisors: A Portfolio Management Perspective. [Master\u2019s Thesis, Yale College]."},{"key":"ref_33","doi-asserted-by":"crossref","first-page":"243","DOI":"10.1007\/s11166-005-5102-x","article-title":"Relative risk aversion: What do we know?","volume":"31","author":"Meyer","year":"2005","journal-title":"J. Risk Uncertain."},{"key":"ref_34","doi-asserted-by":"crossref","first-page":"16","DOI":"10.3905\/jpm.2014.40.4.016","article-title":"Return predictability and dynamic asset allocation: How often should investors rebalance?","volume":"40","author":"Almadi","year":"2014","journal-title":"J. Portf. Manag."},{"key":"ref_35","doi-asserted-by":"crossref","first-page":"1242","DOI":"10.1016\/j.jbankfin.2009.01.005","article-title":"Portfolio performance evaluation with generalized Sharpe ratios: Beyond the mean and variance","volume":"33","author":"Zakamouline","year":"2009","journal-title":"J. Bank. Financ."},{"key":"ref_36","unstructured":"Gaspar, R. (2018). Mean-Variance Theory Mean-Variance Theory: Applications and Risks, AEdition. Chapter 4."}],"container-title":["FinTech"],"original-title":[],"language":"en","link":[{"URL":"https:\/\/www.mdpi.com\/2674-1032\/3\/1\/7\/pdf","content-type":"unspecified","content-version":"vor","intended-application":"similarity-checking"}],"deposited":{"date-parts":[[2025,10,10]],"date-time":"2025-10-10T13:54:13Z","timestamp":1760104453000},"score":1,"resource":{"primary":{"URL":"https:\/\/www.mdpi.com\/2674-1032\/3\/1\/7"}},"subtitle":[],"short-title":[],"issued":{"date-parts":[[2024,2,3]]},"references-count":36,"journal-issue":{"issue":"1","published-online":{"date-parts":[[2024,3]]}},"alternative-id":["fintech3010007"],"URL":"https:\/\/doi.org\/10.3390\/fintech3010007","relation":{},"ISSN":["2674-1032"],"issn-type":[{"value":"2674-1032","type":"electronic"}],"subject":[],"published":{"date-parts":[[2024,2,3]]}}}