How to Build a Robo Advisor: A Complete Guide

Robo Advisor

Over the years, many people have tried to define the term ‘Robo advice’ properly but nobody has done it well so far. As we can see, the current market is flooded with platforms that facilitate users with automatic investment and financial planning, these are called Robo-advisors.

People take the help of these Robo-advisor platforms to put their money to work in order to meet their pre-determined financial goals. These Robo-advisors have been introduced a decade earlier and since then, these have become more mainstream as now, there are available several options for the users. Due to its easy-to-use functions and unique investing strategy, more and more people are leaning towards Robo investing to make their savings double by putting it in the right place.

Are you also looking to develop your own Robo financial advisor? If yes, then, you must contact a fintech software development company to find a suitable follow-up to know how to build a Robo advisor platform. The below write-up represents a complete guide about creating your own Robo Advisor in easy steps. Here we are also going to explain what Robo-advisor is and how does it work? Let’s get the details:

What is Robo Advisor and how do Robo Advisors Work?

Robo advisors occur as a powerful investment tool for all kinds of investors. To know in-depth about what is Robo advising or advisors, you must be aware that these differ from company to company but can be used as online financial and investing services facilitating users with automated portfolios according to your choices.

The Robo-advisor recommends a suitable portfolio as per your requirements by evaluating users’ personal preferences such as time horizon, risk tolerance, and financial goals against impulsive forces including market instability, asset class performance, and other market conditions. Get to know about how Robo advisors work:

Though every Robo-advisor works differently, they operate similarly. Robo advisor software is advantageous for both newbies and experienced investors. It works well for novice investors with their deposits starting from a low level without much market knowledge. On the other hand, for experienced users, it automates intricate activities like tax-loss harvesting and rebalancing. These automated investment platforms use smart algorithms to understand and forecast the investors’ preferences, goals, and risks.

Here are the steps on how does Robo-advisor work-

  • Complete a set of questionnaires including demographic and psychographic questions comprising inquiries on incomes, gender, willingness, and liabilities to take on risk and existing resource allowance.  More detailed information will be stored via AI and data.

  • The Robo-advisor creates a diversified fund portfolio automatically that is built by an expert team of investment professionals.

  • After that, the team will observe market activity regularly and each underlying investment will make sure the user portfolio is rebalanced correctly by a smart algorithm.

  • A number of Robo advisors also connect users to a certified financial planner or a live consultant to help them focus on their goals and give recommendations to fulfill them.

  • Then, users can log in to their accounts to keep the track of progress, do alterations, add contributions, and continue to do their best for achieving their goals.

Who can use a Financial Platform like Robo Advisor?

There is no particular segment of people who use Robo Advisor as these automated investment platforms can be used by anyone including investors & institutions, financial advisors, investors not relevant to financial advisors, etc. A user doesn’t need to have a huge amount to invest as they can start with the bare minimum like as low as $0 and anything above that. Therefore, it is considered the most suitable professional financial advisor platform for those who have a lower net worth as well as a high amount of money.

Step-by-step Process to Create Your Own Robo Advisor Platform

In today’s time, it is beneficial to acquire financial software development services to get an automated investment platform Robo advisor. If you are also interested in building your own Robo Advisor, then, there are some of the few steps below to follow to get a proficient solution:

  1. Market Identification & Asses the Risk Profile
  2. Work on the Proof-of-concept
  3. Get an Appealing User Interface
  4. Start the Development Phase
  5. Release & Maintenance

1. Market Identification & Asses the Risk Profile

Start the project by doing proper market research about your potential user base and existing competitors. Try to conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) to get in-depth details about the marketplace. Get to know about the future customers’ preferences, and decide what will you go for among B2B, B2C, or both accordingly. The research phase will help you get a clear picture of your expectations from the project and ROI goals.

Other than that, you can decide on must-have features, including tech stack, etc. that will give a kickstart to your project. Also, you need to access the risk profile referring to how much risk you can handle to double your future return. As you know nowadays, the market is full of risk, hence, you better be ready to be a cool head while being patient about fluctuating stock prices.

2. Work on the Proof-of-concept

Machine learning algorithms play a vital role in financial software development. While creating a Robo advisor with the help of a leading software development company, you need to consider the development of proof-of-concept first. With the integration of ML, it will be smoother and easier for the Robo advisor to process the users’ data and also build portfolios as per their inclinations. This is the part where several portfolio models will be created, and they will get authenticated in opposition to the accumulated stock market records.

3. Get an Appealing User Interface

Now, it’s time to work on the user interface also known as front-end designing. Here, your chosen financial and investment mobile app development company needs to think from the perspective of users. It is mandatory to design easy-to-understand and low-fidelity prototypes & UI wireframes to get approval from the client and start working on the main UI design.

To provide a smooth user experience (UX), the app designer must create the design phase very interactive, responsive, and attractive with the help of technologies such as HTML, CSS, React Native, etc. While designing the automated investment platform, designers must take advice from the developers as sometimes, they are well-informed with the latest design guideline needed to launch the solution on the decided mobile platform.

4. Start the Development Phase

Let’s navigate to the most important phase of Robo advisor platform development. In this stage, you will realize why it is important to hire software developers with experience and skills. Developers need to write the codebase to implement features and functions while following the Agile methodology referring to announcing the solution updates every two weeks. With the Agile approach, it becomes mandatory to release a product with an ideal product fitted to market demands. To develop the Robo advisor platform, there can be implemented the latest technology stack including Java, Python, C++, Kotlin, Swift, Flutter, etc. Applying these technologies and tools helps financial software developers to fine-tune every system component without impeding the overall user experience.

5. Release & Maintenance

The final step is to launch the financial advisor on the selected platforms following the standard guidelines and rules. After that, the app maintenance will include observing and analyzing the system performance to sort out the issues and update the functions as per the users’ feedback. It is necessary to hold high user engagement for a long time. Update and maintenance are necessary even when there are new features to add to the app. You can ask your selected mobile app development company to provide you with free support and maintenance services for at least some time after the development.

In Essence,

With the wider reach of AI and machine learning, there are assumptions that soon, these digital financial and investment advisors like Robo Advisor will replace the standard advisors. But there is no harm in this as the financial software has several advanced features to enable users with advantages such as creating a financial plan based on their preferences and choosing suitable investment plans for the short and long term. So, this is the right time when you can create your own Robo advisor platform by hiring a software development company and can get benefit from it.

Rohan Singh

Author Bio:
Rohan Singh is a Chief Executive Officer at SemiDot Infotech, Top rated multi-award-winning software development company providing a full suite of services and solutions to small, medium, and big enterprises, product companies & new-age start-ups.

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