One approach to financial planning, investing, and portfolio management involves strategic asset allocation. Chen (2020) inferred strategic asset allocation is presetting targets based on investment policy then re-balancing assets as deviation occurs beyond initial ranges over a significant period. Surveys attempt to assess investor confidence with essential risk and return scenarios (Bryant, 2020). Bryant affirms this investing approach based on a plan. That commentary remains congruent with previous research. Graham, Smart, & Megginson (2010, p.692) affirmed balancing short-term cash management with long-term equity and fixed income positions. The risk-averse U.S. investor generally has a conservative-to-aggressive tolerance to financial uncertainty. To accurately discern strategic asset allocation that is tailored for an investor requires qualitative and quantitative tools – intuition with math.
Employing computer-based algorithms and processes is part of modern finance. Without significant limitations, robots cannot assess appropriate financial strategies or investments tailored for a human being. This involves art and science. Humans and robots both have limitations. “Robo-advisors can’t take your long-term lifestyle goals into account and a successful investment strategy always aligns with those goals” (Jansen, 2018). Jansen concurred with the U.S. Securities and Exchange Commission (SEC). Robots, or more accurately named “Internet Investment Advisers” provide interactive questions and answers through a website where computer-based algorithm processes analyze transmit investment advice to the investor by electronic media (SEC, 2003).
SEC opinion concurs with long-term financial practice. The risk-averse U.S. investor is best served by working with a registered investment adviser who is a human being employing computer-based algorithm processes for personal financial analysis with communication service leadership through electronic and other media. This hybrid model of investors working with the registered investment adviser who employ computers to help with analysis, automation, and processing is the best approach for people experiencing financial independence and helping people become financially independent.
Bryant, J.C. (2020 August 20). Investing is a Process. Retrieved from https://tinyurl.com/y5b9v987
Chen, J. (2020 June 11). Strategic Asset Allocation. Investopedia. Retrieved from https://tinyurl.com/y5ujc6x8
Graham, J.R., Smart, S.B. and Megginson, W.L. (2010). Corporate Finance, 3rd Edition. Mason, OH: South-Western Cengage Learning.
Jansen, E. (2018 June 5). When a Robo-Advisor is, or Isn’t, the Right Choice. CNBC LLC. Retrieved from https://tinyurl.com/y8lljk8z
U.S. Securities and Exchange Commission. (2003 January 20). Final Rule: Exemption for Certain Investment Advisers Operating Through the Internet. Retrieved from https://tinyurl.com/y6bvgoox