Save investors from themselves with your own robo-advisor and UNSW Online

Save investors from themselves with your own robo-advisor and UNSW Online

Robo-advisory is an emerging field of stock market investing that is saving investors and stockbrokers from their worst enemy – themselves. That’s because no matter how much information they have about a company, shareholders often make investment mistakes because of their own cognitive biases.

Warren Buffett is one of the most successful long-term investors in the world and he acknowledges his own bias in every important decision. In fact, Buffett even invited a vocal critic of his company to speak at the AGM to actively prevent bias – by giving voice to opinions that contradict his own.

Rather than inviting another human to contradict us, robo-advisory short-circuits our bias by offering investment advice based on numbers, rather than gut feelings. It’s one of the reasons why UNSW’s 100% online Master of Financial Technology appeals to mathematicians and coders.

Program Director Luis Goncalves-Pinto has studied markets and investors for two decades and leads the Robo-Advisory and Portfolio Optimisation course.

“In this course, students start by learning about the common biases that investors have when choosing their investments, and the costs incurred in this process,” says Goncalves-Pinto.

“They develop an understanding of how automated trading systems can help investors overcome the costs of such biases.”

The costs that robo-advisory can eliminate are not just those caused by poor investment decisions.

Investors often use financial advisors or financial managers to build an investment portfolio that costs around two per cent of the amount invested each year. If your investment makes eight per cent, that’s a quarter of your profit gone in fees.

Robo-advisors do the same job for around a quarter of one per cent in fees. It’s one reason why traditional human fund managers are increasingly working with robo-advisors.

“We discuss the frontiers of robo-advising and the industry convergence to a hybrid model where robot and human advisors co-exist and complement each other,” says Goncalves-Pinto.

There’s no doubt that this course can be quite technical, but it also dives deep into modern portfolio theory. Also known as mean-variance optimisation, this is a mathematical framework that assesses how each stock influences the risks and returns of an entire investment portfolio.

“You’ll learn to implement mean-variance optimisation in both Excel and Python, and develop the skills needed to develop your own robo-advisors by building on open-source codebases.”

If you’re less experienced in maths and coding, you’ll be pleased to hear that Goncalves-Pinto comes from a background in markets rather than mathematics or computer science.

“These courses have been designed in a way that even students with limited prior exposure to finance or programming are expected to cope well with the material.”

So whether you have a bias towards maths and coding, or a bias towards traditional finance – UNSW’s 100% online Master of Financial Technology will level up your potential as a FinTech professional.

Learn more about how you can develop the in-demand skills to respond to the technological revolution in finance with UNSW Business School.