Investment banks and other investment bodies which typically employ anything between 5,000 and 10,000 analysts as human advisors for their clients’ portfolios are now using automated, or ‘robo-advisors’ it would seem from an article on Monday this week on Bloomberg site. Quite how they value the advice of the robo-advisors compared with human advisors. I don’t know. 1 Robo-advisor = 1,000 human advisors perhaps? But why are they doing this?
Because they’re desperate. Now that the world economy is in the doldrums and rich customers want every 0.1% or 0.2% interest above what others are promising them, the investment banks will try any method to gain an advantage over their competitors. Or even to survive. Investment banks were the only financial bodies that were not affected much by the 2008-Crisis. Yet they and their structured derivatives were the principal cause of 2008.
Since last year, all of them are experiencing steeply declining profits and they’re becoming very worried indeed. Unlike the high street banks that had to be saved by governments, the investment banks won’t be. Some of them will be going bankrupt soon and some of us can’t wait for that to happen.