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Robo-Advisors: A perspective on the Latin American context

Abstract:

Robo-Advisors (RAs) offer personalized and automated advice through algorithms becoming popular in developed countries. This paper develops from the current debate on the use of RAs where the risks of providing our financial information to third parties and their ability to facilitate the entry of new novice investors, decreasing financial exclusion, are considered. On this topic, studies have been conducted on RAs analyzing how they affect traditional capital markets and the development of new investors. This research performs a descriptive analysis of how RAs are entering Latin American financial markets and the challenges faced by these tools. Financial education has been a constant problem in the region, limiting stock market participation. The legal and regulatory framework is unclear and does not contemplate the growing use of RAs; these limitations and others have hindered the insertion of RAs in the Latin American market.