If you follow financial news closely, you may remember the 2010 “Flash Crash,” the stock market spiral that wiped out $1 trillion in half an hour, only to mostly recover later in the day. The wild market swing was blamed on automatic high-speed trading algorithms that spun out of control.
The good news (or possibly frightening news, depending on your poipnt of view): the kind of programs that caused the Flash Crash are now available for individual investors to use, as more and more companies are offering sophisticated trading software, once used only by hedge funds, to consumers.
“Robo-advising” promises to change the entire financial system, and Princeton is convening some of the top businesspeople and researchers to discuss how to manage the impact of financial technology. The conference will take place Friday, April 28, from 8 a.m. to 6 p.m. in Princeton University’s Computer Science building at the corner of William and Olden streets. The conference will feature Michael Evans, who is president of Alibaba, the world’s largest online commerce company. Tickets are $75. Visit fintech.princeton.edu.
New generations of “robo-advisors” are automating investment decisions across disparate classes of assets, from equities and bonds to commodities and real assets —- not just for big companies but for individual investors. In an age when people increasingly have to manage their own retirement funding via 401(k)s and other plans (as opposed to relying on traditional employer-run pensions), the role of financial advising will be critical, with or without human planners. How can individuals carry out these complicated plans and implement them, given the many stresses of modern life?
Robo-advisors have the potential to disrupt the financial services industry by reducing the role of human analysts and lowering costs. And as with all disruptive technology, there will be pros and downsides. The four-university rotating conference on FinTech brings together leading academic researchers and practitioners to take a critical look at this revolution. Do the systems really work? Are they a good value? What are the risks?