Have you ever thought why the same medicine which worked wonders for your friend did not have the desired effect on your body? Or, why did a movie liked by you not bode well with some family members? Well, that happens because every human choice is as unique as their fingerprint. And personalization is needed. The sui generis human nature corresponds to solely developed thoughts and selections.
Personalization in the current world
Personalization has been magnanimously appealed to and adhered concept in the modern-day market. Whether it’s the news, movies, music, videos, and even shopping ideas, every content, product, or service we consume is tailored to our interests across multiple platforms.
Global giants like Netflix, Spotify, and YouTube are big examples of how a user’s viewing habits and the behavior of similar users can direct markets.
Their services are exclusively moderated by algorithms based on your preferences of the genre, mode, and affinity to various topics. It won’t be surprising somewhere in the future when Netflix movies influence the plot twists, dialogue, and even soundtrack based on our likings.
Personalization challenges in Investing
Just like our unique preference for clothes, music, or books, even investing is dictated by individual principles. What breaks or builds the portfolio is financial scaling in terms of our style, investment goals, return targets, and risk factors. And even though we see personalization in almost all folds of the economy, the failure to cut down resource utilization has made personalized investing quite expensive and available to only an elite few.
The only way to get personalized investment advice is to open a separately managed account (SMA) at investment management firms such as Fidelity or Schwab. However, a Financebuzz study suggests that more than 75% of Americans are not even eligible to open an SMA. As a result, investors resort to more generic investment advice that is just insufficient to drive portfolio performance or promise satisfactory customer outcomes. Sources such as Reddit threads, Seeking Alpha, CNBC, and Motley Fool recommending stocks know nothing about your goals and preferences and would mostly leave unanswered questions about the quantity, price, exit point, and alterations in existing portfolios.
Addressing the need for Personalization
Personalization in investing requires the amalgamation of the right tools and techniques to facilitate a convenient end-to-end client journey, enforcing a robust value proposition.
Modern systems need to understand user discretions while weeding out the complexities of investing world. Moreover, all this should be affordable and easily accessible to average retail investors to produce strong and sustainable financial gains.
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