Terms like "personalized advice" and "AI-powered investing" are used loosely. This article explains what automated tools can and cannot do, so you can compare options clearly. All investing involves risk, including loss of principal.

What Does AI-Powered Investing Mean?

AI-powered tools use artificial intelligence to process information, such as market data and news, and present it in a way that is easier to understand. They can save time on routine tasks. They are not a substitute for professional judgment, and they can be inaccurate, incomplete, or out of date [1].

What Automated Tools Can Offer

Convenience. Automated tools can assign a portfolio, rebalance it, and explain what is happening in plain language.

Education. Many platforms offer lessons and explanations that help new investors learn.

A starting point. A questionnaire-based tool can match you to a portfolio, but the match is only as good as the information you give it [2].

What They Cannot Do

No tool can predict markets, assure a return, or protect you from loss. Automated assignments are based on the answers you provide and a set method, so they may not reflect your whole financial situation.

How Alinea’s Tools Work

Alinea Invest, Inc. offers a mobile investing app. Investment advisory services are provided by Alinea Advisory Services LLC, an SEC-registered investment adviser and a wholly owned subsidiary of Alinea Invest, Inc. SEC registration does not imply a certain level of skill or training.

• Model portfolios. Alinea asks about your risk tolerance and assigns you one of four risk-based model portfolios of ETFs by algorithm. Alinea rebalances it monthly. The portfolios are the same for every investor at a given risk level.
• Investing Playlists. Playlists are collections of stocks and ETFs organized around themes or interests. Some Playlists have their weights set by AI on a schedule, with no human review of the changes, and themed portfolios may be less diversified and more volatile.
• Recurring investing. You can set a fixed amount to invest on a schedule, including into individual stocks, an approach known as dollar cost averaging. It does not assure a profit or protect against loss in declining markets.
• Allie. Allie, Alinea’s AI assistant, is available in the Alinea app. It can explain your holdings, market news, and financial terms in plain language, and share lessons. At your request, Allie can also start a deposit, withdrawal, buy, or sell, and you confirm every transaction before it runs. Allie does not provide investment advice or recommendations, does not give tax or legal advice, does not predict prices, and can make mistakes.

Alinea’s support team handles questions about using the service only and does not provide investment advice. If you want advice tailored to your whole financial situation, consider speaking with a registered investment professional.

Questions to Ask Any Provider

• What does it do, and what does it not do? Ask who makes the final decision and what the tool is limited to.
• How does it work? Ask how portfolios are chosen, how often they change, and whether a person reviews the changes.
• How is my data used? Look for clear privacy policies and strong security measures.
• What does it cost? Compare fees, since they can reduce your returns.

Potential Pitfalls

• Over-reliance on AI. Do not follow AI output without understanding the reasoning. Use it to support your own decisions.
• Lack of transparency. Make sure you understand how a tool works and how your portfolio is managed.
• Data privacy. Consider the privacy implications of using AI-powered tools, and choose platforms with clear policies.

Brokerage accounts are held at DriveWealth LLC, member FINRA/SIPC, which is not affiliated with Alinea. SIPC protects securities customers of its members up to $500,000 (including $250,000 for claims for cash) if the brokerage firm fails financially. It does not protect against a decline in the market value of your securities [3]. Bank accounts are linked through Plaid, Inc., a third party not affiliated with Alinea, and we do not store your online banking credentials. SSL and 256-bit encryption help protect your data.

Frequently Asked Questions

What is personalized advice?

It is investment advice that takes into account an individual’s goals, circumstances, and risk tolerance. Alinea assigns model portfolios from your risk tolerance answers and does not provide personalized investment advice through Allie or its support team.

How long does it take to see results?

There is no set timeline. Results depend on markets and your investments, and they are not guaranteed.

What makes automated tools useful for new investors?

Many new investors value simple setup, plain-language explanations, and automation. Whether a tool is suitable depends on your goals, time horizon, and risk tolerance.

What mistakes should I avoid?

Avoid relying solely on AI-generated information, assuming a tool knows your full situation, and not understanding how a platform works.

Disclosure

Advisory services are provided by Alinea Advisory Services LLC, an SEC-registered investment adviser and a wholly owned subsidiary of Alinea Invest, Inc. SEC registration does not imply a certain level of skill or training. Brokerage and custody services are provided by DriveWealth LLC, an unaffiliated registered broker-dealer and member of FINRA/SIPC.

This content is for informational purposes only and is not an offer, solicitation, or recommendation to buy or sell any security. All investing involves risk, including loss of principal. Past performance does not guarantee future results. Allie is educational only, does not provide investment advice, and can make mistakes. Some Playlists have their weights set by AI on a schedule, with no human review of the changes, and can be wrong. Alinea oversees the algorithm and monitors it for anomalies. Themed portfolios may be less diversified and more volatile. Alinea is not affiliated with the sources listed below, and their inclusion is not an endorsement. Alinea charges a subscription fee for its advisory services; see Item 5 of Form ADV Part 2A. Alinea’s support team handles questions about using the service only and does not provide investment advice.

See our Form ADV Part 2A, Wrap Program Brochure, and Form CRS at www.alinea-invest.com/legal/home. For more on Allie, see AI Allie – Disclosures & Terms of Use at www.alinea-invest.com/legal/ai-allie-disclosures-terms-of-use.

Sources

[1] SEC Office of Investor Education and Advocacy, NASAA, and FINRA, “Artificial Intelligence (AI) and Investment Fraud,” investor alert, January 25, 2024 (finra.org, investor.gov).

[2] U.S. Securities and Exchange Commission, Office of Investor Education and Advocacy, Investor Bulletin: Robo-Advisers, February 23, 2017 (investor.gov).

[3] Securities Investor Protection Corporation (SIPC), What SIPC Protects (sipc.org).

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