How to Start AI Automated Asset Management: Pros, Cons & Service Comparison (2026 Edition)

In recent years, fintech services powered by AI have rapidly expanded, with “robo-advisors” for automated asset management attracting particular attention. Even those without investment knowledge or time can benefit, as AI constructs optimal portfolios on their behalf—making it accessible and popular among beginners. However, despite the convenience, there are risks you should understand. In this article, we’ll clearly explain the pros and cons of AI investing, using services like WealthNavi and THEO as examples.

What Is AI Automated Asset Management? The Basics Explained for Beginners

AI automated asset management is a system where artificial intelligence makes investment decisions and automatically adjusts asset allocation. Traditional investing required specialized knowledge for stock selection and market timing, but with robo-advisors, you can leave all of that to AI.

Representative services include WealthNavi and THEO. These platforms propose and manage optimal asset allocations based on the user’s risk tolerance and investment goals. Thanks to advances in fintech technology, you can easily get started with just a smartphone.

4 Benefits of AI Investing: Why It’s Popular Among Beginners

1. Easy to Start with Small Amounts

Many robo-advisor services allow you to start investing from as little as 10,000 yen (approximately $70). WealthNavi’s minimum investment is 10,000 yen, making it attractive due to the low initial cost barrier.

2. No Expert Knowledge Required—Completely Hands-Free

Even without deep investment knowledge, simply answering a few questions will generate a portfolio tailored to your needs. The system also automatically rebalances your assets, maintaining optimal allocation at all times.

3. Rational Decision-Making Free from Emotional Bias

Humans tend to react emotionally to sudden market fluctuations, but AI makes calm, data-driven decisions. This prevents emotional investment mistakes like panic selling or unfounded buying.

4. Low-Cost Diversified Investing

Compared to traditional investment trusts, operating costs are lower. Additionally, the system automatically diversifies investments across various global assets, enabling efficient risk distribution.

3 Drawbacks of AI Investing You Should Know

1. Risks of Complete Automation

Since all decisions are delegated to AI, there are situations where it may not respond adequately when markets move unexpectedly. During events like “flash crashes”—sudden, sharp market drops—AI may not be able to respond appropriately.

2. Limited Customization

It’s difficult to reflect your personal investment philosophy or values in detail. For example, many services cannot accommodate ethical investing preferences like avoiding specific industries or companies.

3. Accumulated Fees Over Time

While costs may appear low at first glance, fees accumulate over long-term management. For instance, even a 1% annual fee can amount to approximately 22% of your principal over 20 years.

Is It Safe? Important Risk Factors in AI Investing

AI investing also carries technical risks. From a security perspective, there’s the risk of personal data breaches. Financial information is particularly valuable and makes an attractive target for cyberattacks.

The AI algorithms themselves also carry risks. Since they learn from historical data, they may not respond appropriately to unprecedented market conditions. During the 2010 “Flash Crash,” algorithmic trading actually accelerated the market decline.

Furthermore, changes in regulations could suddenly alter service offerings. Fintech is a relatively new field, and the regulatory environment will continue to evolve.

3 Things Beginners Should Check Before Starting AI Investing

Before starting AI investing, accurately assess your risk tolerance. Since investments are not principal-guaranteed, it’s important to consider how much price fluctuation you can handle.

We also recommend comparing multiple robo-advisors. WealthNavi and THEO differ in their investment methods and fee structures. Choose the service that best fits your needs.

Starting with a small amount and gradually getting accustomed is a wise approach. Rather than investing a large sum all at once, check the usability and performance of the service while gradually increasing your investment amount.

Comparing Notable AI Asset Management Services in 2026

WealthNavi

Japan’s largest robo-advisor with assets under management exceeding 1 trillion yen. Features fully automated portfolio construction and rebalancing, with a minimum investment of 1,000 yen. The fee is 1.1% per year (tax included) of assets under management, with discounts up to 0.99% (tax included) for long-term users. It’s NISA-compatible and the most popular choice among beginners.

THEO

A robo-advisor featuring diversified investment combining approximately 40 types of ETFs. The minimum investment is 10,000 yen, with fees ranging from 0.715% to 1.10% per year (tax included). Its AI Assist function automatically adjusts your portfolio during sudden market changes. Integration with d-points is also an attractive feature.

ROBOPRO

An aggressive robo-advisor where AI analyzes over 40 indicators and dynamically changes the portfolio monthly based on market predictions. Past performance has shown results exceeding WealthNavi. The minimum investment of 100,000 yen is somewhat higher, but it’s suitable for those seeking aggressive returns.

Frequently Asked Questions (FAQ)

Q1. Is AI asset management principal-guaranteed?

No, there is no principal guarantee for AI asset management or any investment product. While AI operates optimally based on historical data and market analysis, losses can occur due to sudden changes in market conditions. Following the principles of long-term, diversified investing can help mitigate risk.

Q2. Do I need to file tax returns?

If you select a specified account (with tax withholding), tax returns are generally unnecessary. The brokerage handles tax calculation and payment on your behalf. However, tax filing is required when offsetting gains and losses across multiple accounts or carrying forward losses.

Q3. Can I use AI asset management with a NISA account?

Yes, major robo-advisors including WealthNavi are compatible with NISA accounts. Under the new NISA system launched in 2024, you can combine regular investment and growth investment allowances for tax-free management. The annual investment limit is up to 3.6 million yen, and the benefit of tax-free investment gains is significant.

Q4. How much should I start with?

We recommend starting with the minimum investment of 1,000 yen to get familiar with the service and price movements. After securing an emergency fund (3-6 months of living expenses), start with small, regular contributions from your surplus funds. As you become comfortable, gradually increase your monthly contribution amount.

5 Golden Rules to Avoid Failure in AI Asset Management

Rule 1: Secure an Emergency Fund Before Starting

The fundamental premise is to only invest with surplus funds. Save at least 3 months’ worth—ideally 6 months’—of living expenses in a regular savings account before starting AI asset management. If you invest your living funds, you risk being forced to sell at a loss when unexpected expenses arise.

Rule 2: Commit to Long-Term Investing

The strength of AI asset management lies in the compound effect over the long term. Don’t get caught up in short-term price movements or market ups and downs—plan for a minimum investment period of 3 years or more. Historical data shows that long-term investments of 10 years or more have rarely resulted in negative returns. It also pairs perfectly with dollar-cost averaging through regular monthly contributions.

Rule 3: Always Compare Fees

Robo-advisor fees typically range from 0.7% to 1.1% annually, but over long-term management, the difference can amount to hundreds of thousands of yen. It’s important to compare the effective total costs, including currency exchange fees and ETF trust fees, not just the headline rate. Choosing services with long-term discount programs is also an effective strategy.

Rule 4: Don’t Use Multiple Services Simultaneously

While diversification is important, using multiple robo-advisors simultaneously can lead to overlapping portfolios, making your overall strategy inefficient. Consolidate into one service and verify that adequate diversification is being properly implemented within that service.

Rule 5: Regularly Review Your Portfolio

Even with fully automated management, make it a habit to review your investment status at least once every three months. Check whether your risk tolerance has changed or whether your management policy needs adjustment due to life stage changes. Most services allow easy review through their apps.

Q5. Which is better: AI asset management or index investing?

For beginners, we recommend AI asset management (robo-advisors). You don’t need to select securities or rebalance yourself—the system automatically maintains an optimal portfolio. On the other hand, those with investment knowledge can significantly reduce fees by purchasing index funds on their own. The ideal approach is to start with a robo-advisor to learn the basics of investing, then gradually increase the proportion you manage yourself.

Q6. What kind of performance do robo-advisors deliver?

Performance varies by service and market conditions, but according to WealthNavi’s published data, risk tolerance level 3 (standard) has reported cumulative returns of approximately 5-8% annually in yen terms since service launch. However, past performance does not guarantee future returns. What matters is not short-term results but the expectation of compound growth over 10-20 years.

Conclusion: AI Investing Is Convenient, but Use It with Full Understanding of the Risks

AI automated asset management is an excellent tool that allows even beginners to easily start diversified investing. As of 2026, services like WealthNavi and THEO have matured technologically, and combining them with NISA allows you to enjoy tax benefits as well.

However, you should always keep in mind that there is no principal guarantee and that there are black-box aspects to the management approach. The wisest strategy is to start with a small amount, understand your own risk tolerance, and gradually increase your investment over time.

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