Natixis Global Asset Management, a financial services firm, will announce Monday that it is funding a $1 million research project at the Massachusetts Institute of Technology to help consumers better understand the risks associated with their investment decisions.
The Boston firm will help fund behavioral and financial engineering research at MIT’s Sloan School of Management for three years.
Among the goals is designing a computer program to help consumers decide when to buy and sell investments, based on how much risk they can tolerate and what the money is being used for: retirement, college tuition, or a second home, for example.
Natixis hopes the research helps investors “build better portfolios and increase their chances of long-term success,” John Hailer, its chief executive, said in a statement. “It’s time to introduce a new paradigm for investing.”
With technological changes, personal investing can be more automated than ever before, said Andrew W. Lo, a professor of finance at MIT who will lead the research project.
But individual investors don’t always know when to sell stock or when a market has become calm enough to start buying again, Lo said. For example, after the financial crisis of 2008, many individual investors waited too long to return to the stock market and missed out on some large gains.
The research will use surveys by Natixis of investors and financial advisers to understand consumer financial behavior and eventually develop algorithms personalized for each investor’s preferences.
“We should be able to automate the large part of portfolio management,” Lo said.