# WIA-FIN-001: Robo-Advisor Standard v1.0

**Status:** Stable
**Version:** 1.0.0
**Date:** 2025-01-15
**Category:** Finance (FIN)
**Emoji:** 🤖

弘益人間 · Benefit All Humanity

---

## 1. Overview

The WIA-FIN-001 Robo-Advisor Standard defines a comprehensive framework for building, deploying, and integrating automated investment advisory platforms. This standard ensures interoperability, regulatory compliance, and best practices across the robo-advisory ecosystem.

### 1.1 Purpose

- Standardize data formats for portfolio management and risk assessment
- Define RESTful API specifications for robo-advisor operations
- Establish investment algorithm protocols and AI model integration
- Ensure regulatory compliance (SEC, FINRA, MiFID II) and security
- Enable seamless integration with brokers, custodians, and market data providers

### 1.2 Scope

This standard applies to:
- Digital investment platforms (robo-advisors)
- Financial institutions offering automated advisory services
- Portfolio management systems and wealth management platforms
- Investment algorithm providers and AI model vendors
- Broker-dealer integration platforms and custodian services

### 1.3 Key Principles

- **Transparency**: Clear disclosure of algorithms, fees, and risk factors
- **Fiduciary Duty**: Acting in the best interest of investors
- **Risk Management**: Robust risk profiling and portfolio monitoring
- **Tax Efficiency**: Automated tax-loss harvesting and optimization
- **Accessibility**: Low minimum investments and user-friendly interfaces

---

## 2. Data Format Specification

### 2.1 Portfolio Schema

Complete portfolio representation including holdings, performance, and risk metrics.

```json
{
  "portfolio": {
    "id": "port_abc123xyz",
    "userId": "user_789def456",
    "accountType": "taxable",
    "createdAt": "2025-01-15T10:30:00Z",
    "updatedAt": "2025-01-15T14:45:00Z",
    "status": "active",
    "totalValue": 150000.00,
    "currency": "USD",
    "riskProfile": {
      "score": 65,
      "level": "moderate_aggressive",
      "questionnaire": {
        "version": "1.2",
        "completedAt": "2025-01-15T10:00:00Z",
        "responses": [
          {
            "questionId": "q1",
            "question": "What is your investment time horizon?",
            "answer": "20+ years",
            "score": 10
          },
          {
            "questionId": "q2",
            "question": "How would you react to a 20% portfolio decline?",
            "answer": "Hold steady and wait for recovery",
            "score": 7
          }
        ]
      }
    },
    "targetAllocation": {
      "stocks": 70.0,
      "bonds": 25.0,
      "cash": 3.0,
      "alternatives": 2.0
    },
    "currentAllocation": {
      "stocks": 72.5,
      "bonds": 23.0,
      "cash": 3.0,
      "alternatives": 1.5
    },
    "holdings": [
      {
        "symbol": "VTI",
        "name": "Vanguard Total Stock Market ETF",
        "assetClass": "us_stocks",
        "shares": 450.50,
        "costBasis": 210.25,
        "currentPrice": 225.50,
        "marketValue": 101587.75,
        "unrealizedGain": 6897.38,
        "weight": 67.7
      },
      {
        "symbol": "BND",
        "name": "Vanguard Total Bond Market ETF",
        "assetClass": "bonds",
        "shares": 450.00,
        "costBasis": 75.00,
        "currentPrice": 76.80,
        "marketValue": 34560.00,
        "unrealizedGain": 810.00,
        "weight": 23.0
      }
    ],
    "performance": {
      "inception": 15.2,
      "ytd": 8.5,
      "oneMonth": 1.2,
      "threeMonth": 4.8,
      "oneYear": 12.5,
      "threeYear": 8.2,
      "fiveYear": 9.8
    },
    "lastRebalance": "2024-12-15T09:30:00Z",
    "nextRebalanceCheck": "2025-03-15T09:00:00Z"
  }
}
```

### 2.2 Risk Assessment Schema

```json
{
  "riskAssessment": {
    "id": "risk_xyz789abc",
    "userId": "user_789def456",
    "version": "1.2",
    "completedAt": "2025-01-15T10:00:00Z",
    "expiresAt": "2026-01-15T10:00:00Z",
    "questions": [
      {
        "questionId": "q1",
        "question": "What is your age?",
        "answer": "35",
        "score": 8
      },
      {
        "questionId": "q2",
        "question": "What is your investment time horizon?",
        "answer": "20+ years",
        "score": 10
      },
      {
        "questionId": "q3",
        "question": "What is your primary investment objective?",
        "answer": "Long-term growth",
        "score": 8
      },
      {
        "questionId": "q4",
        "question": "How would you react to a 20% portfolio decline?",
        "answer": "Hold steady and wait for recovery",
        "score": 7
      },
      {
        "questionId": "q5",
        "question": "What percentage of your income do you save?",
        "answer": "15-20%",
        "score": 7
      }
    ],
    "totalScore": 65,
    "riskLevel": "moderate_aggressive",
    "recommendedAllocation": {
      "stocks": 70,
      "bonds": 25,
      "alternatives": 5
    },
    "constraints": {
      "timeHorizon": 25,
      "liquidityNeeds": "low",
      "taxSensitivity": "high"
    }
  }
}
```

### 2.3 Rebalance Event Schema

```json
{
  "rebalanceEvent": {
    "id": "reb_123abc456",
    "portfolioId": "port_abc123xyz",
    "triggeredAt": "2025-01-15T09:00:00Z",
    "executedAt": "2025-01-15T09:15:00Z",
    "status": "completed",
    "trigger": "threshold",
    "analysis": {
      "maxDrift": 5.2,
      "driftedAssets": ["VTI", "BND"],
      "rebalanceNeeded": true,
      "estimatedCost": 125.00,
      "estimatedTaxImpact": 850.00
    },
    "transactions": [
      {
        "action": "sell",
        "symbol": "VTI",
        "shares": 25.0,
        "price": 225.50,
        "value": 5637.50,
        "fees": 0.00
      },
      {
        "action": "buy",
        "symbol": "BND",
        "shares": 73.0,
        "price": 76.80,
        "value": 5606.40,
        "fees": 0.00
      }
    ],
    "impact": {
      "transactionCosts": 125.00,
      "taxImpact": 850.00,
      "portfolioRiskChange": -0.5
    }
  }
}
```

---

## 3. API Specification

### 3.1 Base URL

```
Production: https://api.wiastandards.com/v1
Sandbox: https://sandbox-api.wiastandards.com/v1
```

### 3.2 Authentication

All API requests require authentication via Bearer token:

```http
Authorization: Bearer {api_key}
X-WIA-Standard: FIN-001
X-WIA-Version: 1.0.0
```

### 3.3 Portfolio Management Endpoints

#### Create Portfolio

```http
POST /portfolios
Content-Type: application/json

{
  "userId": "user_789def456",
  "accountType": "taxable",
  "initialDeposit": 10000.00,
  "riskScore": 65
}

Response 201:
{
  "portfolioId": "port_abc123xyz",
  "status": "active",
  "createdAt": "2025-01-15T10:30:00Z"
}
```

#### Get Portfolio

```http
GET /portfolios/{portfolioId}

Response 200:
{
  "portfolio": { ... }
}
```

#### List Portfolios

```http
GET /portfolios?userId={userId}

Response 200:
{
  "portfolios": [ ... ],
  "count": 3,
  "hasMore": false
}
```

#### Update Allocation

```http
PUT /portfolios/{portfolioId}/allocation
Content-Type: application/json

{
  "stocks": 70.0,
  "bonds": 25.0,
  "cash": 3.0,
  "alternatives": 2.0
}

Response 200:
{
  "success": true,
  "updatedAt": "2025-01-15T11:00:00Z"
}
```

### 3.4 Risk Assessment Endpoints

#### Submit Risk Assessment

```http
POST /risk-assessment
Content-Type: application/json

{
  "userId": "user_789def456",
  "responses": [
    {
      "questionId": "q1",
      "answer": "35",
      "score": 8
    },
    {
      "questionId": "q2",
      "answer": "20+ years",
      "score": 10
    }
  ]
}

Response 200:
{
  "riskScore": 65,
  "riskLevel": "moderate_aggressive",
  "recommendedAllocation": {
    "stocks": 70,
    "bonds": 25,
    "alternatives": 5
  }
}
```

#### Get Risk Assessment

```http
GET /risk-assessment/{userId}

Response 200:
{
  "riskAssessment": { ... }
}
```

### 3.5 Rebalancing Endpoints

#### Preview Rebalance

```http
GET /portfolios/{portfolioId}/rebalance/preview

Response 200:
{
  "rebalanceNeeded": true,
  "maxDrift": 5.2,
  "proposedTransactions": [ ... ],
  "estimatedCost": 125.00,
  "estimatedTaxImpact": 850.00
}
```

#### Execute Rebalance

```http
POST /portfolios/{portfolioId}/rebalance

Response 200:
{
  "rebalanceId": "reb_123abc456",
  "status": "executing"
}
```

#### Get Rebalance Event

```http
GET /rebalance/{rebalanceId}

Response 200:
{
  "rebalanceEvent": { ... }
}
```

### 3.6 Market Data Endpoints

#### Get Security Price

```http
GET /market-data/{symbol}

Response 200:
{
  "symbol": "VTI",
  "price": 225.50,
  "timestamp": "2025-01-15T15:59:00Z"
}
```

#### Get Historical Prices

```http
GET /market-data/{symbol}/history?startDate=2024-01-01&endDate=2024-12-31

Response 200:
{
  "symbol": "VTI",
  "prices": [
    { "date": "2024-01-02", "price": 210.25 },
    { "date": "2024-01-03", "price": 211.50 },
    ...
  ]
}
```

---

## 4. Security Protocol

### 4.1 Authentication & Authorization

- **API Keys**: SHA-256 hashed, rotated every 90 days
- **OAuth 2.0**: Supported for third-party integrations
- **MFA**: Required for account access and high-value transactions
- **Session Timeout**: 30 minutes of inactivity

### 4.2 Data Encryption

- **In Transit**: TLS 1.3 with perfect forward secrecy
- **At Rest**: AES-256-GCM encryption for all sensitive data
- **Key Management**: AWS KMS or equivalent HSM-backed solution

### 4.3 Regulatory Compliance

#### United States
- **SEC**: Investment Advisers Act of 1940 compliance
- **FINRA**: Rule 2111 (Suitability) and Rule 3110 (Supervision)
- **Regulation Best Interest (Reg BI)**: Disclosure and care obligations
- **GLBA**: Data security and privacy requirements

#### European Union
- **MiFID II**: Investment advice and portfolio management regulations
- **GDPR**: Data protection and privacy (right to erasure, data portability)
- **PSD2**: Payment services and strong customer authentication

#### Asia-Pacific
- **MAS**: Monetary Authority of Singapore guidelines
- **FSA**: Financial Services Agency (Japan) regulations
- **ASIC**: Australian Securities and Investments Commission rules

### 4.4 Audit Logging

All system activities must be logged:
- User authentication and authorization events
- Portfolio creation, modification, and deletion
- Trade execution and rebalancing events
- Risk assessment submissions
- API access and rate limiting violations

Logs must be:
- Immutable and tamper-proof
- Retained for 7 years (regulatory requirement)
- Searchable and analyzable
- Regularly backed up to off-site storage

---

## 5. Integration Patterns

### 5.1 Broker/Custodian Integration

Robo-advisors must integrate with brokers and custodians for:
- Account opening and KYC verification
- Cash transfers (ACH, wire) and funding
- Trade execution and order routing
- Position reconciliation and corporate actions
- Tax document generation (1099, 8949)

**Standard Protocols:**
- FIX (Financial Information eXchange) for trade execution
- ISO 20022 for financial messaging
- SWIFT for international transfers

### 5.2 Market Data Integration

Real-time and historical market data required:
- End-of-day prices for portfolio valuation
- Intraday prices for rebalancing decisions
- Corporate actions (dividends, splits, mergers)
- Fund characteristics (expense ratios, holdings)

**Data Providers:**
- Bloomberg, Refinitiv, IEX Cloud
- Quandl, Alpha Vantage, Polygon.io
- Fund family APIs (Vanguard, BlackRock, State Street)

### 5.3 Tax Services Integration

Tax optimization requires integration with:
- Tax-loss harvesting engines
- Wash sale detection systems
- Cost basis tracking (FIFO, LIFO, specific ID)
- Tax document generation services

---

## 6. Performance Requirements

### 6.1 Latency

- API Response Time: < 200ms (P95)
- Portfolio Calculation: < 1 second
- Rebalance Preview: < 2 seconds
- Trade Execution: < 5 seconds

### 6.2 Throughput

- Concurrent Users: 10,000+
- API Requests: 1,000 req/sec
- Daily Rebalances: 100,000+
- Portfolio Updates: Real-time (< 1 min delay)

### 6.3 Availability

- Uptime: 99.9% (43.8 minutes downtime/month max)
- Planned Maintenance: Off-market hours only
- Disaster Recovery: RTO < 4 hours, RPO < 15 minutes

---

## 7. Implementation Guide

### 7.1 Technology Stack

**Recommended:**
- Backend: Node.js/TypeScript, Python (optimization)
- Database: PostgreSQL (transactional), TimescaleDB (time-series)
- Caching: Redis
- Message Queue: Kafka, RabbitMQ
- Cloud: AWS, Azure, GCP
- Monitoring: Prometheus, Grafana, DataDog

### 7.2 AI/ML Models

**Portfolio Optimization:**
- Modern Portfolio Theory (MPT) implementation
- Black-Litterman model for expected returns
- Mean-variance optimization with constraints

**Risk Models:**
- LSTM networks for return forecasting
- Random forests for risk factor analysis
- Reinforcement learning for dynamic allocation

**Tax Optimization:**
- Genetic algorithms for tax-loss harvesting
- Integer programming for lot selection
- Monte Carlo simulation for tax impact

### 7.3 Testing Requirements

- Unit tests: > 80% code coverage
- Integration tests: All API endpoints
- Performance tests: Load testing at 2x expected traffic
- Security tests: OWASP Top 10, penetration testing
- Compliance tests: Regulatory requirement validation

---

## 8. Certification Process

Organizations implementing WIA-FIN-001 can apply for official certification:

### 8.1 Requirements

1. **Standard Compliance**: Implement v1.0+ requirements
2. **Security Audit**: Pass third-party security assessment
3. **Regulatory Review**: Demonstrate compliance with applicable regulations
4. **Performance Testing**: Meet latency and throughput requirements
5. **Documentation**: Complete technical and user documentation

### 8.2 Certification Levels

- **Bronze**: Core features (portfolio management, basic rebalancing)
- **Silver**: Advanced features (tax optimization, AI models)
- **Gold**: Full compliance including integrations and regulatory adherence

### 8.3 Application Process

1. Submit application at https://cert.wiastandards.com
2. Complete self-assessment questionnaire
3. Schedule technical review with WIA team
4. Pass security and compliance audits
5. Receive WIA certification badge and license

---

## 9. Version History

| Version | Date | Changes |
|---------|------|---------|
| 1.0.0 | 2025-01-15 | Initial release |

---

## 10. References

- [Modern Portfolio Theory (Markowitz, 1952)](https://www.jstor.org/stable/2975974)
- [SEC Investment Advisers Act of 1940](https://www.sec.gov/investment/laws-and-rules)
- [FINRA Rule 2111 (Suitability)](https://www.finra.org/rules-guidance/rulebooks/finra-rules/2111)
- [MiFID II Directive (EU)](https://ec.europa.eu/info/law/markets-financial-instruments-mifid-ii-directive-2014-65-eu_en)
- [ISO 20022 Financial Messaging](https://www.iso20022.org/)

---

## 11. Support

- **Website**: https://wiastandards.com/robo-advisor
- **Documentation**: https://docs.wiastandards.com/fin-001
- **GitHub**: https://github.com/WIA-Official/wia-standards
- **Email**: support@wiastandards.com
- **Discord**: https://discord.gg/wiastandards

---

弘益人間 · Benefit All Humanity

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Licensed under MIT License