You may have read the headlines about financial analysts and advisors being “replaced by robots.” What exactly is this new upstart technology?
Simply put, robo advisory is the internet interface of investing. A new breed of online financial advisors uses computer models and algorithms to both design and manage investment portfolios.
Many provide automatic portfolio rebalancing and tax-loss harvesting; some offer “hybrid” services for larger investors, adding in a human advisor who can assist with detailed portfolio reviews and fund selection processes. Common among them is that all have lowered the bar on investment minimums.
Starting an investment relationship with a robo firm often begins with a simple online questionnaire that establishes goals and objectives as well as tolerance for risk. Coupled with vastly different gradations of service, access and interactivity, it is somewhat difficult for individual investors to determine the best choice for their needs.