3/31/2015 – Robo-advisers: The in’s and out’s of automated investment platforms (Employee Benefit News)

You may have noticed that there’s a new trend sweeping the financial services industry: robo-advisers. What is a robo-adviser exactly? Is there actually a fleet of robots somewhere managing people’s money?

Well, not exactly. They offer an online platform for investing and portfolio management and, despite the “robo” part of the name, humans actually are in fact involved. These services use algorithms to automate investing, manage individual portfolios and provide financial guidance. So, what spurned the rise of this new way of managing money? What do these advisers have that traditional (and might I add – 100% human) financial advisers don’t? In the words of one robo-adviser: betterment.

Basically, behavioral finance shows that people aren’t the best at saving or investing on their own. Furthermore, traditional advisers are usually only available to people with a certain net worth. Robo-advisers ostensibly try to eliminate both of these issues; first by the automation factor and second, by making their service available to people with smaller account balances. These organizations are using technology to offer financial help to many more people than traditional advisors ever could and they’re doing it for a lower cost.

Read the full article at Employee Benefit News.