Robo-advisor
Robo-advisors are a class of financial advisor that provides portfolio management online with minimal human intervention.[1] While their recommendations may vary, they are all based on algorithms that originally served the traditional advisory community, which has relied on algorithmic templates to conduct portfolio management for since roughly 2004.
Other designations for this class of advisor include automated investment advisor, online investment advisor and digital investment advisor. While such advisors are most common in the United States, where they must be registered investment advisor, they are also present in Europe.
Legally, the term "advisor" here applies to any entity giving advice about securities. But robo-advisors generally limit themselves to providing portfolio management (i.e. allocating investments among asset classes) without addressing larger issues of tax, estate and retirement planning, which are also the domain of financial planning.
The tools they employ to manage client portfolios differ little from the portfolio management software already widely used in the profession. The main difference is in distribution channel. Until recently, portfolio management was almost exclusively conducted through human advisors in a bundle with other services. Now, consumers have direct access to portfolio management tools, in the same way that they obtained access to broking and stock trading services with the advent of the Internet.
The customer acquisition costs and time constraints faced by traditional human advisors have left the majority of investors underadvised or unable to obtain neutral portfolio management, because of the high minimums imposed on investable assets.[2]