Robo-advisor

Robo-advisors are a class of financial adviser that provide financial advice or portfolio management online with minimal human intervention. They provide digital financial advice based on mathematical rules or algorithms. These algorithms are executed by software and thus financial advice do not requires a human advisor. Software utilizes its algorithms to automatically allocate, manage and optimize clients’ assets.

Robo-advisors emerged in 2008 with greater acceleration in the United States and other countries after 2011. Today there are over 100 robo-advisory services. Investment management robo-advice is considered a breakthrough in formerly exclusive wealth management services, bringing them to a broader audience with lower cost compared to traditional human advice. Robo-advisors typically allocate the customer property on the basis of their individual investment, risk preferences, and desired target return. While robo-advisors have the capability of allocating client assets in many investment products such as stocks, bonds, futures, commodities, real estate, the funds are often directed towards ETF portfolios. Clients can choose between offerings with passive asset allocation techniques or active asset management styles.

Legally, the term "financial advisor" applies to any entity giving advice about securities. Most robo-advisor services are instead limited to providing portfolio management (i.e. allocating investments among asset classes) without addressing issues such as estate and retirement planning and cash-flow management, which are also the domain of financial planning.

Other designations for these financial technology companies include "automated investment advisor", "automated investment management", "online investment advisor" and "digital investment advisor." Early robo-advisors include Betterment, Wealthfront, Schwab, Vanguard, and TradeKing. In Canada, Bmo smartfolio and Wealthsimple are examples of early players.

While robo-advisors are most common in the United States, they are also present in Europe,Australia,India, and Canada.

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