Robo AdvisorsAUM ($bn)
Vanguard - Personal Advisor51.0
Charles Schwab Intelligent Portfolio10.2
Betterment7.4
Wealthfront5.0
Personal Capital3.9

*AUM as of April, 2017

 

Robo Advisors

Just as the traditional investment fund has evolved into an efficient, exchange-traded product, investment research and advisory have also changed.  With the rise of faster and more cost-efficient computing power, investment research has become greatly influenced by quantitative methods and mathematical models.  What was once far-off academic research is now mainstream.  Several asset-management firms have sprouted up from this movement to create low-cost investment advisors that allocate assets with primarily the help of computer models, with very limited human intervention.  A majority of these Robo Advisors invests in ETFs to maximize efficiency and portfolio diversity.  After setting up an account online and answering a few simple questions any retail investor can access powerful algorithms designed to optimally allocate assets and balance a portfolio.

Investment models and approaches do differ between advisors.  Before investing one should have at least a general understanding of how assets are allocated and the management fees involved.  Also, keep in mind that since many robo advisors are investing in ETFs, investors pay the ETF management fee and the robo advisor fee.  These fees can add up quickly so, make sure you choose an advisor that fits your needs.