Robo-advisors have had a significant — and generally positive — impact on the financial services industry. The term typically refers to services that use models and algorithms to invest client portfolios, often in exchange-traded funds (ETFs). A benefit much touted by some of these services is that there’s no interaction with a human advisor. The entire process is done online. Betterment and Wealthfront are the leading robo-advisors that fit into this category.
Because these robo-advisors are automated, they have significantly lower expenses than traditional investment advisors. Here’s Betterment’s fee schedule, which it offers through a wrap fee program:
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