How Do Robo-Advisors Work?

How do robo advisers work? What are robo adviser algorithms and features?

How Do Robo-Advisors Work and What are Robo-Advisor Algorithms?

Robo-advisors have stormed onto the investment scene as a way for all investors to participate in the wealth-building possibilities of the markets. Finally, get the answer – How do robo-advisors work?

No longer do you need deep pockets to hire a financial advisor or  to invest in a professionally managed portfolio. From Betterment to Schwab or M1 Finance, the robo-advisory choices are vast. But, if you’re wondering What is a robo-advisor and how do they work? read on.

A robo-advisor is an investment manager that uses computer programs to professionally invest your money. Beyond that, there are many varieties of robo-advisors with diverse fees, investment minimums and features.

If you’re interested in a low-cost, professionally managed investment approach, then a robo-advisor might be for you.

How do robo advisers work? What are robo adviser algorithms and features?

How a Robo-Advisor Works 

Synthesizing algorithms has been the backbone of successful programs in various fields. Waze and Uber are known for their transportation algorithms and Google for its search engine algorithms.

An algorithm is a fancy word for the process that a computer uses to solve a problem. A robo-advisor’s computer algorithm is the steps the computer takes to create your investment portfolio.

Computerized robo-advisor algorithms are perfect for investors due to their inherent efficiency and cost-effectiveness. And, picking investments based upon the best-practices investing

2 thoughts on “How Do Robo-Advisors Work?”

    1. Barbara A. Friedberg, MBA, MS

      Hi D, The best way to uncover that information is to visit a specific robo-advisor website and read their “legal” and “disclosures” section. For example, most robo advisors are registered investment advisors and subject to strict laws that govern the entire investment industry. Most will complete an ADV form which isthe uniform form used by investment advisers to register with both the Securities and Exchange Commission (SEC) and state securities authorities.

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