Jill E. Fisch, Marion Labouré, and John A. Turner
- Published in print:
- 2019
- Published Online:
- October 2019
- ISBN:
- 9780198845553
- eISBN:
- 9780191880728
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780198845553.003.0002
- Subject:
- Business and Management, Pensions and Pension Management, Innovation
Robo-advisors are online services that use computer algorithms to provide financial advice and manage customers’ investment portfolios. This chapter describes the development of the robo-advisor ...
More
Robo-advisors are online services that use computer algorithms to provide financial advice and manage customers’ investment portfolios. This chapter describes the development of the robo-advisor industry and compares robo-advisors to traditional human financial advisors. Robo-advisors emerged in response to people’s need for financial advice and the high cost of obtaining that advice from human advisors. Pure robo-advisors, which offer no direct human contact, are generally substantially less expensive than human advisors, and the use of computer algorithms allows for an increasing degree of personalization of the advice. Nevertheless, robo-advisors do not provide customers with all of the services offered by human advisors and, in particular, human contact. In response, some firms are offering hybrid robo/human services that combine cost savings from a robo-advisor with some human input.Less
Robo-advisors are online services that use computer algorithms to provide financial advice and manage customers’ investment portfolios. This chapter describes the development of the robo-advisor industry and compares robo-advisors to traditional human financial advisors. Robo-advisors emerged in response to people’s need for financial advice and the high cost of obtaining that advice from human advisors. Pure robo-advisors, which offer no direct human contact, are generally substantially less expensive than human advisors, and the use of computer algorithms allows for an increasing degree of personalization of the advice. Nevertheless, robo-advisors do not provide customers with all of the services offered by human advisors and, in particular, human contact. In response, some firms are offering hybrid robo/human services that combine cost savings from a robo-advisor with some human input.
Jennifer L. Klass and Eric L. Perelman
- Published in print:
- 2019
- Published Online:
- October 2019
- ISBN:
- 9780198845553
- eISBN:
- 9780191880728
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780198845553.003.0003
- Subject:
- Business and Management, Pensions and Pension Management, Innovation
It is not surprising that the investing public seeks accessible, low-cost, and reliable advice. This chapter discusses how digital, or robo-advisors have triggered a dramatic upheaval in how ...
More
It is not surprising that the investing public seeks accessible, low-cost, and reliable advice. This chapter discusses how digital, or robo-advisors have triggered a dramatic upheaval in how investment advice is formulated, delivered, and applied on an ongoing basis to actively managed retail investment accounts. The availability of digital advice is promoting the important policy objective of expanding access to retirement advice to a growing segment of underserved and undersaved Americans. In addition to discussing the socioeconomic and technological factors that are accelerating the growth of digital investment advisors, the chapter also discusses how such advisors fit within the existing legal and regulatory framework governing retail investment activities. It concludes with a look ahead anticipating how digital advice will continue to disrupt the financial services industry.Less
It is not surprising that the investing public seeks accessible, low-cost, and reliable advice. This chapter discusses how digital, or robo-advisors have triggered a dramatic upheaval in how investment advice is formulated, delivered, and applied on an ongoing basis to actively managed retail investment accounts. The availability of digital advice is promoting the important policy objective of expanding access to retirement advice to a growing segment of underserved and undersaved Americans. In addition to discussing the socioeconomic and technological factors that are accelerating the growth of digital investment advisors, the chapter also discusses how such advisors fit within the existing legal and regulatory framework governing retail investment activities. It concludes with a look ahead anticipating how digital advice will continue to disrupt the financial services industry.
