Three types of robo-advisors

o Pure technology website without advisors that allow investors to do

everything themselves (eg. Motif Investing & Jemstep)
o Advisors who use technology only to communicate with clients (eg.
Personal Capital and Learnvest)
o Established companies that recently expanded online advice offering
(eg. Vanguard & Edelman Online)
Primary differences between robo advisors & financial advisors
Robo
Generate model portfolio

Financial advisors
Personalizes portfolio for specific
situation
In person also
Financial planning and other services
Offer passive or active management

Communication limited online

Limit services to portfolio management
Passive in terms of security selection &
market timing
Lower costs
Higher costs
What kind of investors may benefit from robo-advisors?
o Dont have complicated finances
o Comfortable with banking online
o Dont like to meddle
o Got through 08-09 without panicking