Robo Advisor Definition

A robo-advisor, also called digital advisors, can be defined as a self-guided online wealth management service that provides automated investment advice at low costs and low account minimums, employing portfolio management algorithms. They provide financial advice or investment management online with moderate to minimal human intervention. To get to know the client’s risk tolerance, he or she has to fill out a questionnaire first. Based on this information the Robo-Advisors creates individual investor profiles so that it is able to invest automatically in different assets. In many cases, Robo-Advisors invest in low-cost ETFs. The first robo-advisors were launched in 2008 during the financial crisis. The first robo-advisers were used as an online interface to manage and balance client's assets by financial managers.