Robo-advisors and fintech
Robo-advisors are part of a larger trend in financial technology, or fintech, which is disrupting the role of large established companies in the financial sector. Fintech firms are still new and lack the credibility of leading market players, but the innovative technological solutions that they develop make them very attractive business partners.
Timing is everything
Stock markets have seen overall increases since the 2008 Financial Crisis. The real test of these new advisors will be when the next crisis hits. The question is whether or not the algorithms can pick up subtle market signals better than humans can, or are human advisors distracted by preconceptions and irrelevant information that the algorithms ignore? Comparing the losses of robo-advisors to overall market losses might provide insight to the answer.