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What is a Robo Advisor

Robo-Advisors

An Introduction

Illustration of how Robo-Advisors work

Robo-Advisors can help put your money to work so you don’t have to.
Join us for a look at how Robo-Advisors work, and how they can be
personalized to help you meet your specific financial goals.

Robo-Advisors Are Growing in Popularity

Since their introduction nearly a decade ago, Robo-Advisors have become more mainstream with over 100 options now available. They have become popular with novice investors because they have low starting deposits and don’t require in-depth market knowledge. For experienced investors, Robo-Advisors can automate complex time-consuming activities like rebalancing and tax-loss harvesting.

Assets Managed by Robo-Advisors (in billions)1

47.3 billion $ in 2015. 98.5 billion $ in 2016. 460 billion $ predicted in 2022

What is a Robo-Advisor?

Personal Preferences: Time horizon, Financial goals, Risk tolerance

Robo-Advisors vary from firm to firm, but are generally online services that provide automated portfolios based on your preferences.

Unpredictable Forces: Asset class performance, Market volatility, Market conditions

Robo-Advisors weigh
personal preferences against unpredictable forces
to automatically recommend a portfolio
that fits an investor’s specific needs.

Personal Preferences: Time horizon, Financial goals, Risk tolerance. Unpredictable Forces: Asset class performance, Market volatility, Market conditions

How Do Robo-Advisors Work?

Each Robo-Advisor is different but they
tend to operate in a similar fashion:

  • 1.  Complete a brief questionnaire to assess your investment needs—anything from retirement planning to buying a new car.
  • 2.  The Robo-Advisor automatically builds you a diversified portfolio of Exchange-Traded Funds (ETFs)—selected by a team of investment professionals.
  • 3.  Experts regularly monitor market activity and every underlying investment to ensure your portfolio is rebalanced appropriately by a sophisticated algorithm—all so you don’t have to.
  • 4.  Some Robo-Advisors include
    access to live consultants or Certified Financial Planner professionals who can help further hone and personalize your financial plan.
  • 5.  Log in to your account to track your progress, make adjustments, add contributions, and continue working toward new goals.

Are Robo-Advisors Right for You?

As Robo-Advisors continue to grow in popularity, traditional financial advisors
remain available, as well as a combination of both approaches.

Robo-Advisors

  • Ideal for a single, specific
    investment goal

  • Stay on track to individual
    goals with automated
    portfolio rebalancing
  • Financial planning advisors
    usually not provided
  • Pay low advisory
    fees plus automatic
    tax-loss harvesting

Robo + Traditional Hybrid

  • Ideal for an automated holistic
    plan created with guidance
    from a CFP® professional
  • Combines a customized
    financial action plan with
    automated investing
  • Conveniently meet with an
    advisor via phone or online
  • Pay moderate fees
    for occasional
    financial advice

Traditional Advisors

  • Ideal for more complex services
    such as estate planning

  • Develop a holistic view for
    assistance with all your
    financial accounts
  • Meet in-person with your
    dedicated advisor
  • Pay higher fees for dedicated
    attention and increased
    advisor availability

Finding a Robo-Advisor That’s Right For You

If you decide that a Robo-Advisor is right for you,
Schwab offers two options:

Schwab Intelligent Portfolios®
automatically generates a diversified portfolio of ETFs that is monitored daily for you. You can open an account in minutes with as little as $5,000.

Learn More

Schwab Intelligent Advisory
sets you up with a Certified Financial Planner professional to develop a financial Action Plan, generates a diversified portfolio that is automatically monitored and rebalanced, and provides you with the opportunity for regular, ongoing check-ins with a planning consultant—all with a minimum deposit of $25,000.

Learn More

1. http://www.fa-mag.com/news/the-vanguarding-of-the-roboadvisors-has-only-just-begun-33901.html

Please read the Schwab Intelligent Advisory disclosure brochure for important information about this program.

Schwab Intelligent Advisory is made available through Charles Schwab & Co., Inc. (“Schwab”), a dually registered investment advisor and broker-dealer. Portfolio management services for Schwab Intelligent Portfolios® are provided by Charles Schwab Investment Advisory, Inc. (“CSIA”), a registered investment advisor.

Please read the Schwab Intelligent Portfolios Disclosure Brochure for important information, pricing, and disclosures relating to Schwab Intelligent Portfolios.

Schwab Intelligent Portfolios is made available through Charles Schwab & Co., Inc. (“Schwab”), a dually registered investment advisor and broker-dealer. Portfolio management services are provided by Charles Schwab Investment Advisory, Inc. (“CSIA”). Schwab and CSIA are affiliates and subsidiaries of The Charles Schwab Corporation.

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