Can robots help Americans be better prepared for retirement?
Online investment services that provide automated, algorithm-based portfolio management advice have attracted millions of investors over the past few years with their low fees and minimum requirements.
The so-called robo-advisors had an estimated $8 billion in assets under management as of July, a 34 percent increase from last year, according to financial research firm CB Insights. By 2020, assets in these services could grow to nearly $2.2 trillion, management consulting firm A.T. Kearney estimates. (That's still a relatively small piece of the overall investment asset pie — Vanguard alone has about $3 trillion in global assets under management — but it's not insignificant.)
Established financial services companies have taken notice. In August, BlackRock, the world's largest asset manager, acquired FutureAdvisor, a robo-advisor with more than $600 million in assets under management, in a deal valued at between $150 million and $200 million. Venture-backed robo-advisors, such as Betterment, Personal Capital and Wealthfront, are competing with new automated investment advice services launched earlier this year by Charles Schwab and Vanguard.