Robo-Advisor - What is it and how it can work for you

Written by
Gergely K.
Fact checked by
Adam N.
Updated
Dec 2023

Definition

A robo-advisor is an online platform that gives you automated investment advice. To be able to use one, you first need to enter some specifics such as risk appetite or the type of investment you are interested in. Based on these inputs, the robo-advisor recommends an investment portfolio tailored to your needs and liking. The recommended portfolio is actively managed by the robo-advisor, which means the elements of the portfolio are changed by the service provider.

Everything is automated, so after signing up you don't have to do anything beyond transferring the funds you want to invest. With robo-advisors you get a high level of convenience but much less control over your portfolio. The service is cheaper than investing in a mutual fund as everything is automated and thus cost-effective.

The biggest robo-advisors in the US are Betterment, Wealthfront and Vanguard. In the UK and Europe, ETFmatic, Nutmeg, and Scalable Capital are the market leaders.

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Gergely Korpos
Author of this article
With over a decade of experience in financial markets, I've executed thousands of trades as both a commodity trader and an equity portfolio manager. I have hands-on experience in opening accounts with the brokers that are listed on BrokerChooser. As the co-founder and Chief Product Officer (CPO) of BrokerChooser, my mission is to demystify personal investing for all.
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