Robo-Advisors
These new products solve a problem by asking a number of simple questions, such as your risk tolerance and your financial goals. The software will then create a portfolio ofliquid exchange traded funds that theoretically will meet that goal.
With mostof these platform you will not purchase individual stocks. All types of investors will have access tothe same limited number of ETF's provided by the platform administrator. The only difference between each investors isthe allocation of the ETFs.
Cost of Fund Will Decline
As robo-financial advisors become more popular, the costs ofthe fund associated with platforms will drop, creating a more competitive environment. For now, companies such as Wealthfront offer a range of stock and bond ETFs which are allocated to your portfolio based on your risk tolerance and financial goals.
Betterment currently offers 7 stock portfolios which include staples such as large cap,mid cap and small cap portfolios, along with Emerging Markets which pump up your risk as well as your potential reward. I
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