What it is
Robo-advisors use algorithms to build and manage investment portfolios based on a client's risk tolerance, financial goals, and time horizon. Clients typically complete an online questionnaire, and the platform then suggests and implements a diversified portfolio, often consisting of exchange-traded funds (ETFs) and mutual funds. These platforms handle tasks like rebalancing, dividend reinvestment, and tax-loss harvesting automatically.
Robo-advisors have gained popularity among retail investors due to their lower fees compared to traditional financial advisors. They often feature prominently in discussions about accessible investing and the democratization of financial services. News stories might focus on their growth, new features, or how they compete with established wealth management firms, especially concerning market volatility and investor behavior during downturns.
Why it matters
Robo-advisors offer an affordable, convenient way to manage investments, helping you build a diversified portfolio without needing extensive financial knowledge or high fees.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice