AS PROBLEMS GO, the suspicion that you are being overcharged by a private wealth manager is one of the better ones to have in life. But even millionaires who are regularly invited out to lunch by their banker tire of the 1-3% annual fee they have to cough up for his investment advice. Many mere submillionaires may well be paying similar rates for an asset-management professional to administer their pension pot, often without being aware of it. Could a computer not do an equally good job dishing out standardised guidance on how much they should invest respectively in shares, bonds and other assets?
A raft of “automated wealth managers” is now available, on the premise that algorithms can offer sound financial advice for a small fraction of the price of a real-life adviser (see table). With names that suggest a mix of blue-blooded discretion and startup ebullience—Wealthfront, Betterment, Personal Capital, FutureAdvisor—they are growing at a rapid clip. Most are grudgingly starting to accept the tag of “robo-adviser”.
The platforms work by asking customers a few questions about who they are and what they are saving for. Applying...
from The Economist: Special report http://ift.tt/1FRItAa
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