Rise of the Machines

Robo-advisor is an online wealth management service that provides automated, algorithm-based portfolio management advice without the use human financial planners. Robo-advisors use the same software as traditional advisors, but usually only offer portfolio management and do not get involved in more personal aspects of wealth management, such as taxes and retirement or estate planning.

Robo-advising is gaining traction with younger investors and will become a trillion-dollar industry one day — and even Wall Street banks are willing to admit it.

In just two years, the report notes, robo-advisers have boosted their assets from virtually nothing in 2012 to $14 billion by the end of 2014. And they’re just getting warmed up.

Over the next 10 years, their assets under management could expand exponentially, to $5 trillion, the report speculates.

Already big corporate players like Charles Schwab and BlackRock have taken notice. Schwab launched online-wealth-management tools of its own earlier this year, and BlackRock decided to buy instead of build, purchasing FutureAdvisor last month.

Jr.Trader-G.Bozhidarov