The term ‘robo-adviser,’ which can be traced back to 2002, isn’t normally implied as a compliment.
It describes online automated investment platforms, which use algorithms to handle financiers’ money immediately, instead of designating a human adviser to actively handle each customer’s financial investments.
By calling companies that practice this investment approach ‘robo-advisers,’ critics insinuate that they’re something foreign, something undesirable, something not human.
Betterment is one of the most well-known and greatest robo-advisers. So, how do they feel about the term? When we asked founder and CEO Jon Stein, he stated:
I personally love the term robo-adviser because I think it helps to promote our segment.
If you reflect 5 years earlier, we were really a voice in the wilderness. We were stating, ‘Everybody is going to be utilizing automatic investment services someday.’ And nobody was truly listening, nobody actually believed us.
Now that there’s a term to describe the industry, there’s even more of a hook there that individuals can get hold of onto. I believe that it has assisted to type of provide us an area in the customer’s mind.
Stein’s viewpoint is distinctly various from that of Wealthfront president and CEO Adam Nash, who likewise leads a company carefully associated with the name ‘robo-adviser.’ Nevertheless, Stein and Nash do agree on one point: ‘Robo-adviser’ doesn’t accurately represent what goes on behind the scenes.
‘The term itself is entertaining, due to the fact that of course we have a great deal of live advisors here,’ states Stein. ‘We have actually constantly had advisors on the group, from day one. We have actually always discovered value in adviser relationships.’