Robo-advisors are automated online services that provide low-cost asset allocation and portfolio management with minimal human intervention. The emergence of robo-advisors began with a virtual investing game on Facebook that was later taken over by an entrepreneur. Wealthfront is now the largest robo-advisor, managing over $1.5 billion. Robo-advisors target the low-end of the brokerage and financial advisor market by automating asset allocation for lower fees than traditional financial services. Major asset managers and portfolio apps have entered the robo-advisor space, and traditional financial firms like Schwab and Vanguard are developing their own robo-offering services.

1. The Emergence of
the Robo-Advisor
The Growing Trend of
Automating Asset Allocation
Strategies

2. It all started with a game
❖ kaChing is was a popular
virtual investing game on
Facebook

3. and a Stanford professor
❖ Andy Rachleff, founder of
Benchmark Capital, takes up
management of kaChing

4. Funny story
circa 2009
@#$%^!!!

6. Fast forward to 2014
And now…
Wealthfront is the largest robo-advisor in
the world and manages over $1.5 billion

7. So, what is a robo-advisor?

8. “Robo-advisors are a class of financial advisor that
provides portfolio management online with
minimal human intervention.”
–Wikipedia

9. Robo-advisors going after plain-vanilla, asset allocation
❖ Robb-Advisors going after the
low-end of brokerage/RIA
business with automated asset
allocation
❖ $? < 25 bps

10. Who are the players?

11. Asset Managers

12. Portfolio Apps

13. Algorithmic Portfolio Management
❖ Platforms like Collective2 and
Covestor allow investors to
synch their brokerage accounts
to an automated trading
strategy

14. What’s driving robo growth?

18. The incumbents are
coming
Schwab, Vanguard, et al following with
their own offerings

19. Any questions?