When robo advisors first gained popularity, they promised to change the investment game.
And they did, to a degree. Millions more people were drawn to investing, with the knowledge that a robo advisor could pick up the slack when their own lack of information let them down. While robo advisors haven’t delivered the riches that those touting them initially promised, they have delivered results.
In the time since, robo advisors have seemed to pop out of the woodwork every few days. One after another offered the same features with their own set of promises, making the field somewhat murky. It became more difficult to identify which robo advisors were worth investing time in and which would only set you back.
Two of the strongest survivors have been Betterment and Wealthfront. They have continued at the front of the pack as two of the most popular and most useful advisors. Click through for a Betterment vs. Wealthfront full comparison.
What have Betterment and Wealthfront done to stay relevant in 2019? Here are some of the important decisions they’ve made.
Hybridization
One of the most significant changes Betterment made in 2017 was switching to a robo-human hybrid advisor. Instead of leaving everything to the algorithms, they introduced a feature that gave investors access to financial advice from licensed experts.
This was a truly momentous step, because in the past it could have been viewed as a step backwards. After all, wasn’t the very idea of a robo advisor to eliminate human error? However, Betterment managed to frame it well enough to give investors a clear idea of why it was necessary.
As things stand, robo advisors like Betterment and Wealthfront are created by humans. Humans write the algorithms, with plenty of space for exponential machine learning. Humans are working consistently to improve them. And while this is still the case, it makes sense to bring in a human touch. Expert financial advisors provide the nudge the system sometimes needs to correct itself.
Combining new and old
It is this approach, combining the new and the old in an industry that has been around for a long time, that has kept both Betterment and Wealthfront relevant. They have begun to better understand that investing money is more than just a game. It is not just about making as much money as possible. On the contrary, it is far more personal.
This can be seen in the way that both companies, among many others, promote Socially Responsible Investing (SRI) strategies, allowing investors to align their investments with their values and morals. Similarly, Betterment makes charitable giving possible directly from users’ accounts.
Keeping it personal
But perhaps the most significant way that robo advisors remain relevant is by gearing their algorithms towards people’s real lives. They can be customized for whatever your personal situation, whether you’re saving up for a home or trying to repay your student loans.
Investing needs to fit into your wider financial planning, after all. The moment robo investing is viewed out of context, it loses any relevance to real people.