What's going on?

Blackrock, the world�s largest asset manager, bought a �robo-advisor� called FutureAdvisor. It�s a small deal for Blackrock but it highlights how investors, especially millennials, might have their money managed in the future.

What does this mean?

A �robo-advisor� is a type of wealth management firm that typically uses computer models to build and manage investment portfolios for individual investors. The fees are usually much smaller than traditional, face-to-face advisors.   FutureAdvisor�is being bought by a Blackrock division that provides services and software to other financial firms. Presumably, Blackrock feels that there will be an increased demand from wealth managers for a robo-advisory platform � and Blackrock will be there to capitalize on it.

Why should I care?

1. �Robo-advisory� can be a very good way for investors to access the financial markets, especially because of their low-cost. Investors who want to participate in the market but don�t want to be trading stocks routinely should consider robo-advisors for their financial needs.
2. Big players in the US, like Fidelity, Vanguard and Charles Schwab, have already partnered with robo-advisors or are building their own online capabilities as they prove to be an efficient way to service the �mass-affluent� (e.g. $100k - $1million in investable assets). Firms that do not use technology to service this investor class risk losing market share.