Will Investors Turn Their Portfolios Over to Machines?

Computerized trading has already taken over Wall Street. But are investors ready to hand their portfolios over to machines, too?

Websites such as SigFig, Betterment and Wealthfront are cropping up with the goal of putting human financial advisers out of work. These sites promise to be an autopilot way to create an ideal portfolio and bring investors in balance.

Investors pay a fee to these companies, then the computers take over. The systems assume the role of financial adviser and broker, using computers to tweak the portfolio, buy and sell stocks and reinvest dividends.

"Technology has been automating financial advice for decades and retail investors have benefited greatly from the power of technology," Michael Sha of SigFig says.

In some ways, putting technology in charge is the next evolution of investing. The runaway success of index funds is largely the result of computers being able to own broad swaths of stocks and reduce the need for human stock pickers. Efforts to automate portfolios have been tried before, with mixed success. But proponents say consumers are ready this time because of:

EU Lower fees. Many automated portfolio management systems in the past charged lofty fees of 0.5% or even more. But fees on the services have come down. SigFig charges a flat $10-a-month rate. Betterment charges based on the size of the portfolio, charging 0.25% of portfolios between $10,000 and $100,000 and 0.15% for portfolios more than $100,000. Wealthfront charges 0.25% on portfolios worth $10,000 or more. Low fees would be the only way for some investors, such as Gene Sandler, a 45-year-old engineer in Minneapolis, to even entertain the idea.

EU Greater comfort level. Consumers have gotten increasingly comfortable conducting business online. These services require a pretty big leap of faith. For instance, when signing up for SigFig, investors give the company, which is registered as...

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