The algorithmic asset management offers various benefits. Which features individual private investors profit from depends on which type of robo-advisor they use. A distinction is made between full-service, half-service, and self-service systems.
Full-service robo-advisor
The full-service robo-advisor takes cares of all aspects of the financial investment. It suggests an investment strategy to the investor, takes over the complete asset management, and independently takes care of the rebalancing to restore the original investment structure, if necessary. Serious full-service robo-advisors are generally registered as investment advisors with state securities authorities or federally with the SEC, and are required to adhere to all of the same security laws levied on all registered advisors. This allows the robo-advisor to manage your assets in much the same way as a human advisor would.
Half-service robo-advisor
As the name suggests, this robo-advisor offers a limited service. It acts as a broker for its customers, procuring investment products as part of an investment strategy, but as soon as the investment structure has to be adjusted (rebalancing) it requires the approval of the customer. So if you use a half-service robo-advisor, you’re not entirely giving up the management of your investments.
Self-service robo-advisor
The self-service robo-advisor can be regarded as a kind of guide. It only gives the investor tips on the topic of financial investment. The investor has to do all of the asset management (opening securities accounts, purchases, sales, rebalancing) on their own.