Robo-advisors like Vanguard Digital Advisor automate investing, using algorithms for portfolio allocation based on risk profiles. With fees under 0.3%, they outperform many human advisors for average investors, per a Vanguard study showing 1-2% higher net returns from low costs.
Users input goals—retirement, home purchase—and AI rebalances ETFs automatically. Integration with banking apps simplifies contributions. In 2025, AI enhancements predict market shifts via machine learning.
Drawbacks: lack of personal touch for complex needs and market crash vulnerabilities. Hybrids combine robo with human oversight.
Start with $1,000 minimums; diversify globally. This finance tool levels the playing field, making sophisticated strategies accessible to all.