Who would have predicted that the robot invasion would start with our personal finances?

Yet here we are, witnessing a shift from your average suit-wearing financial adviser to algorithmic trading and software-based portfolio management. And so-called robo-advisers are now taking over as the most trusted source of personal financial management for millennials.

The Millennial generation grew up as digital natives and are probably the most tech-savvy adults living today. Many of them even openly admit to trusting robots much more than humans, so it makes sense that they would trust robots with their finances.

However, robo-advisers haven’t been around for very long. Some of the most popular players in this market, such as Betterment, Covestor, Future Advisor, Motif Investing and Wealthfront, were founded less than a decade ago.

What exactly do these “advisers of the future” do? Well, they pretty much do the same thing your average registered financial advisor is trained to do, only much more quickly and cheaply.

How Does It Work?

The investment process for average Americans starts with an assessment for risk-tolerance. Basically, you are asked to fill out a survey that asks you questions about your income, ability to save and ability to stay calm when your stocks lose value. The survey also delves into your personality traits and your future goals.

The objective here is to see how much risk you can bear and want to bear. Then the adviser takes the data home and determines how your money should be spread. If you are less of a risk-taker, you may be put you in bonds and if you like taking risks, you get put into stocks. Usually it is split between the two in a certain percentage and your real estate holdings factor in somewhere as well.

What robo-advisers do is automate the whole process. You fill out the form online yourself, the software spits out a plan that’s suited to you, which you can adjust it a bit here and there, and then you leave it to run on autopilot.