People who trade online have had access to robo-advisors since 2010, yet as recently as 2017 a Gallup poll concluded that fewer than half of investors knew the term. More than 100 platforms, including all of the big names in online investing, now offer robo-advisors.

No estimates are available on how many people actually use them, but given those poll results, it would seem they haven't yet replaced the two traditional models: The professional (human) financial advisor, for the investor with a big bankroll, or the do-it-yourself discount online broker, for the rest of us.

What Is a Robo-Advisor?

"Robo-advisor" might suggest a fun hands-off gadget similar to the Roomba, the self-directed vacuum cleaner. Investing isn't always fun, and it's never supposed to be hands-off.

In fact, a robo-advisor is a consumer version of the type of software that professional financial advisors have been using for many years. The robo-advisor uses an algorithm to help identify stocks that meet an investor's stated requirements, such as risk tolerance and investment timeline. It then automatically monitors portfolio performance, and make adjustments to keep it on track.

So, a robo-advisor has a few more moves than a Roomba, and some of them incorporate human assistance, though automated portfolio monitoring and adjustment are automated.

E*Trade's Hybrid

For example, E*Trade Financial (ETFC), an industry pioneer that has been offering online trading since the 1990s, operates this type of hybrid robo-advisor, though it avoids the robo-advisor tag.

The user who signs up takes a survey indicating a timeline for investing and tolerance for risk. Those are the two main questions that human counselors ask, too. Based on their answers, users get a recommended portfolio made up of exchange-traded funds (ETFs), each of which was researched, analyzed, and picked by humans behind the scenes.

E*Trade's "advanced technology" (aka robo-advisor) then takes over from day to day, monitoring performance and making allocation adjustments to keep it on track with the user's timeline, in much the same way as a target-date mutual fund is adjusted over time. There is a support team on call.

E*Trade has a first-year-free deal on its service, with a 0.30% annual fee afterward. The minimum starting balance is $5,000.

The Competition

As noted, there are about 100 robo-advisors out there competing for your money. Each offers either of the two models, fully automated or hybrid. The minimum balance of many is zero, but some set a minimum at up to $100,000. Fees vary but generally are under 1%, a bargain compared to professional advisory services.

The best robo-advisor depends in part on what your needs are as an investor, and how much human intervention or one-on-one assistance you require.

A General Opinion

Before introducing its service, E*Trade conducted a study that revealed that more than half of the investors surveyed preferred a human touch over absolute rock bottom price points.

According to that research, "when asked to choose between three account types – a low cost, digital-only solution, managed and rebalanced solely by an algorithm; a moderately priced, digital hybrid solution, defined by automatic rebalancing and human guidance; or a higher cost, advisor-driven account, managed solely by a professional – investors are more likely to choose the digital hybrid model."

This preference was most pronounced among Millennial and Gen X investors.

E*Trade and its competitors are all aiming to appeal to both cost-conscious and technology-savvy millennials as well as those who crave some human input.