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Definition: robo advisor

Software that suggests how people should invest their money. After entering a person's age, current assets, goals and other information, the robo advisor prepares a report that recommends how much should be allocated to stocks, bonds, annuities and other investment vehicles.

Robo advisors can perform "tax-loss harvesting," which routinely scans a user's portfolio to find stocks that should be sold at a loss in order to offset taxable gains for the year. The proceeds would then be re-invested.

In many cases, the robo advisor results are similar to the asset allocation recommendations that many brokerage houses already follow.