One of my favorite sci-fi movies is Arnold Schwarzeneggers The Terminator. Its set in a dystopian world thats ruled by Skynet, and robots who want to kill every human in sight. In some ways Skynet is already here with Google (GOOG ), and them buying the robot firm Boston Dynamics. Not to mention we have high-frequency trading where bots make up to 80% of the daily volume on the stock market, and buy and sell stocks in microseconds. Computers to aid with finance is already here, so the question is; can they help with your own investing?

Can computers replace humans and give sound financial advice? Previously when investing, your choices were pretty limited.

It was only until recently, you had only one of two options when investing:

• Do-it-yourself (DIY)
• Hire a financial investment advisor (FIA)

Historically the problem with trying to get a FIA was many have minimum asset requirements of $500,000 or larger. This requirement obviously put many FIAs out of reach for younger, or lower net worth individuals.

So these individuals had to then fend for themselves, or take the generalized advice from a financial guru like Suze Orman (dont get me started).

In addition its not uncommon for FIAs to charge 1-2% annually (or greater via the loaded investment tools they pushed you into). Thats 1-2% you have to do better than the market just to keep up. As history has shown this is a steep fee to overcome, and in many cases also came with substandard financial advise to boot.

The issue for many individuals is they arent cut out to go it alone. Unlike the days where everyone who retired automatically got a gold watch and a pension (which was managed by a professional), today you are required to self-fund your retirement .

401(k) plans and IRA accounts puts individuals in the drivers seat who many not have the time to read up on investment analysis. Worst yet, may have poor investing psychology and jump out of the market at the absolute worst times (buy high and sell low).

What is a Robo Advisor?

As Ive said before there was a previously untapped market that these new robo-advisors are meeting.

Overall I consider the rise and interest in automated investment services a good thing. Pushing down the costs of high fee Wall Street advisors that offered no real value, and if anything, a drag on returns. This is a great thing in any competitive marketplace. In addition, these firms are helping individuals with goal setting and asset allocation when they typically have no clue where to begin.

Like most anything, the one size does not fit all when it comes to financial advice. I do see this space filling the need of most beginner investors, and investors with an uncomplicated financial portfolio. Are they right for you? That depends upon your net worth, complexity of your investments, and if you feel comfortable you can do it yourself?

Im definitely not in the camp where these robo-advisors add no value. and could easily replicate them yourself just by using Fidelity or Vanguard funds.

In my own case most of my family assets are DIY, but Ive also been studying this for years and feel comfortable doing this other individuals may not and I get this. In full disclosure for purposes of reviewing and testing, I have accounts with: Betterment, Motif Investing, and Personal Capital.

Though keep in mind what these firms are offering is not completely unique. All of these firms base their automated investment guidance using Modern Portfolio Theory (MPT). Efficient Market Hypothesis (EMH), and a series of questions to determine your risk profile.

While this investment strategy isnt perfect it sure beats what most individuals have which is nothing. Its usually a hodgepodge of investments with: no asset allocation, actively managed funds, high annual fees, and whatever investment du jour their peers recommend to invest in.

Firms like Betterment focus on the end-goal and is ideal for individuals who dont care or want to learn about the details of investing. For these individuals the 35 basis points (or less) they pay is well worth the fee, and in many cases much better than hiring a FIA both in terms of cost and good financial advice.

The online tools robo-advisors offer arent really new though. Traditional financial advisors had the same tools available to them for years and could roll up a personalized asset allocation plan specific for you. Heck this stuff was available in 1999 when I first used an advisor at PaineWebber. Like self-checkout at Home Depot (HD ), this is pushing the technology down to the masses so you have direct access and removing the no-value added middlemen.

Let me be clear, some financial advisors can add tremendous value. They can give guidance to the asset allocation best for you based upon unquantifiable factors, which computer programs can never do. Though I believe this is more the exception than the rule.

Financial advisors can give recommendations about long term life decisions (i.e. help plan for a childs education through a recommended action plan). In fact, some of the mentioned robo-advisors in this article are really just tech-assisted firms, and not 100% automated. If you want it, the human element is not completely removed from the loop with some of these firms.

Theres something to be said with any 100% algo driven investment approach. While it might help with a high percentage of individuals, there are always edge cases where automated guidance isnt appropriate for.