Investing’s Old Guard Gets Its Algorithm On

Throughout 2012, John Petrosky kept hearing about a potential financial crisis in Europe. The Houston father of three remembered the losses he’d suffered in 2008, when the U.S. system was on the brink of collapse, and got scared. He pulled money out of the markets—only to miss big gains in 2013.

“I just need protection from myself,” says Petrosky, 42. In September 2013, he decided to let others make portfolio decisions for him. Opposed to the high fees of traditional financial advisers, he was a natural candidate for a robo-adviser, one of the booming online services that offer automated investment management via software. They pick assets and allocations by algorithm and keep costs low. But Petrosky didn’t sign up with Wealthfront or Betterment, the two startups best known in the space. He turned his money over to Vanguard.