Here's Why Betterment's CEO Loves That People Call His Investing Website A 'Robo-Adviser'

The term "robo-adviser," which can be traced back to 2002, isn't usually meant as a compliment.

It refers to online automated investment platforms, which use algorithms to manage investors' money automatically, rather than assigning a human adviser to actively manage each client's investments.

By calling companies that practice this investment method "robo-advisers," critics insinuate that they're something foreign, something unwelcome, something not human.

Betterment is one of the most well-known and biggest robo-advisers. So, how do they feel about the term? When we asked founder and CEO Jon Stein, he said:

I personally love the term robo-adviser because I think it helps to popularize our segment.

If you think back five years ago, we were really a voice in the wilderness. We were saying, "Everyone is going to be using automated investment services someday." And nobody was really listening, nobody really believed us.

Now that there's a term to describe the industry, there's more of a hook there that people can grab onto. I think that it has helped to kind of give us a place in the consumer's mind.

Stein's opinion is decidedly different from that of Wealthfront president and CEO Adam Nash, who also leads a company closely associated with the name "robo-adviser." However, Stein and Nash do agree on one point: "Robo-adviser" doesn't accurately represent what goes on behind the scenes.

"The term itself is amusing, because of course we have a lot of live advisers here," says Stein. "We've always had advisers on the team, from day one. We've always found value in adviser relationships."