Wall Street is witnessing a 'third wave of computerization'

The race is on.

Across the fund management and retirement industry, legacy fund management companies are partnering with and buying up roboadvisers.

These automated investment services utilize algorithms to manage and allocate people's assets. Since they don't require human beings to operate, they offer much lower fees than traditional advisers while delivering similar returns.

And their rapid growth has disrupted the investment space, forcing well-established financial firms to act.

The latest example: John Hancock Financial and NextCapital.

NextCapital, a Chicago-based fintech company, recently announced it would provide John Hancock Financial, a retirement plan provider with $150 billion AuM, a platform that delivers automated financial advice to its nearly 2.7 million 401(k) participants. The plan will include "portfolio tracking, planning, savings advice and portfolio management."

Robert Foregger, cofounder of NextCapital, told Business Insider that we are witnessing the "third wave of computerization" in the financial services industry.

"We have seen the shift from traditional to online banking and traditional to online brokerage," Foregger said.

"Right now we are transitioning from traditional to digital advice and wealth management for both the 401K and retail markets," he added.

Peter Gordon, CEO of John Hancock told Business Insider that the joint-venture is a perfect response to recent changes in consumer preferences and a new regulatory environment in which "scalable personal financial advise" is preferred.

"It marries our institutional knowledge, which is fantastic, with a very clever platform for delivering automated financial advice to investors," said Gordon.

It's the latest in a long line of such deals.

Wells Fargo unveiled a roboadvisor partnership with Arizona-based SigFig in November 2016. That's the same fintech that partnered with UBS America's wealth unit in May 2016.

Other firms have responded to the growth of roboadvising by simply buying them out. For instance, in 2015 BlackRock acquired FutureAdvisor for an estimated $150 - $200 million and Fidelity picked up eMoney.

Those partnerships have helped take assets under management by roboadvisors to new highs. In 2015 global assets under management by roboadvisors stood at a just $100 billion. In 2016 that amount doubled to $200 billion. The estimate for 2017 is $600 billion. And by 2018 AuM is expected to reach $1.5 trillion.