Meet the Modern Investment Advisor: The Robo-Advisor

Money. It tends to be one of most people’s greatest stresses. We worry about making it, we worry about spending it and we worry about saving it. If you weren’t born (or taught how to be) a financial genius, the best thing you can do is enlist a certified financial advisor/planner (CFP) to help ensure your plans are solid and your wealth/portfolio investments are safe. For those people who want to be using the latest technology or the people who, for various reasons, can’t meet a CFP in person, there are robo-advisors.

 

How Will This Faceless System Know My Needs?

Although you are unlikely to engage in inane small talk, the system is set up so your robo-advisor will be able to decipher your needs and invest your money properly. You will be asked a series of questions and your answers to these questions will be used to design your portfolio of exchange traded funds (ETF).

Is It Safe Trusting My Finances To A Robot?

True, the chosen term for the service is robo-advisor, but don’t let that unnerve you or give you the impression that financial control has been fully handed over to the machines. The wealth/portfolio management robo-advisor system is simply a new tool set up to simplify and update the process for modern investors and human CFPs review your portfolio after it is created.

What Are the Advantages to Robo-Advisors?

The system is set up to fully benefit from modern financial technology, a fact younger investors (having grown up with technology) will likely appreciate. This modern technology means startups like Betterment can use Nobel-prize winning algorithms to create their models.

As the system is more automated than traditional CFPs, robo-advisors are available 24/7, which is fantastic news for shift workers or people with very busy work schedules. The fees are also dramatically lower and investors no longer have to deal with the opportunity cost. These savings are added to your portfolio, compounding your investment.
Another perk? There are no hidden fees with robo-advisors, which means fewer surprises in your portfolio.

Finally, robo-advisors are excellent for new investors or people who may not have sizeable assets to contribute. If you have less than $250, 000 in your portfolio and choose to go the traditional route, finding a management firm will be difficult and your choice of investment services will be limited. Not so with robo-advisors.

Creating and managing wealth is a skill that is vital for a healthy life. When your finances are in order you can devote your attention to the other, more important areas of your life. Now, thanks to robo-advisors, you don’t necessarily have to hand your money over to a system that may be hiding its fees from you and insisting you meet at a time that’s incompatible with your work schedule if you want advice. Feel that stress sliding off your shoulders? That’s the power of FinTech.