The Rise of Robots

How well does your robo-advisor know you?

When it comes to investment advisory services, it can certainly seem like the robots are taking over. One of the biggest developments sweeping the investment advisory world over the past decade has been the proliferation of robo-advisors, and it’s quite easy to understand the reason for it. Why pay a traditional human advisor one percent out of your assets every year when the robo-advisor takes less than half a percent? After all, less money to your advisor is more money for you to invest and grow for your retirement or other goals. But here’s the rub: You’re still paying the robo-advisor, and as with any paid service you have to ask the question “What am I getting in return?”

Whether robot or human, any advisor worth his price has to be able to answer the following question for you: Given my spending, saving and investing, can I feel confident that my goals will be funded? For most people, the goal is not running out of money halfway through retirement. For others, it’s leaving behind a desired amount of assets to their kids and grandkids. Whatever the goal is, someone has to do the math! If you have any doubts about how much you’ll need for your goals (spoiler alert: everybody does!), the robo-advisor isn’t going to clear it up for you. So you saved some money with the robo-advisor, but you got no clarity or peace of mind.

The good advisor, especially an Investment Consultant, takes the time to walk you through what it may take to achieve your financial goals, and as a fiduciary, he or she will prepare multiple projections under different spending and investment scenarios to show you all the possibilities. The Consultant monitors the performance of your investments to see where improvements can be made. And just as importantly, he or she constantly educates you on the ins and outs of investing for the long-term so that you’re never in the dark. And the cherry on top of the cake? Every time you have a question or concern about anything, you’ve got a direct line to the guy who did all your investment strategies, who knows your personal and financial circumstances inside out, and who doesn’t need the half-baked introduction you’d have to give to robo-advisor’s customer service rep every time you called. Can you put a price on that?

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