Technology has revolutionized every aspect of our lives, so it shouldn’t come as a surprise that tech-based investment platforms, known as robo-advisors, are becoming more popular. Robo-advisors were created in the aftermath of the 2008 financial crisis, as an alternative to traditional financial advisors and investment managers. This year, robo-advisor platforms crossed the $1 trillion threshold in assets under management.1
These web- or app-based platforms usually use a survey to gather information about your goals, assets, and risk tolerance. Then, based on that information, the program automatically develops and implements an investment strategy. There is usually little or no interaction with an advisor, so everything is based on your answers to the survey questions.
Because there is no human interaction, the fees with robo-advisors are often lower than you might find with a traditional advisor or investment manager. However, cheaper isn’t necessarily better. There are many important functions that a robo-advisor can’t perform. Below are a few services you can’t get with a robo-advisor:
Financial Life Decisions
Your investment strategy is an important part of your financial life, but it’s just one piece of the puzzle. Many financial outcomes aren’t driven by your investment strategy, but rather the choices you make with your investments in life.
For example, how much should you contribute to your 401(k) each year? Is a traditional IRA or a Roth IRA right for you? What can you do to minimize your taxes each year? When’s the right time to file for Social Security?
A computer can’t answer these questions because it doesn’t understand your full financial picture. These questions and more are often very complex and require nuanced answers based on your unique needs and goals. Real human consultation with an experienced professional is often an effective way to find answers and develop a strategy.
Accurate Answers and Input
Like most technological strategies, a robo-advisor’s output is only as good as the input. These platforms rely on your initial answers to develop your strategy.
But what if your answers to the initial survey aren’t correct? While you may be asked about your goals or risk tolerance, it’s possible that you may not truly know the answers. Do you really know if you will retire at age 65? Do you know how you would react if the market declined by a certain percentage?
Again, a conversation with a professional can help you fully understand your goals and your feelings about risk. That way, your strategy can be based on what you truly need and desire rather than based on a quiz that took a few minutes to complete.
Protecting You from Yourself
When the COVID pandemic began in late February, the S&P 500 declined by 33.93% in a month. Did you feel tempted to sell your investments and move into cash or other less volatile assets? If so, you’re not alone. However, had you done so, you may have missed out on the market’s bounce back. Since March 23, the S&P 500 has climbed 49.35%.2
It’s natural to feel anxious or unnerved by market declines, especially when it falls as rapidly as it did earlier this year. However, an advisor can help you look at the long-term strategy and help you determine if a change in allocation is actually warranted. A robo-advisor simply executes your order to sell without any consultation or advice. While that may be convenient, it may not be the best decision for your long-term goals.
Looking for custom advice and strategy to help you reach your biggest financial goals? Let’s talk about it. Contact us today at Oliver Asset Management. We can help you analyze your needs and implement a strategy. Let’s connect soon and start the conversation.
1https://www.tradersmagazine.com/news/robo-advisors-to-become-1-4t-industry-this-year/
2https://www.google.com/search?q=INDEXSP:.INX&tbm=fin&stick=H4sIAAAAAAAAAONgecRowi3w8sc9YSntSWtOXmNU5eIKzsgvd80rySypFBLnYoOyeKW4uTj1c_UNDM0qi4t5FrHyePq5uEYEB1jpefpFAAAU6wGESAAAAA#scso=_QQBhX8b3K5K-tQbo56XwCw7:0
Advisory services offered through Change Path, LLC a Registered Investment Adviser. Change Path, LLC and Oliver Asset Management are unaffiliated entities.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 20419 - 2020/9/17
April Fool’s Day is all about jokes and pranks, but when it comes to retirement planning, getting fooled can cost you real money. Today, we’re uncovering the beliefs that can fool retirees and pre-retirees into making bad financial moves. We’ll cover some of the most common myths that can damage your retirement plans and explain why they might not make much sense for you.
Using a Tax Refund to Fund an IRA
Top 10 IRA Rollover Mistakes
Many retirees and pre-retirees dream of owning a vacation home that they can visit throughout the year. But if you decide to make this move, how should you go about financing a second property? That’s the question one of our listeners, Ted, asked Frank this week.
We've got a great listener question for you today! This week, Barry shares that he has a life insurance policy through his job, as well as a whole life policy he purchased several years ago. Now, he’s wondering- does he really need both, or should he consider canceling one?
Social Security claiming strategies can vary greatly depending on family dynamics. This episode explores how different family situations, such as those with a stay-at-home spouse or a blended family, could impact when and how to claim Social Security benefits to help maximize your retirement income.
Retirement accounts and divorce
Why do you need a financial advisor?
In today’s video, Rebecca asks an important question about retirement planning: With four different investment accounts- her 401(k), IRA, Roth IRA, and individual account- she’s wondering which one she should withdraw from first when she retires next year and needs income.
Financial mistakes can happen at any age, but they can have a particularly significant impact in your 60s. In today’s episode, Frank discusses 5 common financial blunders to avoid during this pivotal decade.
Advisory services offered through CreativeOne Wealth, LLC a Registered Investment Adviser. CreativeOne Wealth, LLC and Oliver Asset Management are unaffiliated entities.
Licensed Insurance Professional. Respond and learn how financial products, including life insurance and annuities can be used in various planning strategies for retirement. The information contained herein is based on our understanding of current tax law. The tax and legislative information may be subject to change and different interpretations. We recommend that you seek professional tax advice for applicability to your personal situation.
*Testimonials are based on unique experiences from current clients and are not representative of all client experiences. Testimonials are unsolicited and clients received no compensation (cash or non-cash). Past performance is no guarantee of future results. Testimonials are encouraged and welcomed from all prospects and clients. Investment advisory services offered through CreativeOne Wealth, LLC, a registered investment advisor. CreativeOne Wealth is not affiliated with Oliver Asset Management. Additional information about CreativeOne Wealth, LLC is available in its current disclosure documents, Form ADV, Form ADV Part 2A Brochure, and Client Relationship Summary report which are accessible online via the SEC’s Investment Adviser Public Disclosure (IAPD) database at www.adviserinfo.sec.gov, using CRD #281213.
Oliver Asset Management © 2023