Although robo-advisors are popular for the benefits they bring to those who use them, they’re not perfect. They also have some shortcomings Finance Brokerage Cryptocurrencies that you would be wise to know ahead of time. Check them out!
Robo-Advisors are not Personalized
If you don’t know it yet, you’re more than just an investment portfolio. You have many goals which are both for the near and long term. Even though many robo-advisors now enable you to set and edit your goals using their financial planning software, you also have money-related issues and concerns which many benefit from a chat with a real, breathing, human being.
Most, though not all, robo-advisors will not try to cheer you up and talk you out of suicide after a significant market drop. The human Finance Brokerage Education advisor is there to assuage your fears and explain how the investment markets work.
A financial planner works to integrate your finances, taxes, and estate plans. The advisor’s office may have a diverse pool of advisors to help with many aspects of life beyond just monetary concerns.
If you want to sell call options on an existing portfolio or buy individual stocks, most robo-advisors won’t be able to help you. There are sound investment strategies that blow beyond an investing algorithm. Sophisticated and newbie investors may want a broader investment portfolio with a wider range of asset classes than the typical robo-advisor offers.
Falsely Bash Advisors’ Price Schedules
It’s true that most robo-advisors have low price schedules, but not all. It’s not true that all financial advisors are expensive. There are financial advisors that charge approximately 1.0 percent of assets under management (AUM) for their services. This fee is comparable to several robo-advisors.
There are other advisors who will charge you an hourly rate or fee for service. This practice gives the consumer an opportunity to control the cost while receiving more personalized information. The newer web-based personal advisors can forgo the cost of fancy office and serve you professionally via web-chat for lower fees.
In addition, there are advisors that “lease” robo-advisors’ platform and mix them with their own advisory services, thereby cutting fees and charges.
They Falsely Claim They’re the only Savior of Low Net Worth Investors
There are financial advisor alternatives for those without huge money and deep pockets or those just starting out. The XY Planning Network is a fee-only financial planning collection of advisors with an affordable monthly fee structure. The XY Planning Network advisors also cater to a younger clientele.
A fee-for-service will put a limit on the client’s charges. Trade infrequently with an advisor paid by commission, and you can see that your cost will remain low. With the multitude of financial advisors, there are pay models and investment approaches to fit every type of investor.
No Face to Face Meeting
If you’re someone that wants to have a strong personal relationship with your financial advisor, then robo-advisors may not be the best choice for you. The robos aren’t really known for having offices where a client can walk and talk directly to an advisor. This type of personal contact is relegated to the traditional financial advisory models.