Investing / Tech | Freeman Capital

The missing element in most automatic investing

with robo-advisors.

Robo-advisors are a great option for investors because of their low fees, low cost threshold and ease of use. Here’s how you can tell which one is the best and identify the full costs and other important factors.

Which robo-advisor is the best?

  • One with a low initial investment
  • One that has clear and transparent fees
  • One equipped with college savings, retirement, mutual funds and other investment products
  • One that takes your goals, debt and personal plans into account
  • BONUS – One that offers a CERTIFIED FINANCIAL PLANNER™ professional for that personal touch

How much does a robo-advisor cost?

The internet has made things very transparent, which means inefficiencies and high costs should go the way of the dinosaur. 

Don’t be fooled. Some platforms are Free for the first $5,000. After that, fees start rolling in and taking your hard earned money. 

It’s also important to consider what kind of support you’ll want during a downturn in the market. The real cost of using just a robot comes into play and rebalancing becomes crucial to your investment strategy.

Why is rebalancing is important?

Sure, most robo-advisors offer an automatic rebalancing feature that is usually pretty simple to set up. But will it be enough during a big financial hit? 

You want to rebalance your investments back to a target asset allocation at a set interval. You might do it every three months, six months, annually or at some other interval.

When a big market market correction hits home, it takes a midas touch to align your personal and financial assets. Don’t wait for a huge hits for you to realize that you are missing something.

What are you missing?

Most robo-advisors will not hold your hand and talk you off the ledge after a significant market drop. The human financial advisor is there to assuage your fears and explain how the investment markets work. A certified financial planner works to integrate your finances, taxes and estate plans. 

Most robo-advisors also won’t be able to help you if you want to sell call options on your portfolio or buy a specific stock.  There are investment strategies and personal financial goals that go beyond an investment algorithm.

The balance of both worlds.

We are human and want a real life touch to our finances. But most robo-advisor companies don’t offer that. Just having a robo-advisor is not the same thing as having a one-on-one financial plan. Algorithms can be a good way to save money if you just want to “set it and forget it”. But unless you have a strategy for the rest of your financial life and hundreds of hours of investment knowledge, all your needs won’t be fulfilled.

Go beyond investments.

A holistic investment plan helps but you must coordinate your debt, savings and lifestyle and not just your portfolio.

Keys to your lifelong financial success include knowing that there’s someone that has your best interest in mind. But just having a robo-advisor won’t help you with that. A CERTIFIED FINANCIAL PLANNER™ professional is bound by a regulatory obligation to do just that.

Will an algorithm be obligated to always act in your best interest?

A CERTIFIED FINANCIAL PLANNER™ professional is legally obligated to always act in your best interest.

This includes:

  • Providing full and fair disclosure of all material facts defined as, those which “a reasonable investor would consider to be important”
  • Acting with undivided loyalty and the utmost good faith
  • Not misleading clients
  • Avoiding conflicts of interest (such as when the advisor profits more if a client uses one investment instead of another or trades frequently) and disclosing any potential conflicts of interest
  • Not using a client’s assets for the advisor’s own benefit or the benefit of other clients

That’s why we come with the savings of a robo-advisor and a CERTIFIED FINANCIAL PLANNER™ professional.

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