robo-advisors I am increasingly reading about the “Rise of the Robo-Advisor” and thought some recent information might interest you as it did me.

For those of you who might not be familiar with the concept, Robo-Advisors are computers programmed to create investment portfolios.  They tend to be most popular with younger investors.

Did you know that, a “decision to protect its investors by Betterment, (a large Robo-advisor) resulted in Betterment temporarily suspending trading the morning after the Brexit vote?  “This decision, made on only a 2% drop in the market, disappointed and surprised many Betterment users. “

(Source: “Betterment’s Brexit Shock” by Suleman Din Techzone Financial Planning August 2016)

As with many other aspects of our business, Resonate believes that polarized approaches, which limit client options, often do not serve the clients’ best interest.  Rather, we have reached the same conclusion that Morningstar founder Joe Mansueto wrote to his Board in August 2016:

“Robo-solutions work well for those early in their careers when their financial affairs are often simpler.  As people age, their financial lives inevitably become more complex – there may be a divorce, a special needs child, care of aging parents, insurance needs, annuities, housing assets, Social Security, estate and legacy planning.”

“At that point, people highly value working with a financial advisor who can put together an appropriate life and financial plan.  (Without benefit of an actual conversation)  It is hard for a computer algorithm to take into account the multitude of possible individual situations and create a plan in a way that engenders trust.

By Morningstar estimates, the value of financial planning is significant – it can provide an additional 1.6% of return per year.”

While we agree that paying attention to fees paid is an important consideration, allowing concerns about fees to obscure the real value brought by real people relating with and planning for other real people can end up “costing clients and their families” in many ways… legally, emotionally,  relationally and financially.

We welcome the opportunity to share a cup of coffee and conversation with you.

Barbara A. Culver
Resonate, Inc.
(513) 605-2500