Financial Advisors Vs. Robos: Which Is The Best Choice For You?

Digital financial advice that’s based on a mathematical formula has become increasingly popular over the last decade. Fans of automated investing see it as an efficient and inexpensive way to build and maintain an investment portfolio. But while an algorithm can allocate assets and select investments based on a person’s input, it is incapable of understanding and addressing what I believe are the most critical components of successful investing — human emotion and behavior. Feelings and behaviors are typically the biggest impediments to sticking to a long-term plan and achieving financial goals. A human advisor whose clients ultimately cross the finish line is part psychologist and part financial expert.

Most of my clients are mature individuals who are approaching retirement age or are already retired. They know how much is at stake every time they make an important financial decision, so there’s a lot of anxiety associated with making the right choices. Without the right guidance and advice, they could be tempted to make impulsive or risky moves due to the fear of losing money or the urgency of playing catch-up. Talking them down requires using some psychology, and no algorithm that I’m aware of is capable of that.