The robots have taken over. Just kidding. In reality, robots haven’t taken over — but they have taken over a major chunk of the financial industry in the form of robo-advisors. A lot of people assume that we’re going to bash on robo-advisors (“The robots are taking your jobs!”) or that we will tell them a human advisor is the only way to go. 

But the truth is, we think robo-advisors are actually pretty useful. Of course, there’s a time and a place to use them, which is exactly what we cover in this episode of Wealth by Design.

 

WHAT YOU’LL LEARN 

• • 01:30 Dustin’s concerns about robo-advisors earlier in his career

  • 01:48 Why they’re not a threat to the financial planning industry

  • 03:37 What robo-advisors are 

  • 04:24 Why it’s not a question of which to use, but when to use each

  • 05:22 The questions that may come up around using a robo-advisor

  • 07:11 The major downside to robo-advisors (hint: it’s about customer service)

  • 08:00 The limiting beliefs that come when people consider hiring a financial advisor

  • 09:32 The biggest question clients have about an advisor

  • 09:40 The scary stories in the media that might discourage you from enlisting help

  • 11:07 What you should feel when you find the right robo-advisor

  • 11:32 What robo-advisors can’t do (spoiler alert: it requires ears)

  • 11:47 How to have your cake and eat it too

  • 13:25 The risk of letting the noise win

  • 15:27 When to go with a robo-advisor

  • 16:42 The rise of the subscription advisor

  • 17:08 How a hybrid of human + robo-advisor can help you navigate complexity

  • 18:19 When you should go all-in on a human advisor

  • 19:16 The need for customization as you grow your wealth

  • 20:02 How Dustin + Danielle use robo-advisors in their own business

WHAT IS A ROBO-ADVISOR… EXACTLY?

You might not be using the term “robo-advisor,” but you might be using one. Sites like e-Trade, Charles Schwab, Ellevest, Betterment, Acorn, and others all offer an automated, algorithm-based, and accessible way to invest for a low cost. Usually, you can create an account, tell them your goals, the amount you wish to invest, and the types of stocks or funds you’d like to invest in (optional), and you’re off to the races. It’s that easy to start investing with robo-advisors, which we think is pretty neat. 

Robo-advisors are:

• • Algorithm-based. They take data to determine the best fit for your investment needs, and they pair you up with the right stocks and funds to make selection super easy and quick. 
  • A little cookie-cutter. How could they not be? A robot can’t understand the nuances of every element of your financial life and goals (thank god). So, you’ll want to ask yourself, “Am I OK with a little cookie-cutter advice to get my investments off the ground?”
  • Cheap. For those of you out there who are super conscious of price, robo-advisors are great. They’re some of the lowest-priced advisor services out there, but you know what they say — you get what you pay for.
  • Pretty DIY. Robo-advisors don’t have a human advisor on the line, waiting to answer your calls. Sure, there’s tech support and a few resources to help with your questions, but they’re going to be fairly general.

 

IS A ROBO-ADVISOR RIGHT FOR YOU?

In this episode, we cover a lot of ground about what exactly a robo-advisor is, as well as when to choose one. We talk about scenarios that make you prime for a robo-advisor, like:

• • When you are just starting out with investing. 
  • If you’re a total DIYer with your finances.
  • Your situation is pretty simple (no kids, not a ton of money to invest yet, etc.).

We also walk you through the scenarios that might make a robo-advisor a “tighter squeeze” for you, such as if you:

• • Have a thriving business and high levels of income (and no clue what to do with it).
  • Are sick of DIYing your finances, or managing all the complexity alone.
  • Are second-guessing the investments you’ve got now, or you’re not getting the results you want from them.
  • Want a more customized, tailored financial plan that covers more than basic investing.
  • Are worried about looming recession — or you’ve been hit hard by one.

As we all know, robots aren’t human (#duh). That means that there are certain things lost in translation — things like supporting specific goals, understanding emotions around investing, and navigating complexity. That’s where we start recommending a hybrid: human and robots, unite!

THE HYBRID OPTION FOR YOUR INVESTMENTS

If there’s one thing you take away from this episode, it’s that you do not have to choose one or the other, robots or humans. You can use both to optimize your financial plan and future. One suggestion we make is pairing your robo-advisor investments with a subscription advisor — this is new!

With a subscription advisor service, you don’t have to have any investments with an advisor, but you can get the financial advice and plan you need to really focus on your financial life and goals. This is right for you if your situation is becoming be a bit more complex, i.e. you own your own business, want to understand estate planning, you have kids or a growing family, etc. but you don’t have a ton of interest in investing (or money to invest). This is something many advisors are beginning to offer because it comes without an investment requirement or minimum. You can get financial advice “on retainer,” so to speak, and your robo-advisor can continue to invest your money in the smaller accounts and portfolios you’ve selected.

P.S. You can learn more about subscription advisor services with Toujours Planning.

But if it’s to level up and really grow your long-term wealth so you can enter “revivement” or live that work-optional lifestyle, we do think that a human advisor is the best way to go.

WHEN A HUMAN ADVISOR IS YOUR BEST OPTION

We know just how much value a human advisor brings people, because we are human advisors! We think that deciding to go directly with a human advisor is a good decision for all the reasons you might choose a hybrid option… except for one big difference: you want the whole enchilada.

You’re sick of DIYing. You’re losing money on robo-investments or not seeing strong growth for how much you’re investing. And you’re feeling the fear that comes with ups and downs in the market. In short, you need a sensei. 

You want someone to create a custom plan for you, to walk you off the ledge if you’re getting spooked, and to help you come out stronger on the other side. Most of all, you’re ready for a custom financial plan and investment strategy that gets you from the hamster wheel of hustle to feeling confident and independent. 

You want to feel listened to, cared for, and like you don’t have to do the work yourself. You’re busy and you are ready for help. If that sounds like you, then you’re probably ready to work with a human financial advisor.

THAT’S NOT ALL, FOLKS

As you can probably tell by all the knowledge bombs we’ve dropped here, this episode is super in-depth and talks all about the benefits, downsides, connections, and scenarios that might help you decide where to start your investing journey. We also cover a lot of ground on mindset, what you might be feeling (or fearing) with your decision, and how to know if you’ve found the right fit.

To get all the magic, make sure to tune into Episode 101. It’s short but jam-packed with great info that can help you really start to build long-term wealth, so don’t skip it!

This material is for general information only and is not intended to provide specific advice or recommendations for any individual.

Resources & People Mentioned

• • • The definition of a robo-advisor (Investopedia)
    • Subscription advisor services
    • The Toujours Planning Quiz — Are we a good fit for your financial planning needs?

Connect With Danielle and Dustin

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