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