You’ve seen the commercials, right? They’re out there saying computers better at this than everyone else. I’d like to ask you a couple of questions:
-Do you really want to be that individual, that human being who’s being block traded his entire portfolio along with everyone else in the entire country at the exact same time?
-Are you first in line or your last in line, what kind of pricing are you getting there?
-Do you really want an algorithm deciding what you should own and in which accounts?
-Do you really think it makes the most sense to have a questionnaire decide the future of your entire life?
-Do you really think that this algorithm and this computer can give you the advice that you need on tax planning, on financial planning, on corporate succession, on philanthropic giving and on business succession?
These are questions that I’d personally like to get an actual human being’s advice. The robo-advisors are useful If you have 5K or 10K, you’ve put that aside and you’re convinced that this algorithm is the best thing for you.
However, if you got actual assets and you’ve accumulated some wealth in your life, you know that in order to get the right advice, you actually need to talk to human beings.
The Robo-Advisors build these portfolios and they’re the same for everyone. These custom portfolios that they have across every platform have underperformed.
You can check study after study. They’ve underperformed. They’re not timing the market and the robo-advisors are not able to take advantage of opportunities in the market.
They’re not able to structure the alternatives, not able to do anything principal protected and they never look at private debt of any kind.
These Artificial Intelligence Advisors are modeled by the institutions that own them; banks and wealth management firms.
These institutions come up with a specific recommendation for individual investors, which is generally in the best interest of the company that owns that robo program or that algorithm.
Now, do you think it’s a fully biased opinion? I’ll tell you what, I’ve asked you a lot of rhetorical questions and if you’re not sure what the answer to those are, maybe you are best to be with a Robo Advisor.
Nevertheless, if you want top level advice, you need to be with a Portfolio Manager. Robo Advisors serve a purpose.
They’re really good for the introductory investor and folks that would like to invest their first 5K and that don’t really need any other advice.
On the other hand, if you actually have wealth, this is not the solution to your investment goals and needs.