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Freedom Debt Relief Asks: Would You Trust Your Money to a Robo-Adviser?

Robo-Adviser Robots in Suits - Vintage Value Investing

As technology becomes bigger and better with every passing day, it’s never been easier or faster to find the financial advice that you need. With the pressure building to provide lost-cost and fast services to consumers, Freedom Debt Relief has found that a growing number of companies are now investing in developing robo-investors, or “robos” for short. Been wanting to get into investing with a robotic adviser but aren’t sure what the deal is? Freedom Debt Relief is here to help! Read on to learn all the crucial information that you need to know before you decide to trust a robo with your money, your time, and your future.

What are robos and how do they work? A robo is basically a virtual investment adviser. You answer a few questions online, and the robo’s computer program matches you with a number of diversified funds that are specially picked to match your age, horizon, and level of risk tolerance. Freedom Debt Relief has found that a number of companies have begun to introduce virtual advising services via their robos, and some companies like Vanguard even offer a combined human-robo investing advice service.

What can they offer me? Robos offer a fast and inexpensive option for investors looking to dip their toes into the waters of beginning a portfolio, but will likely not help with more experienced investors who are looking for a dedicated personal financial adviser to assist them in choosing where to invest their money. If you’re not looking for financial advice based around specific goals like saving for retirement or starting a college fund, Freedom Debt Relief has found that a robo might be the right choice for you, as they’re usually less expensive than seeing a financial adviser.

What fees are associated with my accounts? Because robos’ services are automated, the fees associated with their accounts are almost always lower than personal advisers or hybrid accounts that use both human interaction and robotics. Robos charge fees as a percentage of the amount of assets managed, and typical fee rates range between .25% and .50%. Hybrid accounts typically charge between .31% to .91% a year in annual fees.

Freedom Debt Relief recommends robo-investors to those who are only looking for portfolio advice and who are happy investing their money in index funds- they’re not useful for those with more personalized goals like saving for retirement. If you have something specific that you’re saving for or if you already understand the basics of tracking stocks and making estimations on the market, you may be better off managing your own accounts and saving money on the fees these services charge to keep a look after your portfolio. However, while robos were invented to manage smaller accounts, their potential is growing; some robos now manage accounts that hold over seven figures worth of assets.

So, is a robo right for  you? The answer depends on your individual needs. You’ll have to think about whether or not you’re ready to invest the time and effort that managing a portfolio requires- if the answer is “no,” a robo might be a right choice for you.