Technological innovation is a driving force in business, politics, philanthropy and the humanities.  The auto industry is a great example of how rapidly leaders have had to confront a marketplace where fewer people own vehicles.

Just as automated vehicles are an innovation that is upending the traditional automotive profit model, so too has automated investing emerged as a disruptor challenging the traditional financial advisor. Customers are now able to open an account, decide their risk and create a portfolio, and automatically invest without ever speaking to a person. In a world of automation and information, how does a financial advisor continue to be relevant? 

More importantly, how can an individual seeking advice—who is bombarded in every direction by differing opinions—make an educated decision on whom to trust for something as important as their financial future?   

Robo-Advisors—Context And Disadvantages

The rise of robo-advisory, automated systems that provide risk-appropriate allocation portfolios with little or no in-person interaction, has been hailed as the future of investment advisory and has been much feared by financial advisors. For clients who have little planning needs and want the very low cost but still want asset allocation and diversification, robo-advisory offers a sound solution. These online services automate investments and allow low minimums and low contributions. For people who have no dependents or who simply wants to dip their feet for the first time into investing, the robo-advisors can be an easy and inexpensive way to start.

One disadvantage of robo-advisors is that they generally receive a limited amount of data and that limits the planning that can be done. More important is that a robo-advisor does not provide a comprehensive plan that integrates protection, accumulation and distribution strategies.  Further, many people still prefer to work with someone face-to-face and to have a personal relationship with their advisor.

Individual Advisors—Education and Advantages:

There are many reasons why consumers may still want to work with an individual advisor. An advisor can offer distinct advantages, including comprehensive planning and a one-on-one relationship. As a person’s life and circumstances change, an advisor can be a trusted resource to make important decisions in regards to one’s finances. However, oftentimes people will do more research to buy a pair of shoes than they do in trusting someone to manage their life’s savings.

Advisors can also offer educational direction to customers in making the advisor decision:

1. Bad players seem to always find a way to work around rules. It is important for consumers to do research such as looking up the financial professional’s background on Finra Broker Check. This website includes such information as education, business activities,and disciplinary action.

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