Portfolio Management | June 11, 2020

Is a Robo-Advisor Right for You?


We trust technology to find the best route to the airport and remind us about important events, so it’s no surprise that more and more investors are turning to robo-advisors for a hands-off, low-cost, and efficient way to manage their portfolios.

Using an online questionnaire to access your goals, a robo-advisor employs advanced algorithms to recommend a diversified portfolio, typically consisting of a combination of low-cost exchange-traded funds based on your time horizon and risk profile.

Once your portfolio is created, a robo advisor can monitor your investments and rebalance as needed to keep your allocation consistent with your goals as markets fluctuate. With a minimum investment amount, some robo-advisors even offer automated portfolio-management features like tax-loss harvesting, which can help to potentially reduce current tax liabilities and leave you more money to reinvest and potentially grow over time.

Regardless of your investing savvy or net worth, a robo-advisor could be a good fit if:
  • You want a low-cost investment solution: With low or no fees and commissions, a robo-advisor can help keep costs to a minimum—because every dollar you save in fees is one you can invest for future potential growth.
  • You’re saving for one or multiple goals: Whether it’s college, retirement, or a new or second home, each goal requires its own strategy. Robo-advisors can create multiple tailored portfolios aimed at helping you achieve each of your objectives.
  • You don’t have the time or inclination to be hands-on: Robo-advisors can automatically create, monitor, and rebalance your investments to keep you diversified and on track.
  • You want a healthy mix of assets: Robo-advisors automatically construct a diverse portfolio in line with your goals, risk tolerance, and time horizon.

Bottom line:
If you’re looking for a low-cost and hands-off investing strategy that helps you establish an investment portfolio for one or multiple goals, a robo-advisor could be the right fit for you.

What You Can Do Next