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For better or for worse, technology allows us to automate and streamline an increasing portion of our everyday lives. I often tend towards the self-checkout line when buying groceries, delegate my weekend soundtrack to Alexa, and much to my dog’s dismay, I’m even guilty of using a robotic vacuum to clean my house.  As technology continues to seep further into the fabric of our daily lives, it comes as no surprise that automation is coming for our financial lives as well.

You have likely already heard about “robo-advisors” as a low-cost alternative to a traditional (read: human) financial advisor. But what does it really mean to work with a robo-advisor? Typically, the first step in the robo-advice process will be taking an online survey gauging your risk tolerance, retirement time horizon and other psychological and demographic factors. Based on this information, the platform will use modern portfolio theory and advanced computer algorithms to create and manage your investment portfolio. A one-size fits most approach to passive investing can be a great option for DIY investors who are looking for a low-cost solution to creating a diversified portfolio. Many robo-advisor platforms have no investment minimum, making this option more accessible to younger investors or investors without many assets to manage.

One of the ways robo-advisor platforms keep their costs low is by minimizing human involvement in their portfolio management, choosing instead to manage investments by algorithm. However, this automated approach becomes challenging for clients who have more complex planning needs. Investing in a diversified portfolio is also only a portion of your complete financial picture, and a robo-advisor cannot be attuned to the nuances of your unique story and relationship with your money. Imagine contacting a call center to ask how your financial plan would be impacted if you have a baby next year or quit your high-stress job next week.

A great advisor will keep you accountable, and coach you to stay on track to accomplish your financial goals. This could come in the form of an encouraging phone call when you’re feeling anxious about market volatility, or in the form of an email to remind you to make your Roth IRA contribution prior to the tax deadline because this strategy is built into your customized retirement plan. We brainstorm, we connect, and we do more than just optimize your portfolio.

As advisors, our relationship and personal history with our clients is the “x-factor” that cannot be replicated by an online platform. Robo-advisors offer a great service if all you need is a low-cost, diversified portfolio, but when it comes to complex planning needs, it’s hard to beat sitting across the table from a trusted advisor who’s got your back.


Leah Levingston
Associate Financial Advisor



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