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Tag Archives: retirement

3 Reasons Why Robots Won’t Replace Financial Advisors

Robo-advisors have been heralded as the “future of investing” by their fans, but can computer algorithms really replace human financial advisors?

Robo-advisors are less expensive than traditional advisors—but their low, up-front price comes with a loss in quality. Robo-advisors lack an irreplaceable human element, which prevents them from providing the essential qualities and services characteristic of traditional financial advisors. When you look more closely at the differences between the two, it seems obvious that robo-advisors could never truly replace human financial advisors.

How do robo-advisors work?

Robo-advisors are low-cost, digital platforms that use automated algorithms to provide investment advice. Investors fill out an online form detailing their current financial situation, monetary goals, and investing preferences. Then, the robo-advisor software analyzes the responses and dispenses investment advice.

A recent study by LendEDU found that Millennials, once believed to be the biggest proponents of robo-advisors, actually chose human advisors nearly two-to-one over automated investment services. Other findings from the study revealed that 52% of Millennials believed that robo-advisors are more likely to make mistakes, and nearly 70% thought a human advisor would get a better return on their investments.

Here are 3 reasons why human financial advisors provide more value than robo-advisors.

  1. Money is an Emotional Matter

When you compare a robo-advisor to a human financial advisor, the key difference is a human advisor’s ability to offer emotional guidance. Meeting our clients face-to-face allows us to provide behavioral coaching and hand holding, helping clients develop positive budgeting and wealth management habits that lead to long-term financial security. When markets decline or experience an upset, we work with our clients to help them make rational financial decisions and overcome detrimental emotions or impulses.

  1. Everyone has a Unique Financial Situation

Human financial advisors provide personalized counseling and guidance to help clients achieve long-term financial success. Automated online platforms are unable to match this level of personalization. Instead, robo-advisors rely solely on computerized algorithms to determine asset allocation. While traditional financial advisors may use similar strategies, we also rely on our professional history, as we have worked with a variety of clients with unique financial situations. Additionally, we may work with a team or have additional financial tools at our disposal to determine the best investment objectives for each client.

  1. It’s About More Than Just Investments

Investment advice is just a small part of a complete financial plan. The most sophisticated robo-advisors may offer automatic portfolio rebalancing and tax-loss harvesting, but they don’t come close to providing the full range of services that human financial advisors offer. As people move through life, their priorities and financial goals evolve. Human financial advisors are able to create nuanced investment strategies that take into account changing life circumstances. We provide comprehensive financial planning that includes retirement, insurance, and estate planning services, the best exercise of stock options, cash flow monitoring, and more to help our clients achieve their financial aspirations.

While robo-advisors are gaining more capabilities and media attention, they aren’t close to replacing human financial advisors. Robo-advisors may be useful for beginner investors with limited assets, but they lack the full range of benefits that would let them serve as true replacements for traditional, human financial advisors. If your finances could benefit from a personal touch, please contact us for a complimentary consultation.

 

Sources:

Brown, Mike. (2018, Aug. 23) Robo Advisors vs. Financial Advisors – Millennials Still Prefer Real-Life. [Blog post]. Retrieved from https://lendedu.com/blog/robo-advisors-vs-financial-advisors/

Rixse, Chad. (2018, Apr. 25) The 4 advantages of human vs. robo-advisors. [Blog post]. Retrieved from https://www.cnbc.com/2018/04/25/the-4-advantages-of-human-vs-robo-advisors.html

Wohlner, Roger. (2018) Is An Online Financial Advisor Right For You? [Blog post]. Retrieved from https://www.investopedia.com/articles/financial-advisors/121914/online-financial-advisor-right-you.asp

Investopedia. (2018) Robo-Advisor (Robo-Adviser). [Reference] Retrieved from https://www.investopedia.com/terms/r/roboadvisor-roboadviser.asp

7 Small Changes You Can Make Today to Retire Sooner

You probably started thinking about retirement the day you entered the workforce. For some of us, retirement is very far off. For others, it’s right around the corner. No matter what stage of life you’re at, PA retirement income planning should always be at the top of your mind.

What if you haven’t saved enough for retirement? Or worse, what if you haven’t saved anything at all? Relax and take a deep breath. All hope isn’t lost. There are seven small changes you can make today that will help you save more money and may even help you retire sooner.

Continue reading "7 Small Changes You Can Make Today to Retire Sooner"

Planning For 100: 6 Ways to Retire With Financial Independence

Are you prepared for retirement?

If the answer is no, you’re not alone.

1 in 3 Americans have zero retirement savings. This includes people who are quickly approaching retirement (ages 50-64). Even those who are saving aren’t putting away very much.

This is especially troubling since people are living longer. That means there are a lot of people who won’t be able to keep up their lifestyle during retirement. I always tell my clients to plan as if they’re going to live to 100 (never say never – the oldest woman who ever lived was 122!).

If you haven’t been saving for retirement or if you haven’t saved enough, it’s not too late to turn things around. No matter which stage you’re at, here are six ways to retire with financial independence: Continue reading "Planning For 100: 6 Ways to Retire With Financial Independence"

Planning for Uncertainty

Do you find yourself in one of these situations?

I’m thinking about getting divorced but haven’t taken that first step.

I’m getting divorced and my attorney isn’t helping me get the settlement I want.

I just got divorced and I have no idea how to manage the household finances.

I’m retiring and I want to make my money last as long as I do.

I haven’t saved enough for retirement.

I’m getting a divorce and I’m close to retirement.

Divorce and retirement have one thing in common: uncertainty. Especially when it comes to money. Continue reading "Planning for Uncertainty"

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