Should one go with robo-advisors?

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advise seeker

Should one go with robo-advisors?

Post by advise seeker » Mon Nov 13, 2017 11:59 am

I would like to use this forum to ask this question.

One of the topics mentioned robo-advisors for an investing strategy.

I wonder if anyone has gotten real life experience with it.
How is the fee structured and how the actual performance has been for the past few years?

On the surface the selling point appears to be low cost management fee due to its automated nature.

Actually there seems to be very Little selling done by the institutions on their robo-advisors. This kind of makes me feel that it may be a great product because good product needs very little publicity. Is it really a best kept secret? Appreciate your sharing your experience. Thanks,

Investor101

Re: Should one go with robo-advisors?

Post by Investor101 » Tue Nov 14, 2017 8:49 am

I have had some experience. Hope you find some of the info helpful.

Is robo-advisor for everyone? Probably not
If you have a large portfolio, it probably is not a good choice because one can unusually get it managed with much lower human advisor fees. Also you may want more varieties regarding the types of instruments in your holdings instead of just ETF’s.
If your finance situation is complex for example you are doing a large amount of spousal RRSP contribution; you are staring to receive OAS; you are turning 71 soon which means having to convert RRSP to RRIF, not mentioning life events like a divorce, inheritance. Any of these can easily cause complex shift in your finance situation.

Let’s say after your initial assessment you think it is suitable then consider the following.
If one is comfortable investing on his own, paying a 1% fee (it varies with robo-advisor providers, but between account administration fee, re-balancing fee and/or quarterly advice fee, expenses charged to the ETFs by the ETFs’ managers and etc. 1% or above may be a good rule of thumb).

It is certainly not as cheap as doing it yourself but likely not as expensive as going with a traditional human advisor.

Is it providing a service that is needed? Absolutely! Just as the fee may be in-between, it fills a gap in between the 100% self directed investing and 100% allowing your human advisors to do whatever and charge you whatever.

Bottom line
No one is ultimately responsible for your money but you.
No one knows what you need or want better than yourself.
No one can react to changes in your life faster than yourself.
Do some homework and make the right choice for you.
This link provides some useful info to start with:
http://www.moneysense.ca/save/investing ... t-for-you/

Happy investing!

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