Two options for managing investments are robo-advisors and human financial advisors. Robo-advisors are computers that major firms use to allocate assets for passive portfolios in seconds. What started in the early 2000s has grown to widespread use, but there may still be strong benefits to shaking a human’s hand.
Robo-Advisors
Robo-advisors generally design and maintain low-cost passive portfolios with low minimum balances. Passive investing is a traditionally cheaper approach because trades are rarely conducted. The portfolio construction process is quick, and the investor is given details of the computer-generated asset allocations.
However, robo-advisors typically create portfolios using various index funds. This strategy, by design, makes outperforming the market nearly impossible. This approach can also result in investing in unfamiliar stocks in an overly diversified portfolio. The blind stock selection may also conflict with socially conscious investors’ interests. Conversely, robo-advisors that use an active investing strategy still use humans.
Human Financial Advisors
Individuals seeking active management with a team of analysts or financial advisors may benefit from a human. While fees may be slightly higher, human advisors are flexible, applying strategies to minimize losses during economic downturns and maximize returns upon market recovery.
Active managers can help guide clients away from underperforming stocks and toward stocks with growth potential. They also talk clients out of making emotional decisions amid market volatility and offer clients insight into the investments’ qualitative features, such as management.
Investing with Humans
For those seeking a professional to actively manage their retirement portfolio, First State invests in high-quality Gold Chip stocks customized to client needs. For a free consultation with our team of financial advisors with over 50 years of experience, contact us today at (918) 492-1361.
This overview is for informational purposes only and is not a recommendation. It should not be the sole deciding factor in making an investment. Investing is a risk and, as with all risks, a positive return is not guaranteed. Past performance does not indicate future results.