Robo Advice Vs Personal Advice
posted on August 8, 2018
Robo Advising Vs Personal Advice
Which is right for you?
I’ve heard the term so much in the last little while that I had to sit down and write something about. I am making this case in reference to the financial industry. Do I think that a Robot could replace a human? I think not. Do I think that a Robo Advisor could work for some? The answer is “yes” but only to a certain extent. There will always be a human behind that front, checking off the boxes and making sure that it’s compliant friendly advice. Sure, opening a Savings , RRSP, TFSA or other investment accounts could be done through online services. I certainly don’t feel comfortable getting a cookie cutter advice and a portfolio. A robot could never understand or feel the emotions of an investor. In difficult times, I’ve had to hand hold my clients and walk them through 2008 financial crisis. I’m not sure a Robot could actually sit down with me and deal with the emotions that the investors were going through. If I was left alone and had to decide what to do with my portfolio(s) in 2008, I must say that I would have certainly panicked and bailed out of the market and gone to cash. Now, unless a robot with very sophisticated intelligence had foreseen the melt-down and had guided me go to cash, then I would have been a very satisfied investor with a Robot.
I wonder if that was the case, would going to cash be good for the markets. I don’t think so. Any advice then would have to be driven by human intelligence.
So my next question is; Go to cash, buy and hold (traditional thinking) or both? Who would make the decision for the Robo Advisor? Someone behind the creator of the Robot? Leave aside the emotional roller coaster an investor goes through, I would need to have an assurance from a human unless I’m a sophisticated investor. In that case , who needs a human or a Robot?
In short, Robo Advisor may be good for the beginner investor but, at some point, would need human to provide that emotional balance.
I am inviting comments for a good healthy discussion. This article will also be posted on to my platform www.e2aforums.com
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