AMA The Fifth Person
Asked by Anonymous
Asked on 18 Feb 2019
Top Contributor (Jan)
I'm an FA that can also distribute robo advisor options but also have his own managed portfolio service. Ultimately, it depends if you prefer passive or active management, plus if you'd like human advice on your investments instead of just a computer screen.
I would think that human advisors do better at explaining why you need to be invested even in an economic downturn and in fact top up your portfolios, while robo advisors would not be able to calm you down during negative performances.
Your investments are just one part of your entire financial plan as well, and having an FA handle that can also provide a more holistic view of your entire end goal.
Here's my personal thoughts if you are looking to invest- go with Robo Advisors. If you are looking for entire portfolio mgt advice, perhaps FAs might suit you better.
First off understanding todays context, Robo Advisors has entered only within the past few years and been picking up traction recently, undercutting not just FAs but traditional fund managers and fundhouses in terms of attractiveness of charges. In fact, FMs and FHs and now scaling back their margins to simply stay relevant.
Essentially, the business models of Robo Advisors has been designed to minimise the inefficiencies of existing traditional structures- going through FAs-FA's company-Investment product's company-before reaching the Fund Management Team(all of whom take a cut along the process). Of course there is the question of whether Robo Advisors perform as well as Traditional Fund Management Teams, but I believe a little researching would reveal Robo Advisors are not much worse off, if at all, to justify the hefty charges of Traditional FMTs, much less transacting bottom up through FAs.
That being said, there is still due diligence to be done on the consumers end. There are now plenty of credible Robo Advisors in Singapore- eg. Autowealth, Smartly, Stashaway. In fact, Banks such as OCBC are catching on with RoboAdvisors of their own. My advice- look not just on their charges but beyond that, eg. the teams credibility with managing funds, whether they publish their existing portfolio track record, i.e indicators that show how their algorithms and strategies have been performing against index benchmarks. If such information is not readily available online, set up a meeting with their company team and request for these. Clarify as many queries as you have. As an potential investor, you deserve to know as much there is to know.
22 Feb 2019
Firstly, you can look at the fees charged by both. Traditional investment advisors typically charge anywhere from 1% to 3% of the value of your portfolio, while robo advisors charge less than 1%. You are essentially paying more for more personalised services.
Next, if you are someone that likes personal contact with your investment, financial advisors would be a better choice. If you are contended with not having personal contact, Robo Advisors would be a better choice.
If you are willing to let someone else do your investment, then a robo advisor would work. When you invest in a robo investing platform, the site will handle all of your investment activities for you.
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22 Feb 2019
No emotions, stick to a crafted plan, only concern is to provide mathematically scripted returns without thinking of making commissions or window dressing.
Robo for the win.
I think there pro and con on both advisors. If you are someone who like personal touch then an actual financial advisors will be better.
Apart from what the others have mentioned, try to mine as much information as you can regarding their track records. Look for past trends and records of the funds / roboadvisors, as well as as many reviews as you can online. Also, pay attention to what kind of asset classes you prefer, as well as what kind of risks and returns you are comfortable with.
I'd think robo advisors will be a better choice. Not just fees wise, as Zann mentioned is lower (which will eat significantly less into account value over time), but also through the experience of the professional investment team behind each robo advisory. How many financial advisors out there know each and every mutual fund they market in depth and can choose the ones that fit your needs?
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21 Feb 2019