What are some of the drawbacks of robo advisors and how can we mitigate those drawbacks? ?

A comprehensive research by Standard & Poors Dow Jones compiling the investment performance of thousands and thousands of active investment managers (ie. unit trusts) for more than a decade found that an overwhelming majority of 80% to 90% of professional investment managers who pick stocks and time markets consistently underperforms the general markets over the short, medium and long-term.

This is why we discourage investors from stock-picking or market timing and why we certainly discourage investors from buying unit trusts which are widely sold by financial advisors, insurance agents and banks. You may read more about our investment strategy, access the S&P Dow Jones report and also review our investment performance vis-a-vis unit trusts with a similar investment mandate at https://www.autowealth.sg/strategy.php

To address your concerns about asset security/safeguards, robo-advisors are required by law to hold clients' assets and monies through a third-party MAS-licensed custodian/trustee. In the unforeseen event the robo-advisor ceases operations, clients assets and monies are still held at the third-party custodian/trustee.

AutoWealth offers an even higher level of safeguard by opening personal segregated custody accounts for each individual investor in his/her legal name so that the legal ownership is 100% clear and the investor can claim his/her assets from the custodian directly. This is fundamentally different from the "ONE omnibus custody/trustee account holding ALL clients assets" arrangement for other robo-advisors which may expose the investor to a lengthy court process to claim back the assets.

You may check out this link for other frequently asked questions: https://www.autowealth.sg/faq.php

Hi Darren! One drawback of robo-advisors is the lack of personalization. Although you can indicate your goals and risk appetite, the software has a pre-fixed portfolio allocation. You will not be able to adjust the portfolio allocations of asset classes or pick which asset classes you want or don't want to invest in. Unlike financial advisors who can construct a portfolio to meet your specific goals as they have sat down with you and fully understand your goals. Additionally, robo-advisors don't guarantee performance. While this is applies to all investment, the marketing of robo-advisors tend to give off the impression that investors are guaranteed a certain return. To mitigate these cons, perhaps you could invest a lower percentage.