Shortcomings of Using a Robo-Advisor.

[Milan]

 

Edited June 1, 2020 by Milan

[Sam]

Hi Milan,

If you are interested in hiring the services of a Robo-Advisor, it is essential that you know the shortcomings associated with using the automated decision-maker. Understanding the cons of the financial advisor makes it easy to perform a risk analysis before using the services of the companies. However, the risks differ from company to company. Different companies broker Robo-Advisors with different benefits and disadvantages. Common disadvantages associated with the use of Robo-Advisors include the following.
Robo-Advisors do not offer face-to-face meetings. If you prefer personal interaction, you might find it hard to employ the services of a Robo-Advisor. Robo-Advisors work best with individuals that efficiently work without face-to-face interaction. However, some companies offer face-to-face interaction but at an additional cost. The option seems unfavorable if you do not have the funds to pay the additional fees that the brokerage companies charge. 
Second, Robo-Advisors do not offer completely automated services. You still require talking with a professional via the chat options provided on the websites. The automated advisor does not provide complete advice; for example, you will not receive information on how much you have to save or how to diversify assets and investments. You do not rely on the advisor since you might still require talking to support to help you through challenging questions that the Robo-Advisor does not answer. Furthermore, Robo-Advisors lack feeling and emotion. They do not persuade or reassure investors in case they make the wrong decision. You do not get a complete hands-on experience similar to that of a financial adviser.
Lastly, Robo-Advisors do not simplify the decision-making process. Professionals who require completely automated services still have to log in to approve some of the decisions. Additionally, you still have to log in to input necessary data whenever you want advice on a particular issue. The service still requires human input and approval to perform investment decisions. Therefore, your involvement is still needed, although minimal.