Today we're talking about Robo Advisors and why I think you should NOT have one.
Now, obviously I'm a little biased here. I guess some would say my competition. You've seen the commercials, right? They're out there saying blah blah computers are better at this than everyone else.
I'll just ask you a couple of questions like, do you really want to be that individual, that human being who's being block traded his entire portfolio along with everyone else in the entire country at the exact same time?
Are you first in line or your last in line, what kind of pricing are you getting there? Do you really want an algorithm deciding what you should own, in which accounts?
Do you really think it makes the most sense to have a questionnaire decide the future of your entire life? Do you really think that this algorithm and this computer can give you the advice that you need on tax planning, on financial planning, on corporate succession, on philanthropic giving, on business succession?
These are questions that personally I'd like to get an actual human being's advice and I mean if you got 5 grand or 10 grand and you put that aside and you're convinced that this algorithm, this computer is the best thing for you, whatever. If you got actual assets and you've accumulated some wealth in your life, you know that in order to get the right advice, you actually need to talk to human beings.
So they build these portfolios. They're the same for everyone. These "custom" portfolios that they have across all platforms have underperformed. You can check study after study. They've underperformed. They're not timing. They're not. They are not able to take advantage of opportunities in the market. They're just not able to. They're not able to structure the alternatives, they're not able to do anything principal protected. They never look at private debt of any kind.
This is the kind of stuff. They just don't do. They're modeled by the institutions that own them banks or whatever they may be to come up with a specific recommendation, which is generally in the best interest of the company that owns that robo program or that algorithm.
Now, do you think it's a fully biased opinion? I'll tell you what, I've asked you a lot of rhetorical questions and if the answer to those, if you're actually not sure what the answer those are, maybe you are best to be with a Robo advisor, but if you actually want the top level advice, you need to be with a PM. You need to do with an advisor.
Robo advisors they're there and they serve a purpose, they're really good for the introductory investor, the person who serves his five first five grand and doesn't need any other advice, but if you actually have wealth, trust me, it's not going to work for you. Thanks.
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