What can an in-person Financial Advisor provide that a Robo-Advisor cannot?

I've been bombarded with ads featuring robo-advisory platforms that have a lot of online financial planning tools. What do these tools lack that an in-person financial planner can provide?

Financial Planning, Choosing an Advisor
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May 2017

Dawson, Rebecca

Los Angeles, CA
68% of people found this answer helpful

In the financial industry's dilemna of humans over machines, I am predicting that people will prevail. I do not believe machines will be taking over portfolio management using little human intervention. Robo-advisors is a one size fits all financial solution. Everyone gets the same portfolio which means everyone owns the same stock, when they all decide to sell you could experience selling your position with added downside volatility.

Lets first make a distinction:

1) Robo-advisors offer financial services with minimal human intervention. They provide digital financial advice based on mathematical rules or algorithms. These algorithms are executed by software and thus their financial advice does not require a human advisor. The software utilizes its algorithms to automatically allocate, manage and optimize clients’ assets. Most robo-advisor services are instead limited to providing portfolio management without addressing issues such as estate and retirement planning and cash-flow management, etc which are also the domain of financial planning.

2) A discount brokerage is a business that charges clients significantly lower fees than a traditional full service brokerage firm but without providing financial advice. Discount brokers typically allow investors as well as consumers of financial services to buy and sell on-line while offering comparatively fewer services and/or support.

3) A full service brokerage financial advisor is a licensed financial broker-dealer firm that provides a large variety of services to its clients, including research and advice, retirement planning, tax investing strategies, and much more. Full-service brokers can provide expertise for people who do not have the time to stay up-to-date on complicated issues such as tax or estate planning.

Depending on what your inidividual needs are would determine your choice of financial advice. Retaining the services of an experienced financial advisor far out weigh the services of a robo advisor or even a discount firm. There are many variables and personal financial differences that cannot be evaluted by mathematical algorithms. Also, your financial advisor is a trusted advisor available for consulting with you during the ups and downs of the market. Dealing with a small independent advisor will enable you to customize a portfolio specifically for you and your family.

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