How can you use robo-advisors to offer low-cost investment advice? (2024)

Robo-advisors have several advantages over traditional financial advisors. First, they can lower your costs by charging a flat or percentage-based fee, instead of commissions or hourly rates. Second, they can save you time and hassle by handling the tasks of asset allocation, rebalancing, tax optimization, and reporting. Third, they can reduce your biases and emotions by following a consistent and rational strategy, based on your risk profile and goals.

When selecting a robo-advisor, you should take into account various factors, such as the minimum investment required to open an account, the range of asset classes offered, the investment strategy used, whether or not it provides access to human advisors, and the customer service available. Some robo-advisors have a minimum investment requirement, while others don't; some offer a wider range of asset classes than others; some use passive investing while others use active investing; some offer access to human advisors and some don't; and some provide more customer service than others. Evaluating these factors can help you choose the best robo-advisor for your needs.

Setting up a robo-advisor account is usually simple and fast. You will need to provide some basic information, such as your name, email, address, and social security number. You will also need to link your bank account or transfer funds to your robo-advisor account. Then, you will need to answer some questions about your investment objectives, time horizon, risk tolerance, and personal preferences. Based on your answers, the robo-advisor will generate a customized portfolio for you, which you can review and modify if needed. Once you approve your portfolio, the robo-advisor will start investing your money according to its algorithm.

One of the benefits of robo-advisors is that they do most of the work for you. They will automatically rebalance your portfolio to maintain your target asset allocation, optimize your portfolio for tax efficiency, and generate reports and statements for your review. However, you should still monitor your portfolio performance and check your account regularly. You should also update your robo-advisor if your financial situation, goals, or risk appetite change, so that it can adjust your portfolio accordingly. You can also make manual changes to your portfolio, such as adding or withdrawing funds, or changing your asset allocation, but you should be aware of the potential fees and tax implications.

If you are a financial professional, such as a planner, advisor, or coach, you can use robo-advisors to offer investment advice to your clients. You can either partner with a robo-advisor platform, or create your own using a white-label solution. By using robo-advisors, you can leverage the technology and efficiency of automated investing, while adding your own value and expertise. You can also focus more on building relationships with your clients, understanding their needs and preferences, and providing holistic financial guidance. You can charge your clients a fee for your services, either on top of or instead of the robo-advisor fee.

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