Human or digital advisors, the choices seem endless
An investment advisor is a professional within the financial services industry that provides investment advice to clients. With the boom in financial technology over the past several years, you as an investor have more options than ever before when deciding who you choose to manage your money.
Not only can you use traditional financial advisors, you can also now choose from dozens of digital advice services (often called robo advisors). How you make this decision depends on a number of factors, including the level of your investment expertise, the complexity of your financial situation, how much financial advisor interaction you prefer, and more.
Traditional advisors are still a great option for some
For many, finding a human financial advisor may still be a great option. Not only can you receive face-to-face personalized financial planning and investment advice, but this relationship can also provide you with a trusted person to engage with to walk you through all the details and complexity and answer any of your questions. For some people, having a sit-down meeting with a financial advisor also may be what they need to stay on track to achieve their financial goals.
Digital advice platforms are transforming the industry
On the other hand, more and more people are becoming comfortable with digital-only services. Just as ATMs and online banking transformed the traditional in-person banking experience many years ago, so too have digital advice platforms transformed the world of financial and investment advice. For many investors, a digital service may provide the financial planning and investment services they need along with the instantaneous responsiveness and simplicity of a website or mobile app.
Your preference may depend on your financial picture
The decision between human and digital advice depends strongly on your personal preferences. But there are other important differences as well. If you have a very complex financial picture, such as detailed tax considerations or non-traditional assets, you may still require specialized human expertise to manage your investments for some or part of your financial plans.
In addition, fees can differ significantly between human and digital-only advice. If you have only basic financial planning and investment needs, digital services may provide most of what you need while minimizing costs.
Blurring the lines between human and digital advising
The investment industry is evolving quickly. For instance, the lines between human and digital advisors are being increasingly blurred, as human advisors add digital capabilities, and digital platforms add human support as well. As such, you should continue to be aware of your options as financial technology continues to evolve.