If you are looking for long term gain, face-to-face meetings and comprehensive financial planning is pivotal. Why? Because life throws curveballs at you that artificial intelligence simply cannot account for.
TORONTO (PRWEB) March 05, 2019
As the corporate world continues to advance, many businesses feel compelled to automate some of their processes in order to add efficiency and remain competitive within their industries. The financial investment industry in particular has seen a rise in popularity for robo-advising, an online software that uses computer technology and comprehensive mathematical algorithms to help people build and automatically adjust investment portfolios on a massive scale. Fabio Ventolini, a trusted financial planner and business development manager of 21 years shares his knowledge on robo-advising and its limitations for affluent investors specifically.
Robo-advising offers some unique advantages, most notably its accessibility and ease of use. When users start investing with robo-advisors, they need only complete an investment-related questionnaire. The robot enters these responses into an algorithm and creates an investment portfolio that matches the user’s level of risk tolerance, time horizon and age. Once the user makes their first investment contribution, the robot will invest this money on the user's behalf, and automatically rebalance the investment portfolio if it moves beyond specific thresholds.
Robo-advising was originally designed to attract investors who want low fees and a low-cost threshold, such as tech-savvy millennials or new investors with limited disposable income. However, over time robo-advising companies have felt pressure from high competition to offer their services to high net worth individuals, families and business owners as well. The question of whether robo-advising is actually a good fit for this client base is highly debatable. We asked Fabio Ventolini for his insight on the subject.
Q: What is your view on robo-advising for the financial goals of affluent investors?
Fabio: Robo-advising is great for short-term, low-fee portfolio management. If the investor does not wish to invest beyond $25,000, I would recommend robo-advising as an investment tool. However, I do not believe that an online questionnaire is comprehensive enough to determine lifelong financial goals. Although it can be a great place to start for its simplicity, robo-advising does not compare to the personalization and insight of a client-financial planner relationship, especially for affluent investors. In fact, in order to build your wealth beyond the low six figures, investors need a customized strategic approach that goes beyond just the index funds that are offered by robo-advisors.
Q: How do robo-advising services differ from that of a personal financial planner?
Fabio: A robo-advisor builds their clients an investment portfolio from low-cost exchange-traded funds and index funds. Other common services include automatically rebalancing your asset allocation, offering additional financial planning tools and tax-strategy offerings on taxable accounts. Long-term full-service wealth advisory includes investment advice, accounting and tax services, retirement planning, philanthropy and legal or estate planning, which extends beyond the capabilities of artificial intelligence. Financial planners are also there for you to answer any questions on your investments, personal goals or other financial matters you would like to discuss. They also have the experience as well as judgement and insight based on how their past and current clients have succeeded.
Q: What advice would you give a high net worth investor contemplating between a robo-advisor or hiring a personal financial planner?
Fabio: If you are looking for long term gain, face-to-face meetings and comprehensive financial planning is pivotal. Why? Because life throws curveballs at you that artificial intelligence simply cannot account for. Getting detailed, personal advice means that your financial plan is catered to your specific financial and personal situation, offering you specific steps to take in order to build your wealth at your own pace. For example, you might find yourself in some unique situations in the future which may affect your finances, in which case a robo-advisor will not be helpful when mapping out your investment strategy while accounting for subjective circumstances. This may include a fluctuating budget, career changes, preferred age of retirement, debt repayments and/or college funds. A personal financial planner will also be able to talk you out of rash decisions, which is important when the market is not performing well. A financial planner is one phone call away, which is priceless compared to robo-advising customer service that may lead you to a call centre that knows little about your financial situation. Also, in many cases advisor fees are eligible for tax deductions, such as if it is not commission-based, made on registered accounts, and other factors. All in all, nothing compares to face-to-face meetings and a personalized plan, as only a financial planner can truly fine-tune your investment needs to help best meet your long-term goals.
About Fabio Ventolini: Fabio Ventolini is a trusted specialist in tax, retirement and estate planning for executives, business owners and affluent families. For more than 21 years, he has worked closely with clients to generate tailored financial planning and financial services. He recently joined Bellwether Family Wealth, a division of Bellwether Investment Management Inc. as the Vice President and Family Wealth Advisor. Through this role, he guides the management of corporate investments and protects their assets from creditors and liabilities. He also takes on a number of financial planning roles for affluent individuals, including charitable trusts.
Fabio Ventolini can be contacted at email@example.com.
This article was written by My An Tran, Senior Copywriter at Mrkt360.