Financial Advisors vs. Robo-Advisors - Which Is Worth It?Submitted by MCF on July 13th, 2017
What’s the difference between a robo-advisor and an actual financial advisor? It may seem like there’s an obvious answer - I mean one’s a software - but truly, what’s the difference in services between a robo-advisor and a financial advisor? You work hard for your money and want to see your investments not only grow but thrive, so it’s important to evaluate which path to take, and truly understand what you’re getting into.
Let’s start with robo-advisors. Personally, the name is a little misleading, stirring up visions of half man, half machine bankers. In reality, a robo-advisor, “is a service that uses highly specialized software to do the job of wealth managers or investment advisors – people who decide what type of investments you should be making and then tinker with those investments over time,” according to Wealth Simple.
Financial Advisors, on the other hand, is really quite a broad term. According to Investopedia, a financial advisor is ‘a professional who helps individuals manage their finances by providing advice on money issues such as investments, insurance, mortgages, college savings, estate planning, taxes and retirement, depending on what the client requests. Some financial advisors are paid a flat fee for their advice, while others earn commissions from the investments they sell to their clients. Fee-only arrangements are widely regarded to be better for the client.” Additionally, some financial advisors who obtain the Certified Financial Planner designation have the additional credibility behind their services with strict rules and regulations upheld by the CFP - Certified Financial Planner Board of Standards.
While robo-advisors and financial advisors initially appear to be in opposition, it is important to note that even with a gap in the level of service, financial advisors are able to successfully utilize robo-advisors in conjunction with their service. MCF Advisors can implement a strategy that incorporates the utility of the robo-advisor with the personal care and attention of a financial advisor. Contact us today to find out more about how MCF Advisors can serve you.
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