Earlier this month, I brought on a new client who is the son of an "extremely pleased*" existing client. This young man is 26, very proficient in technology and very NOT GOOD in the language of finance.
One of the first questions I asked him was, "Not that I mind, but why didn't you invest with a Robo-Advisor?" His response floored me; "What's that?"
He then went on to tell me that what his parents told him I can do for him (you'll have to call my office if you want to hear it), he decided that working with a human was probably best.
But then I had an idea. There are so many articles out there comparing Robo's to Humans, but I have yet to see any numbers. Why don't we use this new relationship to test out the real-life difference between human advisors and algorithms?
So, I went through my behaviour based risk profile and asked him to do the same with a leading Robo. I then put together a portfolio based on his risk and, through the magic diving deep into websites, found the portfolio makeup of Mr. Robot.
Now, I have both accounts set up in my planning software and will keep tabs on the performance over the coming year (read: more blog posts). I will also keep track of all the non-financial advise and assistance my office provides for him.
My goal with this experiment is to see exactly what value a Robo can provide with their low fees and their ease of use and to see if a traditional advisor, like me, can make use of them too.
If my compliance department allows it, in 3 months, we'll see the first round of returns and I'll share the list of other services we provided in addition to managing his money (which, as you know, is NOT the most important part of Financial Planning)
* Their words
Kenneth Coombs CFP CHS RRC
Ken has 13 years experience in the financial services industry, is a Registered Retirement Consultant and a Certified Financial Planner. Ken has written financial planning columns and has been a guest on financial radio and podcast programs.