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Man vs. Machine: Final Round

Last January I brought on a client who was right in the marketing sweet-spot for the ever-present Robo-Advisors. Read about how he came to us here and read all about rounds one,two and three.

Now that we have gone 12 full rounds (read months), lets take a look at the judges scorecards.

Portfolio

Our client answered the robots 7 questions and, based on his answers, assigned him to a balanced portfolio. Our team administered our behavioural based risk assessment and came to the conclusion that out client was a high risk taker, had a long time until he needed the money and was comfortable with the ebbs and flows of the market. Did we mention he's a professional poker player?

Performance

Over the last 12 months, the world markets took a beating. (the MSCI All Country World Index, which is over 80% of the globes investment markets, fell 9.6%). The robots predominately Canadian balanced portfolio lost 3.5%. Our global equity portfolio fell 6.2%. Point for the Robot, however, in the first three weeks of 2019, they are up 1.5%, we are up 6.2%. Just saying. (For all of those concerned, here are the disclaimers that I am required to post after the mention of returns.)

Extras

Over the year, we helped our client find an accountant who is familiar with poker winnings, put travel insurance in place for his trip to New Zealand for a tournament (which he won), offered advise on currency exchange, and when his parents were not free, we picked him up from the train station when he came home to visit. Our robots couldn't do any of that.

Overall

I'd say that based on client experience, long-term planing and pick-up-from-the-train-stationess, we came out on top. It was an fun experiment but I realized a few things:

  • Robo-advisors are not my direct competition. They have a place for clients who want simple, easy or are just starting out.
  • Robo-advisors are robots, yes, but they do not advise. They will not get to know you and make sure that you are investing in the right places for the right reasons.
  • Most people know what they are good at and what they want to spend their time doing, not trying to learn about capital markets and trying to outsmart the rest of the world.

Now, on to another challenge for 2019. Stay tuned, it's a fun one!

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.

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