When a person considers investing their money with an investment advisor, there are a myriad of questions that may go through their mind. “Does the advisor understand my goals?” “Will I be able to successfully meet those goals?” “Will my spouse agree with the investment selection?” “What are the risks involved?”
In today’s investment advisement landscape, two primary contenders are battling it out to win that client’s business. The traditional personal financial advisor and the upstart robo technology firms, a turn-key investment platform employing algorithms based on modern portfolio theory to construct and manage portfolios.
Robo technology has been able to gain considerable market share by targeting a sector of the marketplace that has been largely ignored by the investment industry at large—households with under $250,000 in assets, which represent 73.9% of US households.¹ They’ve also focused on younger generations who live so much of their lives online—individuals ages 18 to 54, which represent roughly 51% of US households.²
These technology firms have hundreds of programmers, developers and engineers from prestigious colleges and universities with computer science degrees, research degrees and MBAs, all creating algorithm-based services for households that prefer a digital advice experience. They also have hundreds of millions of dollars in venture capital. With these types of resources, today’s financial advisor may seem to be outmanned and out funded. But, counters Bill Winterberg, Founder of FPPad, the one thing they can hang their hat on, is that they are not out trusted.