When it comes to your investing strategy, it’s important that you have the right information at your disposal. If you’re not intimately familiar with the market, there are plenty of ways to get advice on which direction to move in your strategy, but it’s important to know which one is right for you, your objectives, and how seasoned you are in investing.
We’ve obviously had the benefit of being able to reach out to human advisors for a long time–there’s always a distinct advantage when you hear the sound of a real live human as opposed to a recorded message prompting you to press “2” to get to where you need to go. But are humans your best bet when it comes to investing? The answer is a bit more nuanced: it all depends on what you’re looking for.
Here are a few common needs or concerns investors have, and who takes the points in each one: robot or human?
- Good, expert advice will always cost you something, and investing is no different. As a matter of fact, because this advice has the power to grow your wealth, the caliber of advice is important and there are plenty of ways to “get what you pay for.” But the truth is that robots don’t have bills to pay and didn’t get a nice college degree to be able to sit in a room and tell you how to manage your money–they also don’t have much overhead when it comes to operational costs. 63% of people have experienced much lower costs with robots than they have with humans, which only makes sense. So when it comes to strict out-of-pocket expenses, the robots take this one.
Real-time data: information and analysis
- This is a tough one. Computers will naturally have more up-to-the-second data and algorithms that can adjust forecasting. You can get push notifications on your apps that will tell you to buy or sell because of a recent event and do it immediately. Computers can also gauge the market long after it’s closed for the night–you can get a head start on the next day if you’re paying attention to the kind of data computers provide. Not to mention, humans are a little tougher to get in touch with to get your data right now.
However, with all the base information and analysis a robo-advisor can provide, they still can’t tell you whether or not what is happening will affect your long-term goals (see above.) It’s entirely possible that other people should buy or sell immediately, but not you. Humans are going to be better able to add the “human element” (naturally), and tell you whether or not what is happening in the market really has an effect on you and your strategy.
- Winner: Toss-up–it depends on what you want to get out of data and analysis
- Maybe you’re looking not just for an investment advisor, but also estate planning, retirement, taxes, etc. In this case, robo-advisors are only equipped to give you advice on your investment strategy. A human is much more likely to be able to provide all of these services in one office, meaning that when you find someone you trust, you can trust them with everything. Often, apps only provide either advice, data, or ability to make your investments happen–very few are completely comprehensive, even inside of the investment marketplace.
- This is a hard one, especially since we’ve covered the idea that emotions don’t have to be an enemy of investment strategy. We’re humans–we all have them, and we should understand how they play into our decision-making and use them to our advantage. But you can’t control that in another human, right? The robo-advisor comes with the ability to be completely cold and objective, analyzing the data and forecasting without any kind of emotional connection. If you need someone to give you just the facts, a computer is what you want.
When it comes to investing, there might be right and wrong answers to a lot of things, but the market is more nuanced than that, most of the time. So often, decisions come down to “more right” or “less right” depending upon your goals and objectives. Your first step when determining who should be advising you on your strategy is to evaluate and establish your goals and your priorities: what is most important to you? Are you willing to sacrifice the other pieces where your advisor-of-choice may be weak? Your investment strategy is your own–just know the strengths and weaknesses of certain types of advice before you jump in!