man v machineWe are all robots when uncritically involved with our technologies–Marshall McLuhan

The celebrated philosopher and media theorist (and, let’s never forget, scene-stealing cameo actor in “Annie Hall”) was once again on to something, and one wonders what he might have made of investors’ involvement with the burgeoning financial technology of robo-advisors. They certainly don’t offer what you’d call the personal touch, but they do have distinct selling points and, in terms of balance and clarity, one of the best pieces we’ve seen on the subject—headlined Robo-Advisors Vs. Financial Advisors: Which Is Better For Your Money?—was written by Libby Kane for Here are lengthy excerpts from the article:

“It’s the rise of the machines.

“Robo-advisors, which have made headlines in recent years, are online investment management sites like Wealthfront and Betterment that manage your investments for you through unique algorithms.

“The nickname ‘robo-advisor’ might be more sensationalist than it is accurate.

“Below, we pit humans (whom we’ll refer to as investment advisors) and robots head to head to see who wins when it comes to managing your investments.


“This is where robo-advisors shine. There’s no need to get into the weeds here, because both Wealthfront and Betterment devote considerable real estate to explaining their fairly straightforward and transparent pricing structures on their websites. Wealthfront requires a minimum investment of $5,000; Betterment does not have a minimum.

“Investment advisors, on the other hand, sometimes require a minimum portfolio value, and they can be unclear about how exactly they’re charging you. Those are both case by case, but when it comes down to the numbers, Wealthfront points out that investment advisors traditionally charge a 1.31% average fee, while the robotic alternative charges 0.25% in advisory fees after the first $10,000. Betterment charges a 0.15%-0.35% management fee. (Both companies also charge fees for the ETFs — about 0.15% per year.) SigFig, another player in the field, charges a flat $10 a month.

Winner: Robots.


“Between email, Skype, and the trusty old cell phone, it’s not like you have to trek to your investment advisor’s office. In fact, working with an investment advisor doesn’t even require that most people keep him or her on speed dial — it’s more that they’re there to check in with at regular intervals.

Winner: Robots.


“Money is never just money. It’s your kid’s college fund, your European vacation, your quiet house on a cul-de-sac. For that reason, setting and forgetting your investments may not be the most effective way to achieve your goals.

“An investment advisor’s strength lies in their ability to translate your dreams of an oceanfront beach house into a dollar figure, and to create a plan to get there. A robo-advisor takes only the information you give it and formulates a plan based on numbers — and your financial future is rarely focused on just the numbers. Plus, which is better able to motivate you to focus on your goals: an email statement, or a phone call from your advisor?

Winner: Humans.


“Now, things are getting thorny. Because they’re meant to suit a wide range of people, portfolios managed by robo-advisors tend to be heavily invested in conservative products like ETFs. While not particularly volatile, ETFs aren’t known for their staggering returns. It’s like every skydiver ever posted on his Instagram: No risk, no reward.

“Lance Roberts of “StreetTalkLive” wrote this year that the investments made by robo-advisors are sound, but based on a longer time frame than most investors actually experience. His analysis is worth reading. The simple fact is that money invested conservatively will yield higher returns than money not invested at all — so if it comes down to using a robo-advisor or not investing at all, robo is usually the wiser choice.

“Investment advisors, on the other hand, certainly aren’t guaranteed to outperform their robotic friends, but they have the perspective and context to adjust investments to your needs. An advisor’s perspective is particularly useful if you have a large portfolio or a complicated financial situation.

Winner: Humans.


Use a robo-advisor if you …

– Want to set and forget your investments
– Feel more comfortable working online than with a person
– Aren’t investing a large amount of money

Use an investment advisor if you …

– Want to be involved in your investments
– Are interested in strategic risk-taking
– Are investing a large amount of money

“Remember that you don’t have to use one to the exclusion of the other. First of all, humans and robots usually don’t directly compete for the same clients (there’s that minimum investment requirement, again). And as your investment needs change, so might your strategy — as well as the help you enlist. “