New in the Canadian financial services landscape are robo-advisors, a fully-automated online investment service that provides clients with algorithm-driven portfolio management. The case for robo-advisors are interesting. Firms offering the service will tell you that investment guidance and competitive performance do not require human intervention as they can be delegated to a computer at a cheaper price. However, when it comes to investing, individuals who do it themselves are a unique breed and the majority of people feel more secure when working with a knowledgeable industry professional.
The role of a financial advisor has changed significantly over time from one of a traditional stock broker to that of a holistic wealth manager. Today’s advisors offer an expanded range of services and take into account tax and estate issues, retirement and life objectives, risk management and insurance needs, and various other factors when approaching your finances. This holistic approach extends beyond just managing investment portfolios and cannot be matched by the service offerings provided by robo-advisors.
Perhaps what is most important is that financial advisors offer emotional management. It is human nature to react emotionally when money is at stake and it is the duty of advisors to protect their clients from emotion- and anxiety-triggered actions. Advisors work proactively with clients to prevent them from making costly mistakes in the heat of the moment, such as selling investments into declining markets.
Despite what robo advisors say, there is never one answer, never one size that fits all. A client’s personal financial situation is deserving of a personalized financial solution.
Cattelan Private Wealth Counsel.