There are so many commercials on TV today about Robo Advisors or companies that can invest your money for you at a low cost. It’s almost as bad as the medication commercials. So what is a Robo Advisor? In my opinion, the more appropriate name is Robo Allocator. Essentially, these services are offering low cost investment solutions that may or may not be appropriate for an individual. For example, the majority of them ask a set of questions and then output what percentage of your money should be in stocks versus bonds, hence, the “allocator” name.
These companies can be great for people who have nothing else going on in their lives. But when do we ever have that happen? For example, you are not going to be able to call the company and walk through budgeting concerns, how to buy a house, what happens when you lose your job or get a new job and need help with the benefits package.
So while there are places for everything, friends and family using these types of services may still need the services offered through a Financial Planner (you want to avoid providing misleading statements related to robo advisors).