Are you confused by all the different kinds of financial advice you can get? Or maybe you’re tempted by the low cost of online advisors, but not sure they can handle your assets. Overwhelmed by the prospect of choosing a financial advisor? Focus Financial is here to break down when it’s useful to go online and when you should opt for a more human touch.
What is an Online Advisor?
Online advisors, often called robo-advisors, use automated systems and algorithms to manage your portfolio based on parameters you set.
Because they’re automated, these are the cheapest option for managing investments . Using standard fee structures for comparison, they typically charge between 0.25% and 0.50%, compared to around 1% for traditional advisors. They also don’t require a minimum balance for new accounts, making them accessible to people who don’t have much starting wealth to build upon.
However, the “advisor” part of their name is a bit of a misnomer; while you can sometimes speak to a real human over video or phone, robo-advisors typically don’t offer any extensive personalized advice or commentary. That’s one reason these are popular among DIY investors.
If you’re looking for a more human touch, you’ll want to utilize traditional financial advisor services.
What is a Traditional Advisor?
Financial advisors create strategies for building up your finances and help you set realistic goals. In terms of investments, a financial advisor does the same thing as a robo-advisor: they manage your investments based on set parameters.
However, traditional financial advisor services are more extensive. As we’ve mentioned, financial advisors proactively identify risks and opportunities for you, offer advice, and help you navigate taxes, college finances, business succession, and estate planning. This holistic view of your financial life – not just your investments – can save you lots of money by knowing how all these different areas interplay.
So, which advisor is right for you?
Choosing a Financial Advisor
The great thing about choosing a financial advisor is that you don’t have to live with your choice forever – you can change advisors to better suit your needs based on your circumstances.
If you’re young or don’t have much wealth acquired yet, robo-advisors are a quick, easy, and hands-off way to begin investing. As you gain wealth and your financial situation changes, a traditional advisor can look at the whole financial picture and help you determine the best path to achieve your goals.
If you’re already at that second stage – if you’re a small business owner or have multiple assets – and need a big-picture approach to your financial health, then working with a traditional advisor will bring you the biggest benefit.
When you’re ready to choose a financial advisor, Focus Financial is here for you. Discover the benefit of having a list of experienced financial advisors at your fingertips ready to help you.
Contact us today to get started!