Over the past two weeks, I’ve explained how automated investment services, or “robo-advisors,” are generally wired.
Today, I’m tackling what the real problems are with robo-advisory services – who should use them, and how not to get crushed when they go haywire.
Depending on what theories and math robo-advisors are wired for, they construct a “personalized” portfolio based on forms you fill out online, and they automatically rebalance your portfolio when threshold weightings of positions in your portfolio get out of balance.
And that’s precisely where the issues begin…
Automated investment services, or robo-advisors, are taking over the world.
Well, not quite.
But they are getting lots of attention and attracting billions of dollars.
While I’m a huge fan of the concept of automated investing services and I believe they will get a lot better, they’re far from “there.” And they’re not for everyone.
You’ll need to keep your eyes open so you don’t get sideswiped by internal conflicts some service providers present, and don’t end up down a rabbit hole you didn’t see on the horizon.
Here’s who should seriously consider using a robo-advisor, how they should be used, and what to look out for…