Robo-Advisors Less Popular Now

Comments

• hank

  May 16 edited May 16

  Very interesting. Wouldn’t AI be best for this? Could tell you what to do in real time faster than any human. Probably cheaper to administer too.
  
  Maybe folks that use robos would share their success stories. I’ve never used one. Wish @MikeM would chime in. I think he uses / used Schwab’s robo advisor with mixed results.
• msf

  May 17

  Whether it's an asset allocation fund (TDF with glide path or traditional fixed target allocation fund), or a pure robo advisor, they seem to all pretty much build cookie cutter portfolios and rebalance. So I agree that:
  Most buyers of robo-advisors may be fine with traditional allocation funds or TDFs (with glide-paths).
  
  Some robo advisors can do tax loss harvesting, so that's an advantage they may provide over allocation funds.
  
  I know someone using Vanguard's hybrid robo advisor. But with little interest in investing, they aren't asking for any tweaks. Rather, the robo advisor is essentially replicating VSMGX. For that, one doesn't need the human part of the hybrid; the pure robo advisor would do the same job for lower cost.
  
  They could also replace the robo advisor with VSMGX and cut the cost even further. However, an advantage of mimicking the fund with multiple underlying funds is that one can have a more flexible drawdown strategy. If the stock market swoons, one can sell off bonds until the market recovers. You can't do that with an all-in-one allocation fund.
  
  Morningstar's current piece on robo advisors gives these drawbacks:

  Investors with larger, more complex portfolios could also benefit from the support of a traditional financial advisor. That’s especially true for complex matters like insurance and risk management, estate planning, and retirement drawdown strategies.

  https://www.morningstar.com/personal-finance/are-robo-advisors-still-worth-it