Invest
22 MONEY.COM MARCH^2019
PICKING FUNDStalk to a human, according to
O’Shea, it can be a crucial addition
to a robo-advisory package.
Various services now offer limited
access to financial experts, in
addition to standard customer
service. While that access some-
times comes with added fees, it
can be a “great middle option that
gives you the best of both worlds,”
O’Shea adds. And if you’re
nervous about a computer telling
you what to do, it could be a
make-or-break feature.8
HOW SCARED OF INVESTING
ARE YOU?
“The final question to ask is
one to ask yourself,” McBride
concludes. “Are you comfortable
with a lack of hand-holding,
especially when markets are
volatile?” Which, it should be
noted, they have been recently. If
you bail and withdraw your assets
at the first sign of trouble, you’re
making a rookie investment
mistake. Stocks will go up and
down, but you have to be in the
game for the long haul to reap
maximum rewards. And with a
robo-advisor, “you’re not going to
have someone to call every time”
the market gets shaky, McBride
adds. “It’s important to know that
going in.”create a customized plan for your
needs. Your goals and appetite for
risk are key for identifying the
right strategy.
“Before you even sign up,
robo-advisors will pretty much all
ask the same questions,” says
Arielle O’Shea, NerdWallet’s
investing and retirement special-
ist. If the plan you receive doesn’t
match up with your comfort level
for investment risk or otherwise
seems off, look for options to
further customize your portfolio.
And go ahead and get investment
road maps from other robo-
advisors so you can comparison
shop. Hey, it works on Amazon,
and it works for investing.5
IS THERE TAX-LOSS
HARVESTING?
Trading stocks and bonds
can lead to hefty tax bills, since you
owe capital gains tax on any
profits. The good news: If any of
your investments are temporarily
underwater, the IRS permits you
to sell these and count the losses
you recognize against your taxable
gains, so long as you don’t repur-
chase the exact same investments
within a period of one month. The
strategy can be complicated to
execute on your own, but many
popular robo-advisors include it asan add-on at no additional cost,
says McBride. “It’s a pretty
common offering among robo-
advisors but a valuable one
nonetheless.” That is, if you’re
investing in taxable accounts, but if
you’re looking only at retirement
and college-savings accounts, it’s
not a factor.6
HOW MESSY IS YOUR
FINANCIAL PICTURE?
Robo-advisors can do
everything a flesh-and-blood
advisor can do ... almost. “I don’t
think a robo-advisor is a good
option if you have a really compli-
cated financial situation or you
want super-holistic service,”
O’Shea says. That means if you’re
seeking advice on insurance
coverage and estate planning, go
elsewhere. “Those are the kinds
of things a human advisor will be
able to help with and recommend
other people.” Again, though,
for the less seasoned investor,
robo-advisors can do more than
a fine job.7
CAN YOU TALK TO A HUMAN?
Sometimes we all need a
little one-on-one connection
of the non-A.I. kind. While
research suggests that younger
people oftentimes don’t want toSCHWAB INTELLIGENT ADVISORY
Minimum to open account:$25,000
Average all-in cost:0.43%
Special features and services: Schwab’s
premium robo offering pairs online tools
with phone access to human advisors.VANGUARD PERSONAL
ADVISOR SERVICES
Minimum to open account:$50,000
Average all-in cost:0.38%
Special features and services:Work over the
phone or video-chat with a financial planner.FOR INTERMEDIATE INVESTORS FOR ADVANCED INVESTORSNOTES:Figures as of November 2018. All-in costs include management fees plus
average expense ratio of underlying fund. See August issue for additional details.