This post will guide you on how to select a robo-advisor in today’s era of digital wealth management. Gone are the times when you had to shell out 1% to 3% for a traditional wealth manager to handle your finances. Nowadays, you can manage your money yourself online at much lower costs.
Robo-advisors have revolutionized wealth management, making it more accessible to everyone. For instance, Empower combines advanced digital tools and human financial advisors to offer both convenience and personalized advice. These robo-advisors use sophisticated algorithms to tailor investment strategies based on your profile, helping you invest your money in the most effective way possible.
If you’re skeptical about letting computers handle your investments, consider the success of quantitative investing, as seen with major funds like Bridgewater Associates. At the heart of these operations are talented individuals who design and refine these investment algorithms.
Robo-advisors are similar to target-date funds as they adjust your investment portfolio over time towards your retirement, shifting from stocks to bonds. However, services like Empower require you to transfer your assets to their platform, which might not suit everyone, especially if you prefer keeping your accounts separate.
Empower charges a fee up to 0.89% of your managed assets, which is competitive compared to some traditional target-date funds that can charge much more. They manage around $20 billion and are designed for the more sophisticated investor. The more you invest with them, the lower your fees.
It’s important for a robo-advisor to understand your overall financial situation to offer tailored advice. For example, if a significant portion of your net worth is in real estate, that should be considered in your investment strategy. Empower can craft a portfolio that adjusts to market conditions and your personal risk tolerance.
Unlike other robo-advisors, Empower doesn’t overlook your 401(k). They manage it alongside your other assets, providing advice on how to reduce fees and rebalance your investments without extra charges.
The algorithms used by Empower are based on extensive data and back-tested through major financial downturns, proving their reliability. They prioritize commission-free ETFs to minimize trading costs, which is essential for maintaining your investment’s efficiency.
In conclusion, robo-advisors like Empower represent the future of investing. They combine the best of technology and human expertise to offer low-cost, effective management of your investments. Signing up can give you a glimpse of the potential portfolio they might create for you, helping you make an informed decision about managing your investments in a more modern, cost-effective way.
