I’m fascinated by AI tools and find my curiosity only heightens when I aim to incorporate them into my everyday life (full disclosure: this article is penned by a living, breathing human—not AI). Though Robo-advisors and Certified Financial Planners (CFP®) both strive to provide sound financial advice, there exists a vast contrast in their approach and overall capabilities.
Using algorithms to create and manage investment portfolios, robo-advisors can seem like an attractive option. Yet, millionaires and those with complex financial needs may find the limitations of a robot-dependent approach apparent. A CFP® may provide people access to a range of strategies and craft an individualized plan tailor-made for each person’s unique circumstances. Automation may still be a factor, yet nuances in investing are essential: to optimize success, one needs a skilled human eye.
Robo-advisors excel in their ability to provide quick and efficient investment solutions. Their platforms provide easy access for making changes. However, a robo-advisor requires the investors to be involved and make decisions they might not fully understand. Having a CFP® in the picture means having an ongoing relationship with someone who understands your goals and needs, and can provide a sounding board for alternative paths to reach your goal. Through regular conversations, a real person can understand nuances and adapt financial plans as circumstances change. A real person can hear the strains of worry during a conversation, and an agile financial professional can pick up on hesitancy and suggest appropriate baby steps to ease into an investing strategy and lower your stress.
Wealthy individuals tend to have complicated situations which require comprehensive guidance beyond investment management. Robo-advisors primarily focus on investment allocation and rebalancing, while a real live advisor can look beyond to provide strategic guidance tailored to cross-border investment, tax optimization, risk management, and gifting/estate issues. A risk-tolerance interview requires more than an online quiz.
Bottom line: I’m not afraid that AI tools will replace me as a financial professional. Indeed, I look forward to embracing new tech to better enable my clients to meet their financial goals. Be in touch (02-624-2788) if you want to develop a long-term relationship with a financial professional with nearly three decades of expertise in cross-border investing and maintaining U.S. investment accounts from Israel.
Douglas Goldstein, CFP®, GFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation on how to set up your American assets to meet your financial goals. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
Published August 1, 2023.