In the not-so-distant past, if you wanted to invest your money, you had to go to a human financial advisor or make the investment decisions on your own. You would sit down in person with an individual who, presumably, had your best interest at heart, and advised you as to how you should invest and what you should buy or sell.

As in any industry that requires the vast majority of engagement, communication, and overall service being done utilizing expensive human capital, technology becomes the solution. Within the wealth management industry not only is there a need for technology to reduce the human capital requirements, but it is necessary to bring transparency in the overall cost and quality of investment advice to the consumer.

Thus was the inception and introduction of robo-advising.

What do robo-advisors do?

First things first, every American who has an investment account should try out a robo-advisor. These applications allow you to set up, monitor, and get investment advice on your accounts from the convenience of your smartphone or personal desktop.

Financial Guard is one such service that provides robo-advising.

It only takes five minutes to get started and requires the filling out of a quick customized profile which includes items such as your age, risk tolerance, investment style, and for you to link up your current investment accounts to get assessed (not all robo-advisors allow you to aggregate your investment accounts and provide a portfolio assessment, but any of the ones that are worthwhile are able to do that). In a matter of minutes you are ready to start receiving investment advice.

What will a robo-advisor have you invest in?

Robo-advisors normally will be providing investment advice similar to that of a human advisor– the only difference is that they can do it at a fraction of the cost. The vast majority of robo-advisors will recommend for you to have a diversified portfolio of mutual funds or Exchange-Traded Funds (ETFs) across a variety of asset classes such as equities, fixed income, cash, real estate, alternative, etc. For those of you who haven’t hear of an ETF it is similar to a mutual fund in that it is normally a broad basket of individual securities, except it trades like a stock rather than a fund.  According to Investipedia, “an ETF trades like a stock on a stock exchange and looks like a mutual fund.” Additionally, ETF’s track an index automatically. This means that there is an automated function that chooses what to buy and sell based on a group of stocks that portray the growth of the stock market.

There are many different kinds of ETFs and many kinds of indexes.

Like Financial Guard, there are many other types of robo-advisors out there. I can only attest to the dedication and quality found at Financial Guard, where quality and price are never compromised. Most of the high quality robo-advisors will allow you to try out their service without moving your assets, so give this industry changing technology a try and get your investment accounts on the right track.

P.S. If you find a robo-advisor that is asking you to immediately move your assets to them just to get started, be very cautious as that is the equivalent of the “hard sell,” rather than a confidence in their product/service. Transparent technology should remove that type of behavior in the long run, but not everyone has figured this out just yet…