We all remember the story of John Henry and his noble contest against the steam-powered machine. It’s an effective story that illustrates the feeling many have when confronted with technology that can do what people used to be required to do. Should we fear it? Embrace it? Fight against it?
The Washington Post ran an article[1] recently about the new trend of what some are calling (pejoratively) “robo-advisers,” a new trend in technology where wealth management firms are using algorithms instead of humans to manage their clients’ accounts. It’s an innovation that has some asking if the new service is robust enough to disrupt the financial planning industry with the same force that Über applied to the taxi industry.
The number one attraction that this kind of service holds for consumers is, predictably, the huge drop in fees, which the article quoted at around 0.15 to 0.35%, depending on service and account balance. The question everyone will be asking is whether that reduction in costs to the client comes with a reduction in service to the client. If you’re asking me, the answer will be a resounding, “Of course.”
This kind of service seems to be a natural development from the ease of access to technology. The retirement climate, too, is such that more and more people may be feeling the need for professional guidance to secure their retirement future. A super low-cost option like robo-advisers (or automated investment service, if you like) may be an answer to prayers to some, who feel their needs are straight-forward enough for an autopilot option.
Autopilot may be fine when there isn’t a problem, but we all know that the future can be irregular. We thought we’d take an opportunity to list three very human things that Miramontes Capital does to make our clients feel in control—not on autopilot—when we’re planning for their retirement.
- We check up on you to help you with “variables” — Variables are lifestyle decisions, unexpected expenses, and in retirement, decisions like when to take social security, all of which we monitor often to assist our clients with their future.
- We address fears in a meaningful way — Let’s face it: money can be emotional. Even if a human adviser and an algorithm come up with the same financial plan, a human touch can make the plan sink in in a way that isn’t possible if you’re interfacing with a machine.
- We take joy in your success — Nearly all of our clients at Miramontes Capital have stories about how they achieved their meaningful life in retirement. We love to hear about their successes along with their struggles, and we like to think that they feel good when we take notice of them along their journey.
The most efficient option isn’t always the best option. If you feel you’re in need of retirement planning, in Costa Mesa or beyond, give us a call and talk to a human about your finances.
[1] Frankel, Todd C. “Robo-advisers are here What’s a human financial planner to do?” 11.10.2015. The Washington Post. 11.5.2015. Web.