You may have probably encountered reading articles about digital advisors which highlight the good, the bad, the advantages and the disadvantages of digital advisors. With the amount of information that has been available, it may have made you disconcerted, but, nonetheless, you eventually decided to take the dive into the realm of financial automation without any idea as to where to go first.
So, if you try to visit websites of any digital advisors, you are mostly left in awe especially because it comes with an interactive user interface each of which claiming on the ease of use, the advanced technology, the low cash outlays that it will require, and many more.
With that, you will need to know how to distinguish which of those outstands the others:
The first step is by the identification of your needs. By way of financial planning services, these vary from a simple goal-based planned into a more comprehensive service of managing your liabilities and cash flow. Currently, most of the digital advisors are only equipped to handle simple goal-based planning. Thus, before raising the bar in your expectations, one must remember that a digital advisor may only be able to automate your investments on the road to new financial goals.
Thus, if you have not yet commenced in actively saving and investing towards any financial goals, or that you are planning to add new investment goals, then availing of a digital advisor is might be right for you.
These digital advisors come in different option on whether it may offer complete automation, while those others may offer a hybrid of services that is coupled with computer algorithms along with financial planners. In this way, you will have to make a wise choice on which one fits you more.
So if you are just looking for simple goal-based planning then the first one may be of help. But as the time goes by, and with that comes with the growth of your investment portfolio and financial needs, you might someday necessitate the services of a human advisor, so in effect, it might be practical to select a digital advisor that can offer advanced financial planning, that is with human intervention, as an added service on the package.
The second step is to shortlist digital advisors which are properly registered. When you are in the process of selecting which digital advisor might be best for you, you must choose from a list of those which are legitimately registered as “investment advisers”. There are bodies that had already laid out stringent guidelines to be able to ensure that these investment advisors both online and offline are offering appropriate products to their clients with the proper risk profiling.
The third step is to take and try the free trial or the free membership offered by these digital advisors. More often than not, these digital advisors offer their platform for free say for a period of 7 days or 1 month. With this, you can be able to take the test the platform before you will commit your money by either subscribing to the services offered or by making an investment.
This will give you assurance as to the feel of their platform, and then evaluate if whether or not their user interface is friendly, is easily understandable, and if it is free from those technical glitches. But, although those glitches may still have the risk to come out once you are already transacting, it is then better to confirm first that the platform can move smoothly before any making any monetary commitment.
Fourth, after availing of the free trial period, then it is apt that you evaluate your experience from such platform. Below are some recommended criteria when evaluating if the digital advisor’s platform is good or not:
- In terms of service offerings
The platforms of these digital advisors vary depending on what services they offer. Some may provide you with a host of offline and online finance offerings, while some may offer advanced tracking and portfolio rebalancing services. In terms of services, you’ll have to be more cautious in terms of the cost-benefit relationship.
- In terms of unbiased and research-backed advice
The digital advisor should be able to give you data which are from legitimate sources, and one that is not inclined of promoting a certain firm or investment scheme. There should be an established qualitative and quantitative criteria that are to be considered before deciding on the top schemes for your portfolio.
- It must be an established and reputed company
You should choose digital advisors who are backed by established companies. You must choose your digital advisor wisely in a way that you did not fell prey from those freebies like gifts, lucky draws or attractive discounts. They should be on a fee basis so to ensure that the commissions earned do not influence their advice.
- There is query resolution
Digital advisors should have a team of proficient customer service associates and financial planners. Questions related to the investments made or issues that are being faced when transacting should be resolved promptly and professionally.
- Reasonable costs
Of course, all things come for a price. Costs is vital in planning investments and these digital advisors may charge you through any of the methods below:
- A subscription fee charged either monthly, quarterly or yearly
- A transaction fee that is being charged every time you execute a transaction
- A certain percentage from the amount of investment
- Commission earnings from fund houses
In considering the costs, it is up to you which of the quality of advice or service offer you want to avail of. So, there might be times wherein the costs may be higher than those one-time fees which you would pay otherwise.
The fifth steps is making your decision and your commitment to such decision. After evaluating various digital advisor platforms, you will then be able to choose which of those are worthy to manage your investments. Once you choose which digital advisor is right for you, you can now set out to achieve your financial goals and keep it on track. You must be able to sustain it once you begin so that your financial goals will not be obstructed.
There are a number of reasons why it is much preferable to shift to digital advisors than the traditional ones. One of those is that you have the chance to be a step ahead when it comes to sources of advice, investment procedure, and placement of your financial interest.