facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast blog external search brokercheck brokercheck
%POST_TITLE% Thumbnail

3 Things to Look For When Hiring a Digital Financial Advisor


Before you start looking around for a digital financial advisor, you need to ask yourself this question: What type of financial help are you looking for? If you’re looking for a full array of services—investment advice, retirement planning, etc.—you’re probably after a qualified human with financial planning credentials. 

On the other hand, if you may only need help in getting started and staying on track. In that case your needs could be met through computer-based services. Those services typically carry low fees — or are free with some online banking services like Bank of America or USAA. Your options for those online digital advisors include so-called robo-advisors or a hybrid combination of humans standing by to assist when the automated advisors leave you with unanswered questions.

The Difference Between a Robo-advisor and a Digital Financial Advisor

A robo-advisor is online and uses computer algorithms to model portfolios.1 The client provides the input of personal data, investment goals and risk tolerance, etc. Don’t look for lots of human interaction with a robo-advisor, which mainly focuses on the allocation of your investments, rather than financial planning.

A digital advisor is a combination of a robo-advisor backed up by a qualified financial planner.2 The digital advisor adds the human element to the convenience of immediate access to your financial information.  

Which one you should choose depends on a full understanding of the services each offers. Robo-advisors come with low-fee investment planning. Digital advisors offer a combination of computerized financial services with the ability to talk to a qualified human.

So, for the purposes of this discussion, let’s consider that you are seeking a digital financial advisor, who provides online advice and assistance as well as automated features for a more do-it-yourself approach to financial planning.

3 Questions You Need to Ask a Digital Financial Advisor

1. When I have set up your accounts online, can I access all of them from one online platform?

That access should include customization through the use of interactive spending reports as well as budget assistance. If you are a seasoned investor, you will want to see the total value of your investors at any given time. As an independent do-it-yourself type, you might want to conduct your own trading and investment activity with the digital financial advisor looking over your shoulder and steering you clear of tax or regulatory pitfalls.

2. Is your financial tracking technology easy to use and intuitive?

This could be a struggle point at times when working with some digital financial advisors. It’s all about integrating user-friendly software with the end-user experience. The ideal solution is for your digital financial advisor to have a single sign-in platform with all the tools and accounts, investments, etc. in one place. If you have to leave the platform to manage a piece of your investment elsewhere, you are buying into a potentially difficult user interface.

3. Do you have the technology that brings your financial situation under a single umbrella?

As your financial life becomes more complex, your digital financial service must be able to gather all your data and bring it together in a way that helps you manage your finances. For example, what should you do when your 401(k) is maxed out? What are the tax consequences of investing in an annuity? 

Above all, your data must be secure and presented to you in a format that you use and understand immediately. 

As your financial life gets more complicated, digital financial services providers can tell you, “There’s an app for that!” The trick is to find the ideal solution that integrates everything you need and a digital financial advisor who can integrate all that automation in a way that is best suited for you now and in your financial future.

1 https://www.investopedia.com/tech/top-robo-advisors/

2 https://www.cfp.net/become-a-cfp-professional/cfp-certification-requirements

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.