The New Wave of Online Financial Advisors

As time and technology continue to march relentlessly forward, the evolutions they produce persist in greatly changing the way in which business is done, including that of a more personal nature. On that note, financial advising, perhaps one of the most sensitive, relationship-based businesses that has ever existed, is finding itself increasingly influenced by the fact it can now be done without any in-person relationship necessary between adviser and client. There can be many benefits to the online model of financial advising, but because the handling of one’s money remains something that so many are reluctant to turn over to a company with which they’ve established no acutely personal relationship, it may not be for everyone.

Entirely-online advising is a relatively new manifestation. While most companies have availed themselves of the technological advances of the last decade or so to greatly enhance the customer service experience, it has not, historically, been the goal of those firms to eliminate the core relationship model of in-person consultations and meetings with prospects and clients. That, however, is changing, and there are now financial advisory services available where the services and pricing models are set up specifically on the basis that the advisor and the client will never meet face-to-face. Take Personal Capital, for example. The annual management fees begin at .95% (of assets under management) per year, and work their way down to .75% per year, with the amounts decreasing on the basis of portfolio size – the more you invest, the cheaper it gets. Lower annual management fees is one of the great benefits of the online advisory model for the individual investor looking to access professional money management, because the savings on traditional overhead costs like office space and staff, which are, of course, among the most substantial expenses to a business, can be passed along to the client.

Personal Capital mirrors, in format, much of the way money management firms have worked traditionally, but there are other companies that step a little further outside the box and make money management even a little more “consumerist,” like LearnVest. LearnVest offers three levels of access to a fee-based advisory service. The monthly maintenance fees in all three cases are $19 (at present), but the one-time setup fees are $89, $299, or $399, and vary, as you might imagine, on the type and breadth of services available. The $399 option gets you everything LearnVest has to offer – personalized recommendations on your whole financial profile, including your investment portfolio, as well as unlimited phone and email consultations with a Certified Financial Planner.

So, is an online financial advisor for you? It depends, in large part, on what sort of person you are, as well as how intricate your needs might be. The truth is that outside of especially-complex cases, everything a financial advisor can do for you in person can also be done over the Internet and by telephone. However, for many, nothing replaces that face-to-face meeting with the advisor. For some, the very sleek, cost-efficient mechanisms that the Internet has produced are not suitable for use on behalf of important personal services. Still, it cannot be denied that the availability of online advisors has opened up personalized planning to individuals who had been previously priced out of it, and while traditional advisors are not going anywhere, the advent of online advisors presents one more option for the consumer of financial services to consider.

The information contained here is for general information purposes only. The Financial Writer blog and Bob Yetman disclaim responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this article, or any other article featured at this blog, should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

 

 

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