Investors are increasingly turning to robo-advisers to manage their portfolios. In effect, these electronic platforms that provide automated investment advisory services using computer algorithms replace financial services professionals. Easy-to-use smartphone apps and online portals make setting up an account convenient and quick.
The New Hampshire Bureau of Securities Regulation issued an investor awareness advisory providing information and resources to help investors better understand robo-advisers. The advisory discusses how robo-advisers work and things to consider when investing with one. The full advisory is available on the Bureau’s website at http://sos.nh.gov/InvestEd.aspx.
Investors should also be aware that robo-advisers use computer algorithms and software to create a portfolio based on how you answer a questionnaire or interview with a firm representative. Computer programs are unique, and different programs can make very different investment and portfolio recommendations, even when provided with the exact same investor profiles.
- shop around and research different product offerings and fee structures,
- continue to monitor and adjust their portfolios as needed,
- consider the need for personalized advice from an investment professional,
- research and understand the investment products being offered,
- keep track of their investments and ensure their portfolio meets long- and short-term needs,
- be mindful that the ability to buy and sell securities as markets shift may be limited,
- know how much the robo-adviser’s services cost and how it will affect returns over time,
- check the registration status and disciplinary history of any investment firm they deal with,
- research the company and its management.
Before making any financial decisions, ask questions, do your homework and contact the NH Bureau of Securities Regulation at (603) 271-1463.