A new crop of digital financial advisory services— so-called robo-advisors—have caught on with 20- and 30-somethings eager for simple, straightforward investing insight. But how can these robo-advisors help older investors with a complex array of financial decisions that will affect their retirement?
"As [investors'] financial lives become more complicated, they need data and tools to figure out specifically for them ... what kind of college savings they need and what they need in order to retire securely," said Bill Harris, CEO of Personal Capital, a leading financial technology wealth management firm.
While the majority of American adults who are not currently retired say they feel unprepared for retirement, about 20 percent say they have used digital planning calculators to forecast how much they'll need for retirement, according to a Personal Capital survey.
Another survey found 1 in 5 investors age 50 or older said they would actually prefer to get financial advice mostly through digital tools, but with access to a financial advisor. About 37 percent of these older investors said they would prefer to work mostly with a financial advisor but with an online or digital component, according to the Wells Fargo/Gallup survey.
"Technology is constantly evolving and changing how investors want to interact with their financial services firm," said Mary Mack, president of Wells Fargo Advisors.
So when it comes to choosing a "robo-advisor" or digital service to help plan for retirement, it is important for investors to understand how to evaluate them.
Read MoreDon't let student debt ruin your retirement
Whether you are using a software-based financial technology company—such as Betterment, Personal Capital or Wealthfront—or a financial industry stalwart that now includes a robo-advisor platform, like Vanguard and CharlesSchwab, you need to ask these three key questions to make sure you are able to reach your retirement goals:
What do they offer? Can they help manage all of your retirement accounts—401(k)s, IRAs and taxable accounts? Will they automatically rebalance your portfolio? What is their tax-planning strategy? What's the minimum required to open an account? (You can generally open an account with one of these firms with a $5,000 to $100,000 account minimum; Betterment has no account minimum.)
How much do they cost? While fees are generally lower than those of traditional investment advisors, they can range from 0.15 percent to 0.89 percent of assets under management, depending on the type of robo-advice you receive.
Will you have access to real advisors? Lower cost often can mean less individualized, personal attention to your investment strategy and goals. If you have a complex financial life, or if you think it will become more complicated in the near future, you may want to be able to talk to a person.
Many investors also rely on a human advisor to help them deal with the emotional aspects of investing decisions. A firm that offers a hybrid approach—digital tools and human advice—may be the right fit for you.