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Robo-advisors: Friend or foe?

Robo-advisors: Friend or foe?
Robo-advisors: Friend or foe?

From the perspective of financial advisors, the optimistic view of "robo-advisors" is that they are expanding the market for financial advice.

The planning tools and software algorithms robo-advisor firms use to customize financial services for people who otherwise would not have access to them are helping investors make better decisions with their money.

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The question that keeps surfacing is whether these new robo-advisors will replace traditional financial advisors.

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While robo-advisors use sophisticated algorithms and model portfolios to allocate investments for clients, they are not equipped to provide more detailed and nuanced financial-planning services—which are the specialty of traditional advisory firms, said Elliot Weissbluth, CEO of HighTower Advisors, along with the firm's chairman, David Pottruck.

As new individual investors using robo-advisors begin to accumulate more assets, they will more likely seek out the assistance of the robust financial-planning services that traditional advisors can offer, according to Weissbluth and Pottruck.