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Should You Use A Robo-Advisor? If So, How Do You Choose?

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Online financial advice is more available than ever, and more investors are taking advantage of these services. Whether or not a robo-advisor is the right choice depends on the complexity of one’s situation and their comfort level in working with advice that is mainly dispensed online, according to Investopedia.

If an investor’s situation involves complex financial planning issues that extend beyond allocating investments and related services, they might be better served with a more traditional advisor who provides advice in areas such as estate planning.

For millennials and those with more modest portfolios who only require asset allocation advice and basic financial planning help, online advisers could well meet their needs.

One of the major benefits of online advisors is the convenience and ease of accessing their services. Online advisers are accessible 24/7. With today’s busy schedules, this level of accessibility appeals to many investors.

How To Choose

If an online advisor is the right choice, the next question is how to evaluate and decide which robo-adviser to use.

Just as traditional financial advisers vary in their areas of expertise, how they are compensated and the types of clients they work with, the same differences exist among robo-advisors.

Most robo-advisors offer investment advice and portfolio management, Investopedia noted.

One exception among the major robo-advisors is LearnVest, which gives investment recommendations but not ongoing investment advice. LearnVest’s focus is financial planning and budgeting. The company also offers live help via the telephone.

Asset allocation and portfolio management are most robo-advisors’ dual focuses. They usually provide the service via EFTs and algorithms.

Beyond this basic service, robo-advisors provide tax-loss harvesting services which allow investors to take advantage of any losses in their taxable portfolio.

Robo-Advisors Have Different Strengths

Some robo-advisors focus on specialized areas. Rebalance IRA, for example, focuses on managing retirement accounts. The company also provides human interaction.

Folio Investing provides EFTs or stock portfolios. Motif Investing provides portfolios consisting of 30 stocks for a single price. Personal Capital gives clients the ability to manage their investments on a consolidated basis, focusing on customers with higher net worth.

Fees To Consider

Fees differ among robo-advisors. The fees usually run between 0.15% to 0.5% of the managed assets. Some also charge a one-time set-up fee.

LearnVest charges from $89 to $399 for an initial review and $19 per month thereafter.

Personal Capital charges 0.49% to 0.89% of the invested amount.

In addition to fees, there are also expense ratios of exchange traded funds and mutual funds. There can also be transaction costs for trading investments.

The option of interacting with a human about investments also varies among robo-advisors.

Because robo-advisors are fairly new, they do not have a lot of investment history pre-dating the current stock market rally. It is not known at the present time how well most robo-advisors will perform during the next major stock market downturn.

Established Players Enter The Space

Some traditional financial service players have embraced robo-advisors, which can be a consideration in choosing a robo-advisor. Traditional financial services firms have the funds to invest and the time needed to enable the services to grow. In addition, as a client’s need changes, they will be positioned to transition to the more traditional services these firms offer. Financial advisors working with these platforms could be a way to connect with younger clients and cultivate them as future clients.

Betterment, for instance, has partnered with Fidelity Investments. Fidelity’s institutional platform can provide a version of Betterment’s RIA version to its clients. Fidelity has also signed an agreement with LearnVest.

Vanguard has announced its own robo-advisor and is considering introducing the service to more customers in the near future.

Charles Schwab will introduce a financial advisor version of a robo-advisor that will allow advisors using its platform to white label the service to their clients for free. Charles Schwab will profit on the underlying assets.

Investors need to decide which robo-advisor best meets their needs. They need to consider the specific services the robo-advisors offer, the level of human interaction offered, the minimum investment required and any fees and expenses charged.

The growing interest of major financial service firms in this area is clearly a consideration for both prospective investors and financial advisors.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.9 stars on average, based on 8 rated postsLester Coleman is a veteran business journalist based in the United States. He has covered the payments industry for several years and is available for writing assignments.




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Analysis

Litecoin Price Analysis: Big Optimism Boost Following Litecoin Futures Update

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  • The Litecoin (LTC) price is looking to close in the green, after six consecutive sessions of losses.
  • New regulated cryptocurrency exchange, ErisX, may soon launch Litecoin futures and others.

Positive Litecoin Development

TD Ameritrade, a brokerage firm based in the U.S., have launched a new regulated cryptocurrency exchange, ErisX. This will facilitate spot and futures trading opened by Eris Exchange, a Chicago-based derivatives market.

ErisX, will provide traders access to cryptocurrency spot and futures contracts, within a single exchange. According to a spokesperson from the organization, it will allow investors to trade Bitcoin, Ether, Bitcoin Cash and Litecoin, in addition to futures contracts on cryptocurrencies.

Big Infrastructure Improvement In The Crypto Market

Over the past year now, there has been several encouraging developments, assisting in further market legitimization. The improvement of crypto market infrastructure is becoming more prominent. Liquidity of the cryptocurrencies is greatly increasing as well as market acknowledgement in categorizing digital assets as an emerging asset class.

The introduction of Bitcoin futures contracts by the Cboe Futures Exchange, Goldman Sachs planning to open a cryptocurrency trading desk and CFTC respecting that crypto has a future and is here to stay have all added legitimacy to the market. There’s more: a U.S. Federal Court declared digital currencies as commodities, the growing possibility of a Bitcoin ETF, which could seriously propel the market and introductions of regulated crypto custodians allowing more institutional buyers into the market are also a boon for optimism. As such, the likes of hedge and pension funds inclined to participate.

Technical review

The trend for Litecoin of late has been firmly bearish and a stubborn trend. It has nursed losses for six consecutive sessions, dropping as much as 13% over this period. For almost two months, the price has swung between a range of $70 down to a low of $47 territory. It appears to have formed a bottom, within this range. Currently the price is stuck in between two tough respective supply and demand zones.  Should the bulls manage to sustain the gains finally seen, a test over the coming days back towards $65-70 could be on the cards. Near-term resistance is eyed heading into the $60 area. Support can be observed at $55 and then the psychological $50 area.

LTC/USD daily chart

A breach of either zone, could see huge buying or selling pressure, depending on the direction. Given how long the price has been summoned to this mundane range, chunky moves could be seen. Bulls clearing the highlighted supply, have the potential at a very fast run back towards $90. On the other hand, a breach of the highlighted supply area, could see a catastrophic back towards $30.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 33 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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Analysis

Vietnam ETFs: Growing Higher Than Planned

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By Dmitriy Gurkovsky, Chief Analyst at RoboMarkets

Quite recently, we’ve been speaking about TUR (NYSE: TUR), a Turkish ETF that declined severely because of US customs duties. This, in fact, allowed investors to enter the market a lower price, while TUR now is up and 15% away from its lows.

Still, investing opportunities appear not only after serious falls (in fact, this is risky, as such assets are quite volatile), but also in steadier instruments. As such, those who invested in the Chinese economy in the 1990s earned good profits, although the market was hardly ‘developing’ any longer.

Even now, there are ETF’s that have great earning potential. As always, you can choose a more simple and less risky path. Take a look at APAC: the growth potential is good, while some ETF’s corrected after the trade wars and are now available at attractive prices.

One of the options is the VanEck Vectors Vietnam (NYSE: VNM). This ETF follows the MVIS Vietnam index and consists of the publicly traded companies that are either based in Vietnam or have over 50% of their assets there. Since May 2018, VNM has added 13% to its value. As it is not 100% Vietnamese (only 73% belong to Vietnam), other shares belong to the following countries: South Korea (12%), Japan (5%), Taiwan (4%), UK (3%), Hong Kong (2%). This enables good diversification and makes this ETF quite conservative.

As for the sectors, 16% are represented by consumer and finance, while real estate and technology account for 11% and 8%, respectively. Over the last week, the capital inflow was $3.30M, bringing the yearly total to $44.40M. The major ETF’s shares are such Vietnamese companies as Vietnam Dairy Products JSC (HSX: VNM), which account for 8.15%, Vinhomes JSC (HSX: VHM), 8.01%, and Vingroup JSC (HSX: VIC), which accounts for 6.67%.

Since 1990, Vietnam has been implementing reforms, thus improving its investment climate year by year. After the the Vietnam war and the realization that the Communism regime wasn’t working, the Vietnamese Government enabled a privatization campaign; in 4 years, there were 50% less public companies in the country. Modernization played a very important role, while direct investments were attracted from abroad, and new industry techs were being implemented. In 1991-1995, there were $1.2B as overseas investments in Vietnam, while in 2017 there were over $35B.

The Vietnamese Ministry of Planning and Investments is working with the World Bank to improve the business climate further and create a new direct investment strategy that will focus on the ‘quality’ of the incoming money rather than the amount. Currently, high tech companies are in focus, as the government is doing everything to switch from a cheap work force economy to the one based on technologies and qualified specialists. Most investments into Vietnam are coming from Japan, Singapore, and South Korea. The country is now striving to expand the portfolio and conquer regions other than APAC, such as the US, the EU, and others.

As Vietnam joined various multilateral free trade agreements, such as the WTO, both import and export rose. By 2017, the turnover reached $400B, which is 4 times higher than 10 years ago.

The government is now planning to create free economic zones where the companies will get tax support. This influenced the overseas capital flow in other countries, which made the Vietnamese economists leverage this experience, also taking into account the negative sides other countries faced. As such, the company opening process will be much more simple, while the investment terms will be tighter, and the tax privileges, better.

Over the 9 months of 2018, Vietnamese GDP rose by 6.98%, which is the highest figure since 2011. The GDP change was mostly influenced by construction, and services, which strengthened as more tourists have been coming to Vietnam.

Technically, the price of the ETF in question is not at its highs on W1, which means it’s not overbought. When the price went below $16, the volume grew, which led to the support forming at $12, which has not been broken out by the price yet.

 

On D1, there is a clear support at 5$16. There are two possible scenarios: either the price will break out $17 and head towards $18, or it will correct to $16, but then find support there and, again, go further up.

Disclaimer

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboMarkets shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 15 rated postsHaving majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.




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Analysis

ETFs: What Is The SEC  Really Thinking?

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As a veteran Wall Street type, I was not surprised at Thursday’s SEC announcement on the VanEck-SolidX Bitcoin ETF.  Once again they gave a “no decision”. This pushes the deadline back to December 29, 2018. Don’t be surprised if New Year’s Eve comes and goes and nothing happens before the SEC is forced into a action by the end of February.

Back in August, when the first delay was announced, crypto investors’ reaction was swift and painful.  On Thursday, after a temporary hiccup, prices took a surprisingly positive turn. If we are to believe for just a moment that crypto prices act rationally (or just occasionally) then comes two obvious questions, are crypto ETFs good or bad? Secondly why can’t the SEC come up with an answer?

Never Say Yes

Let’s start with the easy question first: what’s up with the SEC?  Having dealt with this teflon organization for over 30 years, their actions with regard to VanEck-SolidX are the same pattern they have followed forever.  Practically never do they approve anything. Instead they provide two choices: reject or delay. By delaying the VanEck-SolidX application they are accepting the ETF concept in principle but laying out objections that must be corrected.

The result of this regulatory song and dance, don’t expect a decision until the last minute. The reason is that the main issues are not likely to be resolved in time. In fact, I doubt that the ETF proposal gets approval for perhaps as much as another year.  Here is why.

SEC Speak: Obfuscation

According to Jake Chervinsky, attorney for VanEck, the SEC asks “18 multiple part questions covering seven pages.” He adds: “It’s not encouraging to see the SEC ask if the bitcoin futures markets are “of significant size” despite having already concluded last month that they’re not.”

This is a tactic in obfuscation that the SEC loves when an applicant has not provided an adequate response.  In this case there is no objective answer to how liquid a market must be to meet the measure of significance.  Moreover, there is little or nothing that can be done in the short run to create greater liquidity.

The SEC is a political body as much as any agency of the Federal Government.  In raising the issue of liquidity, they can stand behind their role of protecting the public without at the same time hindering public access to a class of assets, even at current depressed levels, is worth $200 billion, more or less.

The SEC Is Right With Their Delays

Does the crypto world really benefit, as this stage of its evolution, by fostering a group of ETFs?  The argument in favor says that this is the way to simply and safely offer the individual investor a way to participate in a diversified portfolio of crypto.  That sounds noble – or is it just something that makes lots of money for those who create them?

But so far, at least from the viewpoint of the SEC, ETF applicants have not created a more secure domain.  More importantly, even if this were not the case, what does the investor gain from investing in a diversified list of crypto when Bitcoin overshadows about every other altcoin?

With nothing against those that believe in the benefits of ETFs, the benefits in current terms is far better for the ETF sponsor that it is for the investor.

Looking just at the math, an individual investor could be just as well off buying Bitcoin, Bitcoin Cash, Ripple, Ethereum and EOS. Admittedly, it is somewhat more complicated finding a place to buy and store Ripple, but with this small portfolio, you cover 75% of the entire crypto asset class. If security is an issue simply go to  blockgeeks.com/cryptocurrency-safe/ and select from a list of hardware wallets.

So whether the SEC gives their approval of VanEck-SolidX in December or February might make a difference if this were 2020 or sometime thereafter.  As for now, it really isn’t critical to the mass acceptance of crypto.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 114 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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