Cheap Price, Great Advice?

Good Morning,

I don’t know about you, but I love a good bargain. Whether it is a 10% discount or a BOGO (Buy One, Get One Free), I’ll always consider the option. The same can be said with financial advice. Everyone is searching for great advice at a discount price (hence why you are also reading this). Last week Financial Planning published an article about Schwab because they are considering creating a Robo-advisor for 401k programs. The key points from the article are:

  1. Vanguard has a Robo-advisor that currently is for accounts which have over $3,000 and the Robo-advisor utilizes a glide path similar to their mutual fund product
  2. This new product/offering can help with asset allocation and better decision making habits around investing

The article points out that these products are available and accessible, but the one thing not mentioned is customization. Most of the off the shelf products are based on assumptions which might not be true for all individuals. The best advice should have some type of customized element in it, which increases the cost but provides you what you truly need and want. What people are probably receiving with this service is suffice/affordable advice. This advice is a step in the right direction, but is only helpful if the customers understand the shortfalls.

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