Technology Portfolio Management

“We all see the world not as it is, but as we are."

- Dr. Stephen Covey

Technology has become a part of our daily lives. We rely on smartphones to tell us directions to new destinations, use computers to accomplish most of our work, and even make use of the internet to accomplish most of our daily tasks. With technology becoming so common and integrated into our society, it"s no surprise that it"s changed the way investments are handled. These days, technology has automated much of the investment and financial planning sector, and it"s not necessarily for the best.

Your life is as unique as you are, and because of that understanding, everything we do for our clients is personalized just for them.

Enter Robo Advisors

Do-it-yourself investments are becoming more and more popular among younger generations. After all, when you"re used to being able to do everything with the swipe of a finger on a smartphone, the thought of trading stocks and making investment decisions without consulting an experienced investment advisor makes sense. It"s fast, it"s easy, and it gives you the feeling of absolute control over your investments. However, many of these DIY formats rely on robo advisors to help you make a decision based on an investment or portfolio allocation.

While robo advisors are not bad in and of themselves, they"re limited in their capabilities. Though they"re capable of reading general trends and looking at what will fit your current risk tolerance, they"re not capable of examining complicated circumstances and providing advice based on your individual situation. Robo advisors look at the surface level of your accounts and make recommendations based on a relatively simple algorithm. This algorithm is designed to fit the largest number of individuals using the platform, not a unique investment portfolio. What this means for investors who rely on a robo advisor is a potentially under-performing portfolio that hinges on risk rather than on smart decisions tailored to suit an individual"s preference.

What This Means For the DIY Investor

Technology makes day trading and staying updated on market performance relatively simple. The news is always at your fingertips and you"re capable of making more informed decisions than individuals did in the past. These improvements have made it particularly easy for investors to consolidate market trends and make decisions based on all of the aggregated information. The robo advisor looks at the trends, distills the pertinent facts from the information available, and presents it in a way that"s easy to understand. For DIY investors, this simplifies the formerly confusing and complicated investment process into something approachable, learnable, and scalable.

However, as your investments grow, getting the high returns you need to satisfy your wealth management goals can be difficult. Robo advisors are limited in the scope of the information they provide. They lack the finesse and understanding to properly examine an individual"s position, risk tolerance, and future plans. Often, this leads to low returns or stagnant portfolios.

Financial Planners Can Help

Robo advisors have their place in the grand scheme of investment technology, but they"re best utilized with the help of an experienced financial advisor. Advisors can present the data gathered in a way that"s both more understandable and customized to fit your unique situation. This helps streamline your portfolio"s performance while also giving you the tools you need to understand the ins and outs of the market.

How Investment Advisors Use Technology

Just like DIY investors, experienced advisors can use modern technology to better understand the options available day to day. They"re better equipped to monitor changes in the market as they occur and can use the information gathered by robo advisors and computer algorithms to better understand trends in your investments. The more informed they are about general performance and anticipated growth, the more accurately they can suggest the right move for your goals.

While simplifying the information for clients is always a goal, technology has also allowed wealth management firms to become more competitive. Advisors are no longer forced to make call after call to complete a trade. Instead, they can do it at the push of a button once securing permission. This reduces the risk of losing out on investments when the price is right.

Robo Analysts Are Just the Beginning

For many people, especially younger investors, staying connected and updated with their accounts at all times is a priority. Many advising firms are making it possible for individuals to stay updated on their accounts" performance through the power of the internet. Technology is at our fingertips and this makes accessing performance reports and your account balance something that can be done daily without forcing you to speak to an advisor anytime you want an update on your account. Though technology has made automated analytics possible, it has also made staying aware of your account"s performance anytime you"re curious a part of daily life.

Keep in mind that robo advisors and analysts are not a replacement for traditional wealth management and financial advising. It takes extensive training and experience to help individuals make the best decisions for their financial future.

Though robo advisors and technological improvements can make the difference between high-performing accounts or those that barely meet the market standard, it"s important to work with an experienced advisor to help you reach your goals. At Foxstone Financial, our advisors will work to understand your unique situation and develop an investment strategy that fits both your needs and your immediate wealth management goals. Whether you"re just starting out or have been investing on your own for a while, the team at Foxstone Financial is ready to help. Don"t settle for underperforming portfolios. Schedule a consultation with one of our dedicated wealth management professionals today.