I recently had the opportunity to speak with U.S. News & World Report regarding the importance of managing emotions in investing. I was quoted in its “Is Your Advisor Helping or Hurting Your Retirement Strategy?” piece, an excerpt of which is below.
You may benefit more from having someone who's able to prioritize your needs at various life stages, even if that means paying a higher fee for financial advice.
Kyle Attarian, wealth manager at Plancorp in St. Louis, says robo advisors fall short of addressing the emotional side of investing. "Money is emotional and a strong driver of human behavior, and if not carefully managed, it can lead to bad behavior." Robo and human advisors attempt to manage behavior, but the former isn't capable of recognizing how emotions motivate decisions.
During times of emotional (and market) chaos, Attarian says it's easier to deviate from a long-term plan when you're answering to a robot, as opposed to another human being who is there to hold you accountable and guide you. Whether you choose a robo advisor to manage costs or a human advisor, your level of discipline matters. "The more emotion that's allowed to seep into the investing equation, the worse the performance will be, all else being equal," he says.