financesdemystified.com

When is the right time to include a robo advisor in your financial plan?

This is a sponsored post curated by me on behalf of Charles Schwab. All opinions are 100% mine! Round of applause to you! You’re doing it, you are successfully adulting and the fact that you are currently reading this post proves it! And since you are reading this post, it also likely means that you have already started or are looking to begin investing AND you are also thinking about adding a robo advisor to your life to make all of this investing stuff easier. Before we dive into the right time to include a robo-advisor in your financial planning process, lets first talk about how to even get started with investing and if this is the right time to begin building a portfolio.

Getting started with investing

Between saving up for an emergency fund, contributing to your 401(k) and still having money for that trip to Peru, it can seem like you never have enough to begin doing any extra investing for longer term goals like buying a home, saving for college, or the future in general. But, believe it or not you do. If you are at that point and you are doing all of the above and know you want to start thinking more long term and have more strategic investments, then it’s a great time to consider a robo-advisor. If you have already decided you want to try a robo advisor rather than going it alone or working with a traditional financial advisor, then it should be easy for you to get started investing. Once you select a robo advisor (Charles Schwab is one of the firms that offers a robo advice service through Schwab Intelligent Portfolios), the process to get started is easy. With most robo advisors, the first thing you do is fill out a short online questionnaire to determine your goals, risk profile, and timeline. Once that is complete, a robo advisor will typically create a diversified portfolio of ETFs developed by investment professionals, and then the robo advisor monitors your accounts and automatically rebalances as needed.

What are you planning for?

If you are at the point in life where you have the basics covered (like setting up your emergency fund, contributing to your 401(k), and paying down high interest consumer debt like credit card debt), you’re probably ready to think about long-term financial planning. I am personally in the process of planning for all the advanced stages of adult life! In the past year, I have gotten engaged and had a baby girl, so my fiancé and I are working on financial plans as a couple, plans for a wedding, and saving for baby girl’s future. Yes! All of that at once. Since planning for all of these at once can be overwhelming, I had a brief conversation with Cynthia Loh, who heads up robo advice at Charles Schwab. Cynthia also just experienced many of these life stages and she shined a lot of light on how robo advisors can be a huge help in the planning process, especially hybrid robo advisors that offer access to a financial advisor for help with financial planning, in addition to an automated investment portfolio.  Cynthia mentioned that if, like me, you are working on merging your financial accounts (and long-term plans) with a significant other, having access to a financial professional to talk you through the process can help cut through a lot of complexity and conflict. It’s often helpful to have a neutral third party not only to map out a joint investment strategy, but also to talk you through how to reach your individual and shared financial goals. There are lots of services out there, but Schwab actually offers unlimited access to a team of CFP® professionals through their premium robo service, Schwab Intelligent Portfolios Premium.  Then, there are taxes to consider. When it comes to complex things like tax loss harvesting that are both time consuming and complicated to do on your own, a robo advisor can help. Cynthia explained to me that a robo-advisor can help you to potentially save money on your taxes, as they know when to sell an investment at a loss in order to help offset your taxable gains, automatically! The digital planning tools, such as those offered with Schwab Intelligent Portfolios Premium, can get very sophisticated but what’s nice is that they’re really easy to use! For example, if you have a child that will be heading off to college one day like I do, you can use the online planning tools to determine how much you need to save for their tuition, and how long it will take. And you can do the same thing with your retirement planning to know how much you will need to save to retire at your ideal age and live the lifestyle you desire. As you can see, no matter what phase of life you are in, having a robo advisor on your team can help you have a lot more confidence in your financial journey and in reaching your financial goals. Check out this page if you want to learn more about Charles Schwab’s offerings. Please read the Schwab Intelligent Portfolios Solutions™ disclosure brochures for important information, pricing, and disclosures related to the Schwab Intelligent Portfolios and Schwab Intelligent Portfolios Premium programs.    Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™ are made available through Charles Schwab & Co. Inc. (“Schwab”), a dually registered investment advisor and broker dealer. Portfolio management services are provided by Charles Schwab Investment Advisory, Inc. (“CSIA”). Schwab and CSIA are subsidiaries of The Charles Schwab Corporation (1119-92R4)