Robo-Advisers for Investors Are Not One-Size-Fits-All

By Tara Siegel Bernard

BETTERMENT This is probably among the more comprehensive services available, particularly for individuals saving for retirement. Its RetireGuide tool, introduced in August, factors in all of your retirement accounts, including, say, a spouse’s 401(k) held elsewhere, expected Social Security benefits and where you want to retire. Users can connect all of their other savings and investing accounts to see them in one place.

Then, the service’s tool will estimate how much an individual may need to spend in retirement each year, and thus how much users will need to save, which accounts to save in (including maxing out a 401(k) still in use) and how to improve tax efficiency. A retirement income tool calculates how much retirees can safely spend each month, then automatically deposits that amount into a checking account.

Users can adjust their investment mix, but they will need to know themselves well enough to select a final allocation that won’t feel too risky in tumultuous markets. Betterment’s chief executive, Jon Stein, said that it did not build portfolios around customers’ emotional tolerance for risk, but instead presents, say, potential annual spending amounts available in retirement. It then lets investors move the dial.

For a 50-year-old investor, it might suggest 75 percent in stocks, and the remainder in a broad collection of bonds largely using Vanguard exchange-traded funds.

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This article originally published January 22nd, 2016 on The New York Times.