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How Technology Is Killing Off Lame Financial Advice

By Ben Steverman

People pay financial advisers thousands of dollars a year to pick investments, rebalance portfolios, adjust risk levels and minimize taxes. And these are all things that computers are learning to do more quickly, more reliably, at a quarter of the cost and with flashier graphics.

A funny thing is happening on the way to total automation, though. While new “robo-advisers” pop up regularly, many are relying on flesh-and-blood advisers. They’re finding a human with a sophisticated computer system can be better at winning trust than an algorithm alone. That highlights the big question for investors and their advisers: How much is the human touch worth? At a time when 0.25 percent will build a perfectly adequate investment portfolio, advisers need to justify fees that can top 1.5 percent.

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This article originally published October 15th, 2014 on Bloomberg News.