Robo-advisors are driving down the fees clients pay for asset management, but what if even 25 basis points is too much? What if clients should not be paying anything at all for it? Will Ortel at Enterprising Investor amplifies the point made by Firefox co-founder Blake Ross in this post, suggesting even firms like Wealthfront are charging too much for investments. “Free investing is the new checking,” Ortel says. “The cost for these services is going to approach and eventually reach zero.” So what’s an advisor to do? Talk about all the other stuff that matters. “What is value here? What’s the point of saving money? Managing someone’s money well should be about maximizing their quality of life. It seems quite reductive to distill that down to the size of their bank account in retirement.” But how much should an advisor charge for helping clients “maximize their quality of life,” even if they can figure out what that means and how to do it? That’s up for debate, but it's a very different gig than most advisors are used to. Is it so far-fetched to suggest that the price tag should not be based on a percentage of assets?
The top long-term investment choice in America is, for the first time in ten years, real estate, according to a BankRate survey of 1,000 investors. More than 1 in 4 respondents listed real estate as their top investment for money they would not need for at least a decade. Cash, which came in second in the 2015 survey, was the top choice for investors in 2013 and 2014. Just 17 percent of respondents listed the stock market as their preferred place to stash money for the long-term, and only 5 percent said they would put their money in bonds.
While some in the financial world are trying to make bitcoin a viable alternative investment, the digital currency still seems to attract trouble. After an FBI and Secret Service investigation, the U.S. attorney in Manhattan filed charges Tuesday against two Florida men for allegedly running an illegal underground bitcoin exchange. Anthony Murgio’s and Yuri Lebedev’s exchange, Coin.mx, allegedly sold $1.8 million worth of bitcoin to people whose computers were victims of “ransomware” attacks, which lockdown a computer until the user pays a ransom - in bitcoin. To evade detection, the Murgio allegedly operated a phony front company to convince financial institutions that they were a members-only sports memorabilia collectors club and operated a New Jersey-based federal credit union that served primarily low-income people.
Comparing the financial services industry to airplanes, Delray Beach, Fla.,-based advisor Jeremy Office makes the case for human advisors to co-exist with automatic investing platforms. "If you want to know how to invest your cash or reallocate your current portfolio, a robo-advisor will run some algorithms like modern portfolio theory, Monte Carlo simulation or a combination of metrics. Mathematics determine how to position your account. Isn’t that just like the airplane? A convenient way to invest," he writes on NerdWallet. But what about estate and retirement planning and complex tax issues? That's where you need a human pilot to "help you take off, navigate through complex and dynamic markets and make sure you land safely."