Robo Advising 101
What options are currently available to someone who wants to invest some of their hard-earned money?
Today’s investors have a number of choices. First, they can open up a discretionary account, where they give their money to a fund manager who makes the decisions for them. They would just have to fill out a form, indicating their objectives and risk tolerance, and would then trust the fund manager to make decisions accordingly.
They could also invest in a ‘pooled fund’ like Gluskin Sheff or Leith Wheeler, or deal with a full-service broker. That’s the standard approach that I grew up with: You open up a brokerage account and either pay the broker a fee or a commission; then they deal with an investment advisor who makes recommendations, which you ratify.
You could also open up a discount-brokerage account, where you make all the decisions and pay a very low commission to the firm. Or, you could go even further down that path and do online trading completely on your own — which is what I do. You basically open up an account with one of the big banks or a firm that offers this option, and you make all of the decisions. In terms of fees, you pay something like $4.99 or $9.99 per trade, so the costs are really low; but you’ve definitely got to know what you’re doing.
Finally, the newest way to invest
