Holland Column

Retirement & Financial Planning

Holland Financial

Have You Ever Told a Computer How You Really Feel?

Technology is everywhere! Computers now do so much of the work formerly done by people. In the world of finance, there are even "robo-advisers" - computer programs that take human advisers out of the investing equation. Robos make financial, or even Social Security timeline, recommendations based on general information that is plugged into their software programs. What many people fail to realize is that robo-advice is based on mathematical formulas and rules written by humans. This means the recommendations can be subject to error or to the prejudices of the individuals who wrote the programs.

There is little doubt, technology is an invaluable tool. Every day, Holland Financial uses computers to perform certain tasks and analyses. Software can also help build a portfolio, but our advisers would never tell a computer to "go ahead and manage John Doe's portfolio'.' In our opinion, that is a job that requires human judgment. Computers can "crunch the numbers;' but it's a team of trained professionals who determine how to manage investments.

To date, there are no programs that can factor in ALL the details that should be considered when making financial decisions. As mentioned, above, there is software available for establishing optimal timelines for taking Social Security benefits. But, the software can't factor in: 1. The longevity of your siblings, parents and grandparents. 2. Your current health and outlook on your future health and well-being. And, 3. Your view on Social Security, and whether you believe it will still be a viable federal program 10, 15 or 20 years from now.

Also, a robo can't evaluate all the financial products in the marketplace and how they might be used to benefit your particular situation. Let's use Social Security for an example, again. A good financial adviser can weave together stocks, mutual funds, bonds, annuities, a reverse mortgage loan, cash, etc., to help determine the ideal time to take Social Security. A computer can't do that. Maybe, eventually ... but not in 2019.

In conclusion, is there a place for specialized computer software in the world of finance? Yes! Can a robo-adviser replace a human adviser? Nope. A computer can't listen to your feelings, concerns and goals, and factor that essential data into its recommendations. People still need people to help make important financial decisions. Maybe the big investment companies are realizing that, as well; some are now offering their robo-platform with an "active management component" - this means a degree of human assistance is also available or being utilized.

Have a financial question you'd like answered here? Email: Questions@PlanStronger.com