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Can a robot do a better job than your investment adviser? The question has to be asked now that there are some eight online advisers – more commonly known as robo-advisers in Canada – with another set to start up this fall. Online advisers build portfolios for clients and monitor them closely on an ongoing basis. The cost to investors isn't as cheap as doing it yourself through an online broker, but it can be a lot less expensive than having a traditional investment adviser. Here are four things to consider if you're wondering whether they're a better option than your current adviser.

1.) Am I getting financial planning? Some online advisers can produce a financial plan for you, but the majority are strictly in the business of building and managing portfolios on an ongoing basis. Has your human adviser interviewed you about your financial goals and produced a plan to realize them? This plan represents value that an online adviser likely won't provide and it justifies the higher fees you pay when you get the human touch.

2.) Is my adviser monitoring my portfolio on an ongoing basis? One of the key services provided by online advisers is rebalancing, which means bringing your mix of stocks and bonds back into line if it has strayed beyond the ideal guidelines for a person with your risk tolerance. If you don't hear from your adviser from one year to the next and your portfolio has been drifting, then an online adviser could be an improvement.

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3.) Does my adviser strive to keep costs low? Online advisers typically build portfolios with low-cost exchange-traded funds, then add an advice fee and, in a few cases, trading commissions when you buy and sell ETFs. Many advisers use comparatively high cost mutual funds for client portfolios. Some mutual funds justify those higher costs with their returns, but many do not.

4.) Is my portfolio simple, sensible and comprehensible? Online advisers typically use seven or so ETFs to build portfolios, and they generally stick to basic categories like bonds and Canadian, U.S. and international stocks. If a traditional adviser has built you a portfolio stocked with dozens of different funds that overlap each other, then a robo adviser could offer a more sound approach.

Need an introduction to online advice? Consult The Globe and Mail Guide to Online Advisers.

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