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Robo-advisers are an overlooked solution to your investing problems.

In a new video, I suggest rob-advisers as the answer for people who want to build low-cost portfolios of ETFs but are staggered by the choices and details they must contend with. Robo-advisers also came to mind when a reader recently asked how to find an investment adviser who is trustworthy. "One hears so many horror stories of [advisers] pushing products that may not be best for the client, but give them hefty commissions," this person writes. "I no longer trust the field and would rather put my money under my mattress sometimes."

There are plenty of trustworthy investment advisers out there, but let's consider a robo firm as the answer to this person's needs. Robo-advisers have been around for a few years in the Canadian market, but they're still unfamiliar to most investors. For a modest fee in the area of 0.5 per cent, a robo-adviser will design an ETF portfolio for a client and then manage it on an ongoing basis. The fee is clearly disclosed on robo adviser websites and it's transparently charged on a monthly or quarterly basis. You'll see the dollar amount deducted for fees clearly when you look at your account online.

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Clients of robo-advisers also pay fees to own the ETFs in their portfolio. These fees are taken off the top of ETF returns by the investment firms that manage these securities, so investors never see a charge (returns are reported on an after-fee basis). Can you trust your robo-adviser to use the lowest-cost ETFs?

The answer is yes. In the latest Globe and Mail Robo-Adviser Guide, you'll find the aggregate management expense ratio for ETF portfolios at 14 different firms. Most firms are in the 0.2 per cent range, which is great. Advice and ETF fees together would add up to about 0.7 per cent, which compares to an estimated 2 per cent for a portfolio of mutual funds bought through an adviser.

Robo-advisers are trustworthy, but they have limitations. While you can speak to people at your robo-firm by phone, you're unlikely to have a dedicated representative who knows you and will talk you through traumas like a stock market crash. Also, robo-advisers are for the most part about managing investments. They don't typically provide financial planning that, for example, determines if you're saving enough for retirement.

If you use a robo-adviser and want a financial plan, try consulting a fee-for-service planner who charges an hourly or flat rate. Another good option for investors who have trust issues with advisers.

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