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The worst-branded product in investing might be robo-advisers.

Streaming services aren’t called robo-music, or robo-TV. Spotify and Netflix would have died at birth with those names. Robo-advisers aren’t dying, but it’s hard to argue that they’re thriving at a time of unprecedented mass interest in investing.

The most significant event in the robo-adviser business of the past 24 months is Wealthsimple’s move into zero-commission stock trading with its Wealthsimple Trade app. There’s still a Wealthsimple robo adviser, but it’s now just another tree in the forest of investing products. The other nine or so robo-advisers are there, too.

Hot stock markets have lessened the appeal of robo-advisers, which build and manage a portfolio of low-cost exchange-traded funds for a reasonable fee. Ironically, robos have never been more relevant as a solution to the problems of investors. That’s one of the reasons why I continue to produce an annual Globe and Mail Robo-Adviser Guide, with comparative information on returns, fees and more.

Here are three examples of robo-advisers providing solutions to the problems of investors:

-You know investing will eventually get a lot harder than it is now:

Investors have had a lot of success with stock-picking in the past 18 months, but the markets will eventually become much more difficult to navigate. If you’d like to speculate on stocks with some of your money while also investing prudently, consider a robo for the prudent portion.

-You are completely lost trying to build a portfolio of ETFs: There are more than 1,000 ETFs listed on the Toronto Stock Exchange, with more arriving almost daily. You only need half a dozen ETFs to build a portfolio, or you could go with a portfolio-in-a-box option called the asset allocation ETF. But which funds suit you now, and what about a few years from now? Robos handle all that for you.

-You use or would like to use a fee-for-service financial planner and need some help with the investments that will drive your plan: Part of the branding problem with robo-advisers is that their name promises more than they deliver. You get advice in building and managing a portfolio of ETFs, but that’s it for the most part. Some robos offer additional financial planning, but this isn’t part of the core mandate for robos. Managing investments is. You can work with reality by hiring a fee-for-service planner who charges and hourly or flat rate fee and answers all your questions about retirement, registered retirement savings plans versus tax-free savings accounts, housing affordability, debts and more. As it happens, many fee-for-service planners don’t manage investments. Robos solve that problem.


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