What is a Smart Money Manager?

What is a Smart Money Manager?

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Using a smart money manager sounds like a good idea. After all, everyone wants to be smart with their money.

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While this is an idea to consider, as smart money managers are picking up steam with each passing year, you don’t want to go down this path until you’re 100 percent sure that it’s the right decision for you and your money (as well as your future).

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Let’s start out by touching on the basics. Generally speaking, a smart money manager is a robo-advisor.

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What does that mean? It’s pretty much what it sounds like. It allows you to invest your money, with little to no human intervention or interaction. Instead, your money is invested and managed based on algorithms and/or rules set by the advisor.

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The Benefits of Using a Robo-advisor

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Many people would love to work with a traditional financial advisor, but soon come to find that it’s cost-prohibitive. They’re not willing to pay a large fee in exchange for professional management.

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And for that reason, robo-advisors are more popular than ever before. With these, you can expect to pay anywhere between 0.2% and 0.5% of your total account balance. An annual flat fee makes it much easier to manage this expense.

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Another benefit of a robo-advisor is the low entry fee.

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Did you know that it typically takes $100,000 or more to get started with a traditional advisor? For many people, that eliminates this possibility.

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But with a robo-advisor, a $5,000 starting balance is the standard minimum requirement. Even if you don’t have that much money to invest right now, it’s much easier to hit this number at some point in the near future.

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Efficiency is another reason to learn more about robo-advisors. Take for example a situation in which you want to buy or sell a stock. Rather than contact your advisor, you can complete everything online in a fast and efficient manner. Not only does this save you time, but it allows you to feel like you’re a bigger part of the process.

There’s one last thing to think about: peace of mind.

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There’s no way to guarantee that your investments will pay off over the long run, but that’s the goal of a robo-advisor. The best ones have a long track record of success, which puts your mind at ease as you get started.

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What About the Downfalls of Using a Robo-advisor?

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A lack of human interaction is both a positive and negative when using a robo-advisor.

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It’s nice to have someone managing your investments, without the need to stay in communication with them.

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Conversely, with limited communication, you may feel that you don’t always have a beat on what’s happening with your money. That’s why it’s so important to choose a smart money manager with a streamlined online system.

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Another thing that may have you thinking twice about using a robo-advisor is the way it limits your investment options.

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You don’t have the power to invest in individual stocks or bonds. Also, you don’t have a choice as to which ETFs and/or mutual funds you invest in. Instead, you’re putting your trust in the robo-advisor to do its job.

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The Top Smart Money Managers

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Thanks to advanced technology and the growth of the internet as a whole, it’s easier than ever for smart money managers to obtain clients and keep them satisfied.

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With that in mind, some robo-advisors have a better reputation than others. Some of the top players in the industry include:

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- Betterment

- Wealthfront

- Personal Capital

- Acorns

- Ally Invest

- Blooom

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When it comes to assets under management, Betterment is top dog with $13.5 billion. However, even on the low end of the scale, Acorns has $257 million of assets under management.

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When comparing services, other details to keep in mind include:

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- Feature list

- Fee structure

- Account minimum

- Perks and extras

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For example, Betterment’s fee structure is 0.25% to 0.5% of your account balance. This is in contrast to Acorns, which charges $1/month for accounts under $5,000 and 0.25% of any additional balance.

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To stand out in a crowded industry, every smart money manager has perks and extras to attract customers.

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Maybe you’re a college student looking to get started with investing. In that case, you’ll want to learn more about Acorns as it offers its service up to four years free for college students. That’s just one example of the type of perks that are available.

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Passiv is Another Option

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On the surface, it may appear to you that Passiv is another robo-advisor. However, that’s not the case.

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Here’s what Passiv has to offer:

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Passiv turns your brokerage account into a modern portfolio management tool. Build your own personalized index, invest and rebalance with the click of a button, and seamlessly manage multiple accounts.

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Robo-advisors tell you what to invest in and manage everything on your behalf. But with Passiv, you still have full control. You’ll make your own decisions on how to invest your money. It’s more of a software tool designed for DIY investors who are looking to rebalance their portfolios and bring organization to this part of their financial life.

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Is a Smart Money Manager Right for You?

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Now that you have a clear understanding of what a smart money manager (or robo-advisor) brings to the table, you can consider the potential impact on your finances.

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Compare the pros and cons, determine if a smart money manager can help you reach your financial goals, and then decide what to do next.

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As you go down this path, you should also consider services such as Passiv, as it provides you with all the tools you need to manage your investments, without taking away any of your control.