How to make sure you’re investing with the right robo-advisor

You may want to take another look at your robo-advisor to make sure you’re investing with the right platform.

As existing robo-advisors switch up or add new offerings and new entrants come into the market, the choices for where to invest and why are changing.

That comes as Betterment recently announced the addition of a new tool to let investors control how asset classes are weighted in their portfolios.

Wealthfront, a competing platform, recently added its own fund to its investment lineup that aims to mimic a hedge fund’s strategy at a lower cost.

Betterment’s tool, which is also accessible to financial advisors, and Wealthfront’s fund, a move toward active investing, are departures from the strategies those companies started out with, said Grant Easterbrook, a former robo-advice analyst and currently co-founder of Dream Forward.

Those changes come as new entrants — including big names such as Morgan Stanley and Wells Fargo — make their way into the market.

Here’s what you need to keep in mind when deciding which robo-advice platform is right for you.

Because robo-advice platforms largely have evolved during this decade, they have yet to face their first big market event.

February’s market downturn, which marked the first major dip in some time, resulted in slower service or full outages at several investment websites. Those temporary snafus could point to bigger challenges if there is a more significant event.

“There’s a question mark as to how it will all play out,” Easterbrook said.

Your robo-advisor may or may not offer human financial advice with the services it provides.

Vanguard Personal Advisor Services, the investment management giant’s online advice offering, provides access to an advisor for all investors during the onboarding and portfolio construction process. Those who have $500,000 or more invested in the platform continue to work with their advisor.

Those one-on-one conversations can help when you face situations that are more complicated, such as a job loss or planning for how to draw funds for college tuition payments or retirement, said Frank Kolimago, head of Vanguard Personal Advisor Services, which had about $101 billion in assets under advisement as of December.

“The advisor can serve as an emotional circuit breaker to help coach you through a period where you’re feeling a little bit stressed,” Kolimago said.

Wealthfront, another online platform, does not work with human financial advisors saying that its clients, who are mostly in their 30s and 40s, do not want to talk to someone.

The company’s offerings eliminate the advisor as the middleman, and instead let the investor build plans based on their goals — and how they are related to each other — on their own.

“It’s just a very different consumer attitude,” Kate Wauck, head of communications at Wealthfront, said of the self-directed platform which oversees about $10 billion in client assets.

Keep in mind that you may need more guidance depending on the complexity of your personal financial situation.

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“Be honest with yourself about what you need,” Easterbrook said. “For high net worth planning needs, you probably need at least a hybrid.”