Are You Looking Over Your Shoulder at the Robo-Advisor?

RobotAre robo-advisors a threat to the traditional advisor model?
 
It depends. If you’re an advisor running a practice that looks like an old Borders bookstore or an old Blockbuster video store then yes, you should be worried. However, if your practice is more like a Nordstrom department store I think you have nothing to worry about.
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Don’t Be a Pig!

PIG_BLOGSource: Morningstar Direct 2014. Indexes are unmanaged baskets of securities that are not available for direct investment by investors. Index performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. All investments involve risk, including loss of principal. Foreign securities involve additional risks, including foreign currency changes, political risks, foreign taxes, and different methods of accounting and financial reporting. Fixed income investments are subject to interest rate and credit risk.
 
“Bulls make money, bears make money, pigs get slaughtered” is an old Wall Street saying that warns against excessive greed and impatience.
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Looking at Smart Beta Strategies through a 3-Factor Lens

Chart1
For illustrative purposes only. Source: Morningstar Direct
 
The rise in popularity of smart beta investment strategies is no secret. There has been a lot of literature written on the topic and new products launched. What you may not know is that smart beta may not be such a novel idea and that these strategies may just be disguised as portfolios with small cap and value tilts.
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