We're like MythBusters, only for money! Follow along as we figure out the best ways to make money online. We investigate the latest and greatest ways to make money online. Follow along as we put time and resources into robo-advisors, P2P lending, crowdfunding, crypto security tokens and anything else we can find and report on our results.

  • Fiscal Frontiers


Updated: Nov 23, 2018


The Legend of John Henry tells the tale of a steel-driving man who tested his skills against a steam-powered drill. John Henry won his legendary contest, but it cost him his life, which ended with a heart attack, hammer still in hand. In isolation, this is a folktale that deals with the dignity of the human spirit against the cold automation of machines. But in the context of history, it is an apt reminder that machines have always been viewed as a source of anxiety for the gainfully employed. However, even though they may replace workers, they only do so when they are more efficient at the job, and there is almost always a place for humans alongside them, either designing, building, repairing or operating them, even if other jobs are destroyed.

In an earlier post, we touched on the generally sub-par performances of actively managed funds as compared to benchmark indices. So why don’t I just refer to that post and save everyone some time? The sub-par performances are because financial and investment planners are not simply active investment managers. In fact, many of them do not even actively manage investments. Many financial planners are happy to use the same technology as the robo-investors to allocate funds, but they offer things that robots cannot, and each investor should consider their own circumstances before choosing between robot, human or a hybrid approach.


Human advisors do offer advantages over their robotic counterparts

Understanding the Investor

Presently, humans are better than robots at collecting information. The robots are designed with a questionnaire to harvest a broad and general set of information from the widest swath of people possible. Their questions are comprehensive, but shallow.

Humans, on the other hand, are able to go off on tangents and explore areas more deeply. Inherent in this, humans are able to help people understand the questions and their answers to those questions. For example, a human may be super keen to start saving for retirement, and may tell a robot that they want to plan long-term (which generally tells robots to invest in growth assets with higher risk, i.e. short term volatility); however, when speaking with a human, it may be uncovered that the person has not built up a sufficient “rainy day fund”, for emergencies, and that the person might like the security that provides first, before investing for retirement. If this is the case, then having assets invested in long-term, more volatile, growth assets may not be best immediately.

Planning for Life

When it comes to robo-advisors, they make an opening set of assumptions, invest funds, and then run on auto-pilot. Robo-advisors do not book routine consultations to ensure that the starting assumptions continue to be accurate and relevant. The onus is entirely on the investor to log on to their account and change their information.

Understanding your Investments

Investing is inherently a complex endeavour. While robo-investors generally invest in ETFs and do not engage in aggressive and complex transactions, the robot investors currently undertake no efforts to help you understand what has happened to your investments or, perhaps most importantly, any tax consequences that may have arisen. In fact, one of the biggest failings of relying solely on robots to do your investing is the knowledge gap that the investor needs to fill by themselves.

Rich Dad Poor Dad, one of the darlings of the self-help finance world, advocates strongly that financial literacy and financial education are the keys to financial independence. This is something we strongly agree with at Fiscal Frontiers and is one of the motivators for this blog. Robots, though, do not help to educate their investors. The onus is on the investor to keep tabs on their portfolio and learn what is being invested in and how those assets are doing. Human financial planners - at least the good ones - will take the time to ensure that you understand your investments, why they did good or bad, and why you are invested in certain things (or not invested in certain things).


The lure of low fees is strong, but a bit of caution should be exercised before handing your money over to a robot. While each investor’s situation is unique, investors who have assets managed 100% by robots (as in, not with a hybrid program) should do these three things (though they may not be the only things)i:

Having a robot invest your money should never be a 100% hands-off experience
  1. Know their own preferences, goals and financial position, as a robot questionnaire may not be sophisticated enough to properly suss them out;

  2. Undertake routine reviews of the assumptions on which the robot is relying, and update them as situations change throughout their life; and

  3. Educate themselves on the assets that the robots are investing in on their behalf and also, ideally, the assets that are not being invested in on their behalf.

Join us next week as we focus in on the history of robo-advisors in Canada.



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