Infinex Financial Grouplocated at Jewett City Savings BankTomasz KosekInvestment Executive111 Main StreetJewett City, CT 06351860-376-7149tomkosek@infinexgroup.comwww.jcsbank.com/investments.html

Robo Advisors Have Arrived, ButLife Often Calls for a Human Touch

August 01, 2017

After years of development, numerous robo advisorshave entered the world of investment management.Still, many investors may not fully understand exactlywhat robos do, or how they do it.

A robo advisor is a digital platform that usesadvanced algorithms (based on various financialmodels and assumptions) to select and manageinvestments. To keep costs relatively low, portfoliosare typically composed of exchange-traded funds(ETFs) and mutual funds that track market indexes.The recommended allocations, available strategies,and various other features can differ significantly fromone service to another.

To start the process, the investor fills out a standardonline questionnaire designed to determine his or herrisk tolerance and investment objectives. Thesoftware builds a portfolio with a mix of assets thatalign with the client's stated short- and long-termfinancial goals, such as saving for a home purchase,a child's college expenses, or retirement.

Robo advisors may be programmed to automaticallyplace trades, generate reports, rebalance portfolios,and perform other asset management tasks. Somehybrid services allow clients to periodically consultwith a human advisor.

This kind of cutting-edge technology may beespecially appealing to younger investors, who aremore comfortable with managing their lives onelectronic devices — and who may not have as muchat stake. Robos typically have low account minimums,which may help investors with minimal assets to getstarted.

However, some risks may not be fully understood.Robo advisors have yet to be tested by an economicdownturn or times of extreme market volatility, whenpanicked and/or inexperienced investors may bemore likely to abandon their investment strategieswithout a familiar voice to guide them through thestorm.

A financial advisor can provide personalized,face-to-face guidance to clients as they accumulatewealth and their needs become more complex. To putit simply, there are still some critical things that peoplecan do better than computers.

1. Get to know their clientsThe true value of a financial advisor may lie inemotional intelligence and interaction. When personalrelationships are formed, advisors gain insight intoeach client's unique financial picture, including theirpriorities, pressing concerns, and psychologicaltendencies.

When challenges arise, a financial advisor can step into help clients overcome impulses and biases thatcould prevent them from achieving their objectives.

A robo advisor may not ask the right questions orgather enough information to accurately assess theinvestor's needs and appetite for risk. In fact, aninvestor's psychological risk tolerance can be difficultto assess. Some people who describe theirpersonality a certain way on a questionnaire may actdifferently under real-life conditions.

2. Offer more choices andcomprehensive serviceRobo advisors can manage investment assets forless than the fees normally charged by personalfinancial advisors. But robo services are typicallylimited to portfolio management, and their reliance onETFs and mutual funds means that investors may nothave access to individual stocks and bonds, or tosome types of alternative investments and strategies.A financial advisor typically has a wider range ofasset classes to choose from and may be able tobuild a broader investment portfolio — or a morefocused one — depending on the client's goals and riskprofile.

To put it simply, thereare still some criticalthings that people can dobetter than computers.

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Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2017

Investment and insurance products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA/SIPC. Infinex and the bankare not affiliated. Products and services made available through Infinex are not insured by the FDIC or any other agency of the United Statesand are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk,including the possible loss of value.

NOT FDIC-INSURED. NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY. NOT GUARANTEED BY THE BANK. MAY GO DOWN INVALUE.

Some financial advisors may utilize a digital platformfor investment management purposes. Even so, afull-service practice can help meet additional financialneeds and provide customized advice that is muchwider in scope. Recommendations might incorporatedebt management, insurance protection, collegefunding, gifting, tax strategies, wealth transfer, SocialSecurity claiming options, and retirement incomeplanning.

3. Provide accountability andperspectiveWhat happens when an investor veers off track and isnot making sufficient progress toward his or herstated financial goals? While it may be easy to ignorethe recommendations of a robo advisor, it might bemore difficult to disregard a trusted advisor. Theprospect of regular checkups with a real person whocares about a client's future might inspire morerealistic decisions about spending and saving.

A financial advisor typically can keep clients betterinformed by discussing the financial issues thatmatter to them, which may help give them moreconfidence in their decisions.

Finally, one strength of a financial advisor is the abilityto listen and lend emotional support through life'stransitions, some of which may call for a shift infinancial strategies. Having a dedicated person to callin difficult times could help ensure that short-termissues don't derail an effective long-term strategy.

Of course, there is no assurance that working with afinancial advisor will improve investment results. Allinvesting involves risk, including the potential loss ofprincipal, and there is no guarantee that anyinvestment strategy will be successful.

As with any investment account, investors who use arobo advisor should understand the specific servicesthat may or may not be included (such as rebalancingand tax-loss harvesting) and how and when theseservices will be performed. Investors should also beaware of all costs associated with the services(including third parties).

Mutual funds and ETFs are sold by prospectus.Please consider the investment objectives, risks,charges, and expenses carefully before investing.The prospectus, which contains this and otherinformation about the investment company, can beobtained from your financial professional. Be sure toread the prospectus carefully before deciding whetherto invest.

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