Consumer Alert: Is a ‘robo-advisor’ right for your investments?

Would you trust AI to make investments for you? According to a recent study by Fidelity, one in ten investors are doing just that.

This Consumer Alert investigates the growing trend of using artificial intelligence to manage investments.. According to the Fidelity study, one in ten investors are trusting AI-powered “robo-advisors” to make investment decisions for them, with millennials (ages 23 to 38) being twice as likely as older folks to use this technology.

Robo-advisors are digital platforms that use artificial intelligence and machine learning algorithms to automate investment decisions with little or no human supervision. Typically, users answer online questions about their financial situation and goals, and the platform generates an automated investment strategy.

“If your situation is very, very simple, very easy to understand, easy to navigate — you have some money you want to invest or you’re getting started in the game of investing — that may not be a bad place to start,” says Jarrett Felton, founder and managing director of Invessent. “It’s just one step above do it yourself or DIY.”

When considering a robo-advisor, Felton recommends looking at the institution offering the service, including how long they have been offering it, and checking ratings and reviews.

While robo-advisors can be a good option for young investors or those with an uncomplicated financial situation, Felton cautions that as your financial situation evolves — getting married, having kids, receiving an inheritance — you are more likely to need a human advisor.

News10NBC Consumer Investigative Reporter Deanna Dewberry has compiled a list of links to top-rated robo-advisors:

CNBC selections:

Bankrate selections:

Nerdwallet selections:

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