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Is Robo-Advising an Option for Me?

For many, Guided Wealth Portfolios (GWP)—the digital investment platform commonly referred to as “robo-advising”—is a new and exciting way to invest. GWP uses complicated computer algorithms to automate and administer investment portfolios. A big perk of GWP is that investors don’t need to be wealthy to take advantage of GWP. In fact, anyone 68 years or younger and with at least $5,000 to invest can enroll in GWP.

How GWP Works
Generally speaking, to get started with most GWP platforms, you will first need to complete an investor profile questionnaire, including your age, risk tolerance, current savings, and investment history. After you’ve completed the questionnaire, you’ll need to electronically aggregate your existing accounts or transfer cash to fund your investments. There will be a few more steps to finalize your application and open your GWP account with the brokerage, and then you’re ready to start investing.

If the brokerage offers the assistance of a real life, warm blooded financial advisor as part of their GWP service (many don’t!), you’ll receive an onboarding call from the advisor to answer questions you may have and to make sure all of the required documents are on file.

Advantages of GWP
Besides the low investment minimums, there are several other advantages to using the GWP automated platform.

Financial Roadmap. You are unique and so are your goals. GWP provides a personalized financial roadmap based upon your age, financial goals, time horizon, and risk preferences.

Tax-efficient Investing. Using advanced asset analysis, the GWP platform will automatically evaluate the tax implications prior to performing a trade.

Consistent Monitoring. GWP monitors your portfolio daily, ensuring it is on track as markets shift, and automatically re-balancing your portfolio as needed.

Tax-Loss Harvesting. If one of your investments experiences a loss, it may be automatically sold and replaced with similar investments. GWP incorporates tax benefit strategies while maintaining the correct asset allocation in a diversified portfolio.

Lower Fees. GWP typically has lower account management and other advisor-related fees than more traditional types of investment accounts.

Nobel Prize-Winning Algorithms. Many robo-advisor algorithms rely on cutting edge investment portfolio research and Nobel Prize-winning best practices investment theory to drive their models. In general, best practices investment theory strives to create an investment portfolio with the greatest return for the smallest risk.

Expanded Market for Young Investors. Younger investors and those with lower net worth may not have considered professional financial advice, or may be intimidated or turned off by traditionally high brokerage fees. Because of GWP’s easy access, low investment minimum, and lower fee models, the platform is open to a larger pool of potential investors.

Potential Disadvantages of GWP
Typically, if you’re someone that wants a one-on-one relationship with a financial advisor, then most robo-advisors are not for you. Most robo-advisors don’t have an office where you can come and speak directly with someone. This type of face-to-face contact is more typically found with traditional advisory services.

Similarly, most robo-advisors are not going to be there to help explain how investment markets work, or reassure you after a significant market drop. Human financial advisors take into account the bigger picture; they work with you to integrate your finances, taxes and estate plans, and assist you during major life events like retirement, marriage or having children. And if you have money-related issues or concerns, you may benefit better by discussing your financial situation with a live person.

Financial advisors can help steer you to sound investment strategies that go beyond an investing algorithm. Sophisticated investors, or those looking to buy and sell individual stocks, may want a broader investment portfolio with a wider range of assets than the typical GWP offers, and new investors may need more hand-holding, at least in the beginning, and may prefer a human advisor.

Trust. Confidence. Guidance.
What are your short- and long-term financial goals? From your first job to retirement—whatever your age or stage—the experienced Wealth Advisors at Tower Wealth Management® can help you work towards a successful financial future.

Tower Wealth Management is the financial planning and investment management group located at Tower Federal Credit Union, and their services are available exclusively for Tower members.

How our GWP is different. While other digital investing solutions, or robo-advisors, offer online investment management, most don’t include a direct personal relationship with a dedicated Wealth Advisor. The GWP platform offered through Tower Wealth Management combines the intelligence of a virtual online portfolio manager with the personal assistance and support of a dedicated live Wealth Advisor. You’ll enjoy the ease and convenience of a 24/7 online account, with the ability to connect to one of our experienced Wealth Advisors who can provide guidance that a robot cannot. Your advisor is just a phone call or e-mail away if you have questions or need advice. With our GWP, you get the best of both worlds.

Get started today! Learn more about GWP.

Schedule a no-cost, no-obligation appointment with a Wealth Advisor.

Resources: Investopedia, Smartasset, Tower Wealth Management

Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Tower Federal Credit Union and Tower Wealth Management are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using Tower Wealth Management, and may also be employees of Tower Federal Credit Union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Tower Federal Credit Union or Tower Wealth Management. Securities and insurance offered through LPL or its affiliates are:

Not Insured by NCUA or Any Other Government Agency Not Credit Union Guaranteed Not Credit Union Deposits or Obligations May Lose Value

Your Credit Union (“Financial Institution”) provides referrals to financial professionals of LPL Financial LLC (“LPL”) pursuant to an agreement that allows LPL to pay the Financial Institution for these referrals. This creates an incentive for the Financial Institution to make these referrals, resulting in a conflict of interest. The Financial Institution is not a current client of LPL for brokerage or advisory services.
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Guided Wealth Portfolios (GWP) is a centrally managed, algorithm-based, investment program sponsored by LPL Financial LLC (LPL). GWP uses proprietary, automated, computer algorithms of FutureAdvisor to generate investment recommendations based upon model portfolios constructed by LPL. FutureAdvisor and LPL are non-affiliated entities. If you are receiving advisory services in GWP from a separately registered investment advisor firm other than LP or FutureAdvisor, LPL and FutureAdvisor are not affiliates of such advisor. Both LPL and FutureAdvisor are investment advisors registered with the U.S. Securities and Exchange Commission, and LPL is also a Member FINRA/SIPC.

All investing involves risk including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

References to tax strategies that the GWP service investment management considers in managing accounts should not be confused with tax advice. Clients should consult with their personal tax advisors regarding the tax consequences of investing.

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