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Financial Wellness

Robo-Advisor: A Good Choice for New Investors?

If you're looking to dip your feet into investing, but aren't sure where or how to begin, a robo-advisor may be a good option for you.

What is a Robo-Advisor?
Robo-advisor is a relatively new digital investment platform that uses complicated computer algorithms to automate and administer investment portfolios.

One reason robo-advisor has become so popular with beginning and younger investors is that the investment minimums are usually lower than other traditional investment products.

How Robo-Advisor Works
Generally speaking, to get started with most robo-advisor 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 account with the brokerage firm, and then you're ready to start investing.

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

Potential Disadvantages of Robo-Advisor
If you're someone that wants a one-on-one relationship with a financial advisor, typically 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.

How We're Different
The robo-advisor platform offered through Tower Wealth Management®—called Guided Wealth Portfolios or GWP—provides the best of both worlds to Tower members: the intelligence of a virtual online portfolio manager combined with the personal assistance and support of a dedicated live Wealth Advisor.

Tower Wealth Management is the financial planning investment management group located at Tower Federal Credit Union, When you first get started with investing, you might need more hands-on assistance, and may prefer a human advisor. With our GWP, you can 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 bot cannot.

Your advisor is just a phone call or e-mail away if you have questions or need advice. Plus, as you get more comfortable with investing, your advisor can help steer you towards sound investment strategies that go beyond an investing algorithm.

Advantages of Guided Wealth Portfolios

Low Investment Minimums. If you are 68 years of age or younger, and have at least $5,000 to invest, you can enroll in GWP.

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.

Learn more about a GWP with Tower Wealth Management.

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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