Robo-advisors comprise a hot trend in financial planning right now, but the discussion tends to center around young people like Millennials, those tech-savvy 30- and 20-somethings. With robos' lower costs and tech-focused nature, it’s not surprising that firms are using these services as a potential lure for young investors. That said, robo-advisors can be useful and profitable for anyone, even those with end-of-working-life needs. 

Why Go Robo

Before you decide to make the switch away from traditional advising, you should figure out if you’re the type of person who would benefit from using a robo-advisor.

Robo-advisors can diminish the emotional aspect of investing, but that's not always a good thing. Some retirees need a trusted financial advisor—a human—to explain how they can reach their goals whether that means paying off a mortgage, estate planning or creating a life estate. Not everyone is numbers driven, and there’s nothing wrong with feeling more comfortable in the hands of a real person.

If your financial situation has changed recently, the need for a personal advisor might be even greater. Going through a divorce, moving across the country or losing a spouse might require more extensive-planning than a robo-advisor can provide. Plus, a financial advisor can soothe and empathize with investors when the market crashes or their house value goes down. 

Top Robo-Picks for Retirees

That said, robo-advisors can be a fantastic choice for retirees that need to save money, don’t like dealing with people, or have a tech-savvy mindset. Here are a few well-regarded services: 

  • Schwab Intelligent Portfolios: This robo-advisor’s clients are 50% likely to be older, which means the service is marketing itself toward Baby Boomers and other retirees. Since many of us associate robo-advisors with Millennials, finding a senior-focused service is key in ensuring that your demographic was a serious consideration when the robo was being developed. Clients are also able to talk to advisors when they need help; however, there’s no guarantee you'll speak with the same advisor every time.
  • Wealthfront: For retirees concerned about paying lots of money for robo-advisors, Wealthfront is a good choice. For assets less than $10,000, Wealthfront charges no fees and only 0.25% for more than $10,000. Wealthfront also offers tax-loss harvesting advice for clients with assets of $100,000 or more, which can optimize your portfolio so you don’t lose money due to taxes. The site claims this can add up to 2% in returns.
  • Betterment: For retirees who don’t want to move current investments into a new robo-advisor account, Betterment doesn't require a minimum to open an account and fees decrease as assets increase. The average expense hovers around 0.14% with management fees ranging from 0.15% to 0.35%.

    For the Kids and Grandkids

    • FutureAdvisor: This service is currently unable to tell retirees when they need to take required minimum distributions (RMDs) and other withdrawals to avoid penalties. That means seniors need to stay vigilant on their own or find a robo-advisor that will notify them of RMDs.
    • WiseBanyan: This small robo-advisor is geared toward Millennials with low account balances. Tax-loss harvesting is only offered as an additional service, and WiseBanyan currently only manages $30 million in assets—a trifle compared to other companies.

    The Bottom Line

    Like most new innovations, robo-advisors aren't just for the young. However, that doesn’t stop them from being confusing and somewhat scary for older investors who spent their entire financial lives trusting in a human advisor. Retirees with a curiosity in technology, a willingness to learn and a penchant for frugality may find robo-advisory services cheaper and more transparent than traditional financial planning.