Dale Jackson

Personal Finance Columnist, Payback Time

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Saving for retirement can be a catch-22 – especially if you’re starting from scratch, or near scratch.

You need to diversify to keep from slipping backward but it’s hard to diversify without professional guidance.

Professional guidance costs money… money that can help you save for retirement.

That’s where so-called “robo-advisors” come in. For a fraction of the cost of a mutual fund advisor, clients can get online advice from a machine.

There are just over 10 major robo-advisor services. What they offer varies and is evolving, but here are the basics:

• Investors fill out a questionnaire that gathers information about their investment goals, when they want to retire and their tolerance for risk.
• The computer system analyzes the information and recommends a model portfolio of exchange-traded funds. ETFs are the initial investments offered, but more products may be available as the service develops.
• Customer support is provided through live chat, email and telephone.
• But it’s the fees that give robo advisors the greatest appeal. They vary from service to service and often decrease as your savings grow, but are usually less than half a per cent of assets invested each year. Some offer a flat monthly price.

On the downside, robo advisors don’t give you the personal connection of flesh-and-blood advisors who come to know their clients over the years. It might be wise to consider a robo advisor a temporary measure until you can build your savings.