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What to Look for in a Digital Advisor

I’ve seen a lot in my 25+ years on Wall Street, believe me. This is what would be important to me in choosing an investments company today:

I’ve seen a lot in my 25+ years on Wall Street. Here’s what I look for today.

An experienced Chief Investment Officer.

While it may be tough to believe, some investments offerings don’t have one. I know, right? It took me a year to find Sylvia Kwan, because I wanted someone with decades of experience at quality firms like Schwab and Financial Engines, who is wicked smart. Sylvia Kwan holds the CFA designation and has a Ph.D. from Stanford University in engineering economic systems. She’s worked with Morningstar to run thousands of simulations and create hundreds of portfolios. That’s no slouch.

An experienced Chief Compliance Officer.

Who’s that? It’s the person who helps keep the company compliant with federal rules regarding the security and protection of your personal information (i.e., the job’s a big deal.) Ellevest, as a registered investment advisor with the Securities and Exchange Commission, must have a Chief Compliance Officer — but there are no requirements on how much experience they must have. It was important for us to have one who likewise has decades of compliance experience.

Strong information and data security.

Security of your financial and personal information is paramount. When you’re investing online, you want to make sure that the company you invest with uses the highest level of SSL encryption (that means that your address bar says “https” and is green) and follows industry best practices. Ellevest uses the strongest encryption available for SSL using 2048-bit keys and SHA-2 for encryption and has an A+ rating from Qualys. You should also make sure that the data you’re giving your investment advisor is kept secure. At Ellevest, we encrypt your data and store it in data centers that meet security best practices.

Bespoke investment portfolios.

The existing offerings (“pick from one of five portfolios”) could really stand to be improved, in my opinion. I wanted much more customized investment portfolios.

More conservative projections.

If you were to compare some of the investment forecasts from other providers, they can be higher than ours. In some cases, “hey-everyone-come-take-a-look-at-this,” higher. We believe it’s because they may have higher market appreciation assumptions, they may not take into account taxes (!), and they may have a tilt toward riskier investment classes within asset categories.

In our opinion: more conservative = better chances of reaching your goals.

Robust (and free) financial plans.

My thinking is: how do you invest well if you don’t plan well? Research that says that merely articulating a goal increases your chances of achieving it. Actually planning for it has got to take that up even more. (And then investing for it? Then there’s likely no stopping you.)

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