5 Financial Moves You Can Make If You’re Using a Robo Advisor, According to Financial Experts

Robo-advisors are revolutionizing investing by offering automated, algorithm-driven financial planning services with minimal human intervention. Using a robo-advisor like Wealthfront or Betterment can save you money compared to hiring a wealth management firm. However, your approach should still have some practical aspects.

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Below, three financial experts weigh in on the money moves they’d recommend for people using a robo-advisor.

1. Set financial goals

The foundation of a successful investment strategy is a clear set of financial goals. Whether you’re saving for a down payment on a home or planning for retirement, it’s important to have specific goals that will guide your investment decisions. Goal setting cannot be left to software.

Robo-advisors typically offer goal-setting tools that help you visualize your financial goals and track your progress. Use these features to align your portfolio with your aspirations. By setting more precise goals, you can help the robo-advisor better tailor your investment plan.

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2. Optimize your taxes

Everyone wants to pay less in taxes, and you can use a robo-advisor to maximize your tax efficiency. “Tax loss harvesting can help you offset gains and reduce your taxable income,” said Kelan Kline, financial expert and owner of The Savvy Para. “This allows you to earn greater returns on your investment, benefiting you in the long run.”

Many robo-advisors offer tax-loss harvesting features that automatically sell losing investments to reduce your tax liability. Tax loss harvesting can be especially beneficial for tax purposes because it helps minimize capital gains taxes.

3. Adjust your risk tolerance

Your risk tolerance is central to your investment strategy and may change over time. According to Charles Schwab, risk tolerance is your willingness and ability to deal with market volatility and potential losses. As your financial situation and goals evolve, your risk tolerance may change.

Chunyang Shen, financial expert and founder of Jarsy Inc., noted, “You need to evaluate and rebalance your risk tolerance whenever you go through a major life change, such as changing jobs or retiring.” For example, a young professional with a new, higher income and a longer investment horizon may be comfortable with a higher level of risk, while someone approaching retirement may prefer a more conservative approach.

Robo-advisors typically offer risk assessment questionnaires to help determine your risk tolerance. Take advantage of these tools and adjust your portfolio whenever major changes occur in your life.

4. Review your portfolio regularly

Although robo-advisors offer automated portfolio management, it is still important to review your investments regularly. Financial markets are dynamic and your personal circumstances may change over time. Regular portfolio reviews help ensure that your investment strategy aligns with your goals and risk tolerance.

Be sure to review your portfolio at least once a year. During these reviews, evaluate your portfolio’s performance, asset allocation, and any changes to your financial goals. Robo-advisors often provide detailed performance reports and information about your portfolio composition. Use these tools to stay informed and make changes as needed.

5. Consider consulting a human consultant

While robo-advisors can automate investing at a relatively low cost, it also makes sense to involve a human advisor in your financial planning. “The question you need to ask yourself is whether the benefits of automation outweigh the luxury of human interaction,” advised Raquel Curtis, author and financial expert at The Boujee Banker. “I have found that many people benefit more from having a human rather than a machine in charge of their financial goals.”

You may also need more personal advice in complex financial situations, including estate planning, high net worth, or major life changes. Consider a hybrid approach that combines the efficiency of a robo-advisor with the personalized guidance of a human advisor. For an additional fee, many robo-advisors offer human advice for a more complete financial planning experience.

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This article originally appeared on GOBankingRates.com: 5 Financial Moves to Take If You’re Using a Robo-Advisor, According to Financial Experts