Consumer Reports: Do robo-financial advisers match up with human counterparts?

NEW YORK (WABC) -- In this era of self-driving cars, what decisions are you comfortable entrusting to a computer? How about financial advice?

New digital platforms can manage your portfolio and charge less than a human financial adviser. Consumer Reports examined whether it is time to make the switch to a robo-adviser.

When Allison Cohen began investing, she opened an account with a robo-adviser, a relatively new breed of online financial advisers that use computer algorithms based on your risk tolerance and timeline to recommend investments for you for a fraction of the cost of a human adviser.

"It didn't feel old or stodgy or conservative," she said. "It felt really on the cutting edge of the future of investing."

Cohen is not alone. Consumer Reports found that robo-advisers have become big business.

"Robo-advisers manage an estimated $53 billion," chief money editor Margo Gilman said. "And that number is expected to grow to between $5 trillion and $7 trillion in the next 10 years."

Some of the players include companies like Wealthfront and Betterment, and asset-management giant Schwab is also getting into the game. But experts at Consumer Reports say going robo requires a fair amount of faith in the technology, especially in a rocky market.

"There's no real track record," Gilman said. "Robo services haven't been around that long and haven't been tested in a true bear market."

Additionally, robos don't account for the human element of advising. A robo-adviser cannot help you prioritize several financial goals, like deciding whether to pay down debt or save more. Nor can it help you navigate tricky financial situations like divorce, saving for college or handling the finances of an aging parent.

Still, for someone like Cohen, a robo-adviser could be the way to go, particularly as a way to jump into the market.

Deciding between a costlier human adviser and a cheaper computer solution depends on a variety of factors, including your financial circumstances, your reaction to risk, and your comfort level with recently developed technology.