
Ask HN: Who invests with a Robo-advisor and what is your experience? - bnchrch
I&#x27;ve been eyeing up using a service like Betterment or Wealth Simple for a few months but I don&#x27;t know anyone who has used it.<p>I wanted to know if anyone here has had experience with it? what your thoughts were and what kind of a risk profile you set it up for?
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troydavis
About 2 years ago, I tested Wealthfront as well as ETrade's roboadvisor
([https://us.etrade.com/what-we-offer/our-accounts/core-
portfo...](https://us.etrade.com/what-we-offer/our-accounts/core-portfolios)),
mostly to see their UX. ETrade did a much better job of exposing the predicted
99th percentile VaR and predicted peak-to-trough drop (though, understandably,
I don't think it used either phrase).

Basically, "Can you handle a 30% drop and not lose sleep (and certainly not
consider liquidating)? 40%? 20%?"

For most investors, 99% VaR, peak-to-trough, and maybe 95% VaR will lead to a
more accurate risk tolerance than their self-assessment of risk tolerance
(low, medium, etc), desired returns/goal (the cute graph of possible asset
trajectories), or tolerance for volatility in an average year. Their failure
case is experiencing a big drop and reactively selling, all because they took
too much risk. This is also true of investors who work with human advisors
([https://www.vanguard.com/pdf/ISGQVAA.pdf](https://www.vanguard.com/pdf/ISGQVAA.pdf)
pages 4 and 16 - "Behavioral Coaching"). A great roboadvisor should clearly
and loudly predict what an awful year (99% and 95% VaR), and an awful multi-
year bear market (peak to trough) looks like.

