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The TiVo of financial advice?

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Can a machine replace an advisor? Silly, we know. But Cake Financial, a San Francisco-based company, introduced an automated service that tailors a mutual fund portfolio to match investors’ goals. Walter Mossberg reviewed the service, called Cake Premium, in the Wall Street Journal. And while it probably won’t replace actual advisors any time soon, it does appeal to investors without the time to seek out an advisor of their own.

Cake doesn’t actually conduct any transactions, so investors have to do their own buying and selling if they follow its advice. Users can transfer their account information from any of 65 major investment companies.

Perhaps the largest limitation is that the service looks at mutual funds only, and learns only a small portion of a user’s financial situation.

“Unlike a good investment adviser, Cake Premium learns only a portion of your financial picture, so its mutual-fund recommendations aren’t made in a complete context,” Mossberg writes. Another drawback is that when reallocating mutual funds in a 401(k), Cake isn’t able to suggest alternatives that are already available in the plan.

Ultimately, Cake Premium may be a quick fix for casual investors, but, as Mossberg writes, “its limitations make it an incomplete solution that’s no threat to a really good, honest investment adviser.”