Robo-advisor VS. Financial Advisor: Which Should You Choose?

Managing your investments can be a tedious task, especially when the market is feeling extremely volatile or you’re approaching a major milestone like retirement and are afraid of making a misstep. Luckily, however, you have several options to help you on your investing journey.

Financial advisors have always been an important asset for wealth management, but robo-advisors have gained popularity over the years for their convenient and cost-effective approach to managing your investments. Before you decide which path to take to manage these assets, there are a few things to consider about each option.

It’s important to note that a financial advisor can be more helpful to your overall financial health, as robo-advisors are only meant to make investment recommendations, while financial advisors offer a more holistic approach to managing your money. Advisors can provide recommendations on more than just investments, including budgeting, spending, major life events, and more.

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What is the difference between a robo advisor and a financial advisor?

Essentially, robo-advisors are software platforms that invest on your behalf. A robo advisor’s job is to create an investment portfolio for you and then manage it over time so you don’t have to. When using a robo-advisor, you will typically be asked a few questions that include your age, investment goals, investment time horizon, and overall risk appetite.

The robo-advisor then uses this information to decide how to allocate your wealth — for example, whether you should hold riskier assets or mostly conservative assets. As market conditions change or you invest more money, the robo-advisor will automatically adjust your portfolio to meet your goals. This process is called rebalancing.

A financial advisor, on the other hand, is a person who assists clients with specific, immediate financial matters – like your investments or your estate planning. You can work with a financial advisor just a few times or decide to have a lasting relationship with them. Generally, you would meet with your financial adviser at their office, but if they are not there, you would have phone calls or virtual meetings with them instead.

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Cost of a robo advisor vs. cost of a financial advisor

Pros and cons of using a robo advisor

When you sign up to use a robo advisor such as Wealthfront or Betterment, you’ll be asked a few questions about your financial goals, investment horizon, and risk tolerance. Over time, your risk tolerance and goals may change, which means you may need to make some adjustments to the assets you invest in.

This is where robo advisors can really shine. They have the ability to automatically rebalance your portfolio for you, so you don’t have to manually change asset allocations — or spend time going back and forth with someone to figure out the best way to do it.

At the same time, however, it’s important to remember that a robo-advisor may have a limited view of your financial standing as they don’t know how your other assets, debt, or other investments come into play. Also, a robo advisor may not help you strategize to invest more money to reach your goals faster.

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While some robo-advisor platforms allow you to connect all of your financial accounts, personalized advice that addresses the nuances of your situation may still be necessary to help you achieve your goals.

Select ranked the best robo-advisors based on factors such as account minimums, fees, choice of investments, and types of accounts offered (ie, IRAs and/or taxable brokerage fees). Here are some of our top picks:


On Betterment’s secure website

  • Minimum Deposit and Balance

    Minimum deposit and balance requirements may vary depending on the investment vehicle chosen. For Betterment Digital Investing, minimum balance of $0; Premium Investing requires a minimum balance of $100,000

  • fees

    Fees may vary depending on the investment vehicle chosen. For Betterment Digital Investing, 0.25% of your fund balance as an annual account fee; Premium Investing has an annual fee of 0.40%

  • bonus

    Up to one year of free administration service with a qualifying deposit within 45 days of signup. Applicable to new individual investment accounts with Betterment LLC only

  • investment vehicle

  • investment opportunities

    Stocks, bonds, ETFs and cash

  • educational resources

    Betterment RetireGuide™ helps users with retirement planning

wealth front

On Wealthfront’s secure website

  • Minimum Deposit and Balance

    Minimum deposit and balance requirements may vary depending on the investment vehicle chosen. $500 minimum deposit for investment accounts

  • fees

    Fees may vary depending on the investment vehicle chosen. No account, transfer, trading or commission fees (fund quotas may apply). Wealthfront’s Annual Management Advisory Fee is 0.25% of your account balance

  • bonus

  • investment vehicle

  • investment opportunities

    Stocks, bonds, ETFs and cash. Other asset classes in your portfolio include real estate, natural resources, and dividend stocks

  • educational resources

    Offers free financial planning for college planning, retirement, and home buying


  • Minimum Deposit and Balance

    No minimum deposit to start investing and no minimum account balance for Ellevest Membership Advisory Service; However, there are portfolio-specific minimum amounts (from $1 to around $240).

  • fees

    Fees may vary depending on the investment vehicle chosen. Ellevest Essential membership costs $1/month (or $12/year), Ellevest Plus costs $5/month (or $54/year), and Ellevest Executive costs $9/month (or $97/year); Fund fees range from 0.05% to 0.10% for all Ellevest Core portfolios and from 0.13% to 0.19% for all Ellevest Impact portfolios

  • bonus

    Use code GOFORGOLD to get $20 when you become a member and start investing (offer expires on EOD August 13, 2021).

  • investment vehicle

  • investment opportunities

    Stocks, Bonds, ETFs, ESG, Mutual, Alternative and Impact Funds

  • educational resources

    Online workshops, email courses and video resources

Pros and cons of using a financial advisor

Unlike robo-advisors, financial advisors have the ability to look at all aspects of your financial life to make appropriate recommendations and next steps. Your financial life is interconnected, so your debt, your budget, Spending habits and other financial commitments (like caring for elderly parents or paying your child’s college tuition) can all affect how much you can invest and how long it might take to reach your investment goals. Robo advisors do not take these factors into account.

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That’s why it’s valuable to have someone to help you work out possible next steps. Of course, financial advisors also take into account factors such as your time horizon and risk tolerance when making investment recommendations.

Because financial advisors cannot automatically rebalance your portfolio like a robo-advisor can, you must spend the time discussing any adjustments with your advisor so that they can manually make changes to your portfolio. That’s not too bad though, as it gives you a chance to try and understand some of the changes that were made.

bottom line

Robo-advisors offer the convenience of an automated investment management strategy at a lower cost. However, if you prefer more human interaction and need recommendations based on a more nuanced view of your overall financial picture, a financial advisor could be the way to go. In any case, check the fee structure before agreeing to the services.

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Editorial note: Any opinion, analysis, review, or recommendation expressed in this article is solely that of Select’s editors and has not been reviewed, approved, or otherwise endorsed by any third party.

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