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Robo advisors vs financial advisors

Automated advisors are a key player in financial portfolios — but are machines better than people?

Robo advisor vs. financial advisor: What’s the difference?

The main difference between robo-advisors and financial advisors is that the first is a fully automated computer algorithm that trades and balances your portfolio on your behalf, while the latter is a person who helps you organize your finances from investments to retirement and children’s education plans.

Robo-advisors cost less than financial advisors, mostly because they’re automated and can perform only one task: to automate investment strategies. All you have to do is set up specific parameters, such as your financial goals and risk, and the algorithm will allocate your funds accordingly.

Financial advisors, on the other hand, can provide tailored financial plans for your situation. On top of investment advice, they can provide services such as debt management, budgeting, tax management and estate planning.

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  • Access to thousands of advisors
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Benefits and drawbacks of robo-advisors

  • Minimal human error. Forget panic selling or impulse buying — robo-advisors lack messy human emotions that could interfere with long-term financial growth.
  • Lower fees. The cost of an automated advisor is less than what you’d pay for a human one.
  • No awkwardness. If you’ve ever been in the uncomfortable situation of not getting along with your financial advisor, you’ll appreciate this benefit.
  • Automated advisors can’t get to know you. Even the most sophisticated computer algorithm can’t sit down with you and explain things to you.
  • Robo-advisors can’t handle complex portfolios. These advisors aren’t best for large, complicated portfolios. The rule of thumb is that assets of six figures or more need the human touch.

Benefits and drawbacks of financial advisors

  • Advice beyond investment. Financial advisors can help you with your debt management, budgeting, spending habits and other financial responsibilities.
  • Can save you time and money. If you’re unfamiliar with some aspects of investing or tax management, hiring the right advisor can save you time and money.
  • Create a strategy. Financial advisors can help you create a long-term financial strategy for your retirement or children’s education plans.
  • Cost. Most advisors charge a fee equal to a percentage of your portfolio each year, typically up to 1%. Some advisors, though, charge a flat fee between $2,000 and $7,500 annually for portfolio management. Consultations typically cost a flat fee per hour.
  • Can’t automatically rebalance your portfolio. Financial advisors require time and discussions to manually adjust your portfolio.

Robo-advisor vs. financial advisor: fees

Fees for using a robo-advisor or human advisor vary based on the company you go with — and even vary among human advisors.
Top-level private advisors, for example, tend to charge a lot more than beginning or standard firm advisors. Some companies charge fees that reflect a percentage of your assets, while others may impose an annual or initial investment fee.
Still, robo-advisors are typically more affordable than human advisors. Here’s what you’ll pay for automated advisors through big-name providers.

Options or portfoliosMinimum investmentAnnual percentage or fee
Includes a personal human advisor for the best of both worlds
$50,000
0.30%
Investor ratio
$0
0%
Add-on human advisor option
$10
0.25%
Advanced Indexing for accounts of $500,000+
$500
0.25%
Assets management human advisor
Human management
$0
1.25% to 1.75%
Fee-only human advisor
Human management
Varies
$1,000 to $5,000

Robo-advisor vs. financial advisor: Which one should I choose?

Robo-advisors work well for basic portfolios that aren’t overly complex. They are also helpful if you’re on a budget, typically offering lower fees than human advising services.
But if you have a sizable investment, complex investment goals or simply prefer to do business face to face, a human advisor might be a better fit. Financial advisors are more flexible and adaptive than robo-advisors, and they can help you with various financial goals. So if your long-term financial goals extend beyond a diversified portfolio, consider a human advisor. Your portfolio’s size should also factor into this decision: If you’ve got assets of six figures or more, a human may be your better bet.
That said, there are situations in which using both a robo- and human advisor may be advantageous. As your portfolio grows, so will your goals. Hedging your bets and splitting your investments between an algorithm-driven service and a human advisor could help diversify your interests.

Compare robo-advisors

1 - 7 of 7
Product USFST Finder Score Annual fee Minimum deposit Signup bonus
Wealthfront logo
Finder score
0.25%
$500
Get $50
Frec logo
Finder score
0.1%
$20,000
N/A
Titan logo
Finder score
$25 per month
$500
N/A
Interactive Advisors
Interactive Brokers logo
Finder score
0.1%
$100
N/A
SoFi Wealth Management logo
Finder score
0.25%
$0
N/A
Acorns logo
Finder score
$3 per month
$0
Get a $20 bonus
Stash Investments LLC logo
Finder score
$3 per month
$0
Get $10 when you sign up and deposit $5
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What is the Finder Score?

The Finder Score crunches 147 key metrics we collected directly from 18+ brokers and assessed each provider’s performance based on nine different categories, weighing each metric based on the expertise and insights of Finder’s investment experts. We then scored and ranked each provider to determine the best brokerage accounts.

We update our best picks as products change, disappear or emerge in the market. We also regularly review and revise our selections to ensure our best provider lists reflect the most competitive available.

Read the full Finder Score breakdown

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Finder is not an advisor or brokerage service. Information on this page is for educational purposes only and not a recommendation to invest with any one company, trade specific stocks or fund specific investments. All editorial opinions are our own.

Bottom line

  • Robo-advisors are automated computer algorithms that allocate your funds and constantly rebalance your portfolio.
  • Financial advisors are humans who help you with your finances from investments to retirement and children’s education plans.
  • Robo-advisors are typically better suited for smaller portfolios and cost less to operate.
  • Financial advisors are typically better for larger portfolios and for complex financial planning.

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