WiserAdvisor – Blog

Main Menu

  • Main
  • Financial Advisor Guide
  • Financial Planning
  • Retirement Planning
  • Education Planning
  • Investment Management
  • More
    • Personal Finance
    • Estate Planning
logo
Header Banner

WiserAdvisor – Blog

  • Main
  • Financial Advisor Guide
  • Financial Planning
  • Retirement Planning
  • Education Planning
  • Investment Management
  • More
    • Personal Finance
    • Estate Planning
Financial Advisor Guide
Home›Financial Advisor Guide›Robo-Advisors vs. Financial Advisors: Which option is the best for you?

Robo-Advisors vs. Financial Advisors: Which option is the best for you?

By WiserAdvisor Insights
September 24, 2019
941
0
Share:
Robo-Advisor

Last Modified on September 25, 2019

Artificial Intelligence or AI has taken the world by a storm. Going by the recent trends in technology and human acceptance and dependence on it, the time when robots completely and automatically devise financial plans is not too far away. British physicist, Stephen Hawking, once said, “The development of full artificial intelligence could spell the end of the human race. It would take off on its own, and re-design itself at an ever increasing rate. Humans, who are limited by slow biological evolution, couldn’t compete, and would be superseded.”

Let’s see if robo-advisors can indeed take over financial advisors and if they are the best option for you.

Table of Contents

  • Advantages of Robo-Advisors
    • 1. Easy and convenient
    • 2. Low investment
    • 3. Budget-friendly
    • 4. Time management
  • Disadvantages of Robo- Advisors
    • 1. No personal touch
    • 2. A false illusion
    • 3. Increased mistakes
  • Advantages of Financial Advisors 
    • 1. Continuity
    • 2. Personalization
    • 3. Constant improvement
  • Disadvantages of Financial Advisors 
    • 1. Expensive
    • 2. Differing opinions
    • 3. Inconvenient
  • Robo-advisors: when to use
  • Financial Advisor: when to use
    • To sum it up

Advantages of Robo-Advisors

1. Easy and convenient

Unlike financial advisors, Robo- advisors don’t require you to make appointments and schedule meetings. They are similar to an online course that you can take while sitting at home. 

2. Low investment

Robo-advisors allow you to invest with as little as $ 10. In fact, there are many websites like Betterment and Acorns that encourage their clients to invest small amounts of money. 

3. Budget-friendly

Robo-advisors offer affordable monthly packages. Most websites offer free trial periods. Paid packages start from $8 – $10 a month. 

4. Time management

Robo-advisors let you learn and grasp information at your own pace. You have ample time to think and decide your investment strategies.

Disadvantages of Robo- Advisors

1. No personal touch

Robo-advisors lack compassion. They are not designed to consider your personal situations or financial crisis. 

2. A false illusion

They can create a false sense of security that may result in some procrastination and ignorance from your side. Robo-advisors present an easy and convenient picture, but they do require regular attention from you. 

3. Increased mistakes

While a financial advisor can warn or stop you from making investment mistakes, robo-advisors may not be able to catch your errors or offer you guidance.

Advantages of Financial Advisors 

1. Continuity

Just like a family doctor or lawyer, you can appoint a financial advisor who is well acquainted with your financial history, family situation, future goals, etc. Such an advisor can devise and keep updating your financial plan over the years, as per changes in your personal and professional life. 

2. Personalization

A financial advisor can gauge your temperament and personality and offer suitable investment propositions. If you are someone who’s willing to take a risk, your advisor can suggest investing in the stock market. However, if you like to play it safe, they would recommend a retirement account or mutual funds. 

3. Constant improvement

A financial advisor can regularly update and advise you to modify your portfolio as per the recent federal and state rules, and the condition of the market. As professionals they are always on the top of their game and can help you implement these changes, keeping in mind your preferences.

Disadvantages of Financial Advisors 

1. Expensive

Having a personal financial advisor is not as cost-friendly as a robo-advisor. Financial advisors can charge hefty fees for their guidance. It is also important to appoint an advisor who you can trust. Some advisors also charge extra for investments that seem more complex. 

2. Differing opinions

You and your advisor may not always have the same opinion on matters. They may persistently advise you to go a certain way even if you don’t agree with them.

3. Inconvenient

Unlike a robo-advisor, you cannot simply open your laptop anywhere and anytime you want. You need to align your time with a financial advisor and make sure to book prior appointments. 

Both these advisors have their pros and cons. But you don’t always have to stick to just one. Here’s when you can use each of them: 

Robo-advisors: when to use

  1. If you want to save up on costs, then you should consider a robo-advisor. Investment advisors can charge up to 3 % of the total value of your portfolio, whereas, most robo-advisors charge only 1 % of the total value or a total fee of less than 1 % yearly.
  2. If you don’t want the nuisance of regular meetings and constant communications, you can go in for a robo-advisor. This is ideal for small investments that come with little risks. You can save up on time and energy and at the same time, invest your money.
  3. Many financial advisors have minimum balance requirements, for example, a portfolio of $ 1,00,000, before they agree to work with you.  If you don’t have such a portfolio, but still wish to invest, you can opt for a robo-advisor. Most robo-advisors start with a portfolio of $ 5,000.

Financial Advisor: when to use

  1. If you are looking for human contact and don’t feel comfortable handing over all your investments to a website, you should opt for a financial advisor. 
  2. If you are trying out a new investment vehicle and feel the need to ask questions and clear your doubts from an expert. 
  3. Robo-advisors usually ask you to fill a questionnaire based on which they offer investment guidance. A questionnaire may not completely align with your thoughts and preferences. If you want customized attention, you should consult a financial advisor. 
  4. If you have a significant portfolio of $ 2,00,000 or more, it is better to consult a financial advisor instead of a robo-advisor. 
  5. A robo- advisor is not the best option if a major chunk of your money is invested in an employee retirement account. Such accounts are managed by an investment trustee and are not included in your robo-advisor portfolio.   

To sum it up

Robo-advisors are undoubtedly fascinating and brilliant, but they may lack in some components. They are automated and by and large lack flexibility and empathy that a financial advisor can offer. Technology is a dynamic facet and has something new to offer every day. Let’s wait to see what the future holds. 

Do you feel that professional experts are better than robo-advisors? Then approach a financial advisor today and get personalized guidance on your portfolio.

Tags#financial advisorFinancefinancial planningInvestmentpersonal financePortfolio
Previous Article

How to Avoid a False Sense of ...

Next Article

Key Strategies for Investing During a Recession

0
Shares
  • 0
  • +
  • 0
  • 0
  • 0
  • 0
WiserAdvisor Insights

WiserAdvisor Insights

A team of dedicated writers, editors and finance specialists sharing their insights, expertise and industry knowledge to help individuals live their best financial life and reach their personal financial goals. We believe that there is no place for fear in anyone's financial future and that each individual should have easy access to credible financial advice.

Related articles More from author

  • Portfolio-diversification
    Investment Management

    All You Need to Know About Portfolio Diversification

    October 21, 2019
    By WiserAdvisor Insights
  • Exchange-Traded Fund (ETF)
    Investment Management

    What is an Exchange-Traded Fund (ETF)? – Beginner’s Guide

    September 11, 2020
    By WiserAdvisor Insights
  • Financial Planning
    Financial Planning

    Six Tips to Help You Face Any Financial Crisis with a Robust Financial Plan

    July 9, 2021
    By WiserAdvisor Insights
  • Safety-First-Retirement
    Retirement Planning

    The Concept of Safety-First Retirement Planning

    December 27, 2019
    By WiserAdvisor Insights
  • Higher-Education
    Education Planning

    Best Ways to Save for your Child’s Higher Education

    October 22, 2019
    By WiserAdvisor Insights
  • Financial Planning Actions
    Financial Planning

    10 Financial Planning Actions to Consider During an Economic Crisis

    June 29, 2020
    By WiserAdvisor Insights

You might be interested

  • Re-examining Bonds in Today's Low Interest Rate Environment
    Investment Management

    Re-examining Bonds in Today’s Low Interest Rate Environment

  • 529 plan
    Education Planning

    Should You Save for Your Child’s College Using a 529 Prepaid Tuition Plan?

  • Investing-101-The Basics of Investing
    Investment Management

    Investing 101 – The Basics of Investing

Don't miss out! Get our Helpful Financial Tips Newsletter

  • Popular Posts

  • The benefits of working with a financial advisor - WA

    The benefits of working with a Financial Advisor

    By WiserAdvisor Insights
    July 16, 2019
  • Financial-Professional

    How to prepare for a meeting with your Financial Advisor

    By WiserAdvisor Insights
    July 8, 2019
  • Do's & Don't investment portfolio

    The Dos and Don’ts to Protect your Investment Portfolio in a Bear Market Amid The ...

    By WiserAdvisor Insights
    April 22, 2020
  • retirement-accounts

    Choosing the Best Retirement Accounts

    By WiserAdvisor Insights
    July 8, 2019
  • Retirement-Planning

    Retirement Planning checklist

    By WiserAdvisor Insights
    July 8, 2019
  • Why investing for goals is the right way of investing

    Why Investing for goals is the right way of Investing?

    By WiserAdvisor Insights
    July 16, 2019
  • Portfolio diversification

    5 Dangers of Over-Diversifying your Portfolio

    By WiserAdvisor Insights
    July 26, 2019
  • Financial Planning for couple

    The Complete Guide on Financial Planning for Couples

    By WiserAdvisor Insights
    August 1, 2019

Categories

  • Business Finance (2)
  • Education Planning (29)
  • Estate Planning (20)
  • Financial Advisor (1)
  • Financial Advisor Guide (27)
  • Financial Planning (111)
  • Investment Management (54)
  • Personal Finance (9)
  • Portfolio Management (1)
  • Retirement (9)
  • Retirement Healthcare (1)
  • Retirement Planning (79)
  • Retirement Plans (1)
  • Uncategorized (2)

The blog articles on this website are provided for general educational and informational purposes only, and no content included is intended to be used as financial or legal advice. A professional financial advisor should be consulted prior to making any investment decisions. Each person's financial situation is unique, and your advisor would be able to provide you with the financial information and advice related to your financial situation.

WiserAdvisor is America’s oldest and largest independent network of screened financial advisors. We make it easy and convenient for consumers to find and connect with advisors in their area. We have successfully helped over 100,000+ individuals find their best financial advisor since 1998 with no match fees, no commitments, no obligation, and complete confidentiality. WiserAdvisor has been featured in The Washington Post, The Washington Journal, ABC, CBS, Yahoo and has been seen in numerous other leading financial news and information websites.

Follow Us

  • Recent

  • Popular

  • Financial Planning for a Baby

    Financial Planning To Prepare For a New Child

    By WiserAdvisor Insights
    June 20, 2022
  • Lower Your Financial Advisor Fees

    How to Lower Your Financial Advisor Expenses

    By WiserAdvisor Insights
    June 13, 2022
  • ROTH IRA 5 YEAR RULE

    A Guide to the Roth IRA 5 Year Rule

    By WiserAdvisor Insights
    June 9, 2022
  • The benefits of working with a financial advisor - WA

    The benefits of working with a Financial Advisor

    By WiserAdvisor Insights
    July 16, 2019
  • Financial-Professional

    How to prepare for a meeting with your Financial Advisor

    By WiserAdvisor Insights
    July 8, 2019
  • Do's & Don't investment portfolio

    The Dos and Don’ts to Protect your Investment Portfolio in a Bear Market Amid The ...

    By WiserAdvisor Insights
    April 22, 2020

Contact Us

Corporate Headquarters

12150 Monument Drive, Suite 700
Fairfax, VA, 22033

Business Hours

8:30 AM – 5:00 PM EST (Monday – Friday)

Email Address

wa.assistance@wiseradvisor.com

Phone Number

(703) 651-2060

Fax Number

(703) 259-4487

  • Privacy Policy
  • Terms & Conditions
© Copyright 2021 WiserAdvisor.com. All Rights Reserved.

Add WiserAdvisor - Blog to your Homescreen!

Add