Robo vs. Personal Financial Advisor

Which Should You Choose?

byMeredith Morris

Series. HOT Qs

December 18, 2019 .4 min read

Artificial Intelligence (AI) technology has evolved so much that we trust it to remind us of important events, order things for us, and even resolve our customer service issues. In fact, AI bots have become intelligent enough to give critical investment and financial advice. But the question is – Can they replace humans?

While the robo-advisor revolution is growing, it focuses primarily on your investments.  This can provide you with an alternative to traditional advisors. However, investments are not the only part of your financial plan to consider.  The choice to use a robo-advisor entirely depends on your personal needs and preferences, so read on to understand the pros and cons of both options to make an informed decision with eyes wide open.



Lower Cost – With investment fees having a material effect on how your investment performs, this would be one of your top concerns. This is where robo-advisors shine because they cost much less than in-person financial advisors.

While you’d typically pay 1%-2% of your portfolio value to traditional advisors, robo-advisors from Betterment and Fidelity charge no more than 0.50%. Some robo-advisors even charge as little as 0.15% to manage your portfolio, which will make a drastic difference in your investment performance.

Ease of Automation – Another notable benefit of using robo-advisors is the ability to quickly automate investing strategies. They can optimize your portfolio weight based on your risk preference and rebalance it in real-time according to market changes.

Robo-advisors also provide tax-loss harvesting in real-time so you can quickly adjust your portfolio to minimize losses. They will instantly detect securities that are losing money in the market, sell them, and replace them with similar assets to maintain the same portfolio structure as before.

All of this makes it much easier to get the most out of your investments with minimal effort. Just leave it to the robo-advisor and you’re set.


Missing Human Element – Robo-advisors may be great at giving you investment advice and managing your assets, but they don’t have a realistic understanding of struggles and concerns that are very human. They can’t understand the emotional aspect of investing and therefore, can’t sufficiently provide you with advice that quells your personal worries.

There are some concerns that only another human being can understand and empathize with, and that’s where a robo-advisor has its limitations.  In addition, since investments are only a part of your overall financial picture, robo-advisors often don’t have the ability to define how your investments will impact other things such as insurance, real estate, debt and taxes.  

Not Fully Personalized – With a missing human element, robo-advisors can’t be fully personalized. For example, some robo-advisors may allow you to set your goals, but they don’t have a real-life understanding of the motivations and intentions behind those goals.  They can’t ask follow up questions to make sure the recommendations are truly sound. AI may change this, but for now, it is something to consider.

As such, they won’t be able to help you with investment decisions that go beyond algorithms. They don’t have the flexibility to make adjustments based on major life changes or crises that are unique to you.

In-Person Financial Advisor


The Human Element – A personal financial advisor understands the emotional aspects of investing. They’re more than just your investment manager, and could be your friend, coach, and educator too. They build relationships with their clients to get a better understanding of each person’s motivations and goals.  They have the ability to see beyond the numbers to the individual.

While a robo-advisor saves you some money, it will never send you a condolence card when you’ve lost someone. They can’t give you the personalized attention many want when making life changing decisions about their money.  So if you value connection and human relationships, a personal financial advisor is an ideal option.

Better Personalization – As there are experiences that only another human being can understand, a personal financial advisor can provide you with advice and solutions personalized for those experiences. Aside from identifying your goals, they also determine why you’ve set those goals. They assess your risk tolerance and provide you with recommendations and tactics that are fully personalized for you.

They also can coordinate all your various plans and products into a plan that truly achieves your goals, not just a portion of them.  


Higher Cost – The human touch comes at a cost. Personal financial advisors charge a higher fee than robo-advisors. Some charge a one-time flat fee of $1,500-$2,500 to build a full investment plan. Others typically charge 1%-2% of your total portfolio value for ongoing management. So for a $500,000 account, you’d be paying them at least $5,000 depending on the firm’s unique assets under management (AUM) fee.

Higher Minimum Requirements – It’s not just the higher cost that compels some people to deviate from traditional financial advisors – it’s the higher total portfolio value requirement. While you can find financial advisors who will advise you regardless of your portfolio value, many of them have higher minimum requirements.

On the lower end, you’ll find advisors with minimum requirements of $50,000-$200,000. Some even require clients to have at least $1 million in assets. This makes them unreachable for new investors who are just starting to build their portfolio.

Hybrid robo software is allowing some advisors to open up their businesses to people of all levels. By leveraging technology to save time, advisors can combine a hybrid approach to give you personal advice alongside a robo type investment platform. This can be a great solution if you are stuck in making a choice.

The Verdict: Which Should You Choose?

So with all things considered, should you go for a robo-advisor or a personal financial advisor? The answer depends on your unique requirements and expectations.

If you value human relationships and are willing to shop around for advisors who have lower minimum requirements, then go with an in-person advisor. If you don’t need much direct contact and won’t be investing much, a robo-advisor could be a good start.  But always consider that investments are only a portion of your financial landscape. The best way to handle your money is to work with someone who can take all things into account.