Humans vs. robots: Which adviser is better?

Automated advisers are a key player in financial portfolios — but are machines better than man?


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Robo-advisors choose investment opportunities for you based on computer algorithms programmed with your specific financial portfolio preferences, such as risk tolerance and capability, along with your goals and timeline.

They can manage basic portfolios at a lot lower cost than human financial advisers — and may pick up on investment trends faster, thanks to specialized technology that works for you.

Our top pick: Betterment

  • Automatic, passive investing
  • Customized retirement planning
  • Low management fees

Our top pick: Betterment

Betterment's automatic investment site aims to improve your returns and support good financial habits with passive investing and financial planning support.

  • Automatic portfolio rebalancing
  • Retirement planning tools & custom advice
  • Automatic microsavings with SmartDeposit

If you want individual, personalized advice, though — and even a little handholding — consider a human advisor. But you will generally pay more.

What is a robo-advisor?

A robo-advisor is not actually an adviser at all — nor does the term refer to one thing. Rather, it describes any number of online platforms that track investment trends, follow an algorithm designed for a client’s portfolio preferences and recommend opportunities to save or invest.

Although “robo-advisors” sounds like something out of Terminator, there’s nothing cheesy about these technology-based financial players. In 2017 alone, these advisers managed a total of more than $200 billion in assets for clients.

Who are robo-advisors best for?

Automated advisers are best for basic portfolios that aren’t overly complicated or complex. They are also helpful if you’re on a budget, typically offering lower fees than typical advising services.

If your portfolio includes many components, you have a sizable investment or you’re looking for individualized, customized options, a human adviser might be a better fit.

How do robo-advisors work?

Because these advisers are software, you’ll typically fill out a financial questionnaire to help “program” that software with your investment preferences.

Your preferences can include:

  • Your personal risk tolerance. You specify whether you’re looking for high-risk investments or prefer lower-risk opportunities.
  • Your age and investment timeline. If you’re a 22-year-old college student, you’ll have much different financial needs than, say, a 60-year-old who’s ready to retire.
  • Your retirement goals. Aiming to be a millionaire by retirement? Your robo-advisor needs to know to plan how to get you there.
  • Your current portfolio information. Folding in your current investments results in a fully informed adviser — and decisions that successfully dovetail with your goals.

What are the benefits of a robo-advisor?

Many people value the ease of a robo-advisor’s automation when it comes to managing and growing their investments, among other benefits that include:

  • Minimal human error. Leaving a “robot” to manage your money and investments might feel uncomfortable initially. But a lack of unintended errors that come with being human is one of its biggest benefits. There’s no panicking and selling off a stock too early and no messy emotions that can get in the way of long-term financial growth.
  • Lower fees. The cost of an automated adviser is typically 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 adviser, you’ll appreciate this benefit. Turns out, robots don’t mind being fired when it’s not a suitable match.

What are the drawbacks of a robo-advisor?

Because there are two sides to every story, there are also potential drawbacks to consider to using a robo-advisor. For example:

  • Automated advisers can’t get to know you. Even the most sophisticated computer algorithm is still an algorithm. It can’t sit down with you, it can’t explain things to you and it certainly can’t listen to your dreams about the future.
  • Robo-advisors can’t handle complex portfolios. These advisers aren’t best for overly complicated portfolios. The rule of thumb is that assets of six figures or more need the human touch.
  • Questions may cost you. If you work with a human adviser, it often doesn’t cost you more to actually talk to them. Unless you subscribe hybrid human–robo management, you might have to pay to speak with a real person.
  • You might find it difficult to lose control. You’re always in control of your finances technically, but you might not be ready to hand over the reigns of your portfolio to a robot. If you prefer a more hands-on approach to digital guidance, a robo-advisor might not be a great fit.
  • You can’t auto manage employer retirement plans. This software can’t do much with retirement plans like 401(k)s, so putting any money in a robo-advisor for a plan like that won’t do you much good.

Who offers lower fees?

Fees for using a robo-advisor or human adviser vary based on the company you go with — and even vary among human advisers.

Top-level private advisers, for example, tend to charge a lot more than beginning or standard firm advisers. Some companies charge fee reflecting a percentage of your assets, while others may impose an annual or initial investment fee.

Still, robo-advisors are typically more affordable than human advisers. Here’s what you’ll pay for automated advisers through big-name providers.

Options or portfoliosMinimum investmentAnnual percentage or fee
VanguardIncludes a personal human adviser for the best of both worlds$50,0000.30%
SchwabInvestor ratio$5,000$0
BettermentAdd-on human adviser option$00.25%
WealthfrontAdvanced Indexing for accounts of $500,000+$5000.25%
Assets management human adviserHuman management$01.25% to 1.75%
Fee-only human adviserHuman managementVaries$1,000 to $5,000

Compare robo-advisors

Name Product Minimum deposit to open Available asset types Annual fee
SoFi automated investing
Stocks, ETFs
Put your money to work. Pay zero SoFi management fees.
$1 per month
Invest your spare change. Anyone can grow wealth.
Stocks,Mutual funds,ETFs,Real estate
0.25% on balances up to $99,999

0.4% on balances of $100,000+
Betterment's automatic investment site aims to improve your returns and support good financial habits with passive investing and financial planning support.
$45 per year
After an analysis, Blooom will place the trades within your 401k, 403b, 401a, 457 or TSP plan account for a low flat fee.

Compare up to 4 providers

Compare human advisors

Name Product Minimum deposit to open Annual fee Available asset types
Facet Wealth Financial Planning
$480 per year
Stocks,Bonds,Options,Mutual funds
Facet Wealth flat fee model allows them to deliver an affordable Facet Financial Life Plan and create greater access for families that are just starting—or with assets in retirement plans
Fidelity Bokerage Account
Fees range from 0% for self-directed accounts to 1.5% for wealth management.
Northwestern Mutual Financial Planning
Stocks,Bonds,Mutual funds,ETFs
Your personalized financial plan will help you find out how much you’ll need every month in retirement, what type of insurance you need to protect your family and realistic ways to save and invest.

Compare up to 4 providers

Bottom line

To manage a basic financial portfolio, a robo-advisor can offer automated management and lower fees. These automated advisers also remove the human elements of error and fear that might hurt long-term financial growth and gain.

However, human management of financial portfolios might be what makes for individualized and customized options. Only a human can get to know you, listen to your gut feelings on investment and understand your dreams for a tropical retirement.

Many popular robo-advisor platforms offer consumers the option to combine both a robo and human adviser for the best of both worlds. You can also hire a financial advisor for a limited period or a specific plan, while relying on a bot long term. In the end, choosing one over the other depends on your personal preferences, goals and assets.

If you’re a college grad just looking for basic portfolio management with fees that won’t eat away your profits, look into a robo-advisor while you get your feet wet. But if you’re staring down retirement and a six-figure investment, the human touch may get you the most bang for your buck.

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