Financial Advisors and Robo Advisors

Financial advisors and robo advisors depicts a man and robot touching a globe.

By Kris Maksimovich:

We are asked about the differences between financial advisors and robo advisors all the time. When it comes to answering this question, investors should do their research and understand what they are getting into with both types of services.

Understanding What You Get

Below, is a breakdown of the differences between financial advisors and robo advisors. We hope you’ll find this list helpful on your journey to investing:

A financial advisor:

  • Offers financial planning, tax planning and wealth management
  • Processes and manages emotion and behavior
  • Helps prioritize and track goals
  • Helps ensure accountability and flexibility
  • Adapts to life changes and outside information
  • Sees nuances and extrapolates trends
  • Removes fear of conducting transactions online
  • Offers direct human contact, individual care, a relationship and can answer questions
  • Can work as a team with your other trusted advisors
  • Enables a measure of control
  • Creates investment flexibility
  • Is helpful for investments that reside in your 401(k)

A robo advisor:

  • Offers one size fits all solutions – lacks personalization
  • Is best used with a good understanding of investment fees
  • Automates online processes
  • Relies on artificial intelligence and algorithms
  • Lacks input and displaces advice management
  • Doesn’t offer hand-holding in bear market
  • Offers no tax planning or succession planning
  • Lacks individualized advice and guidance
  • Presents risks which include flaws in algorithms and lack of accountability
  • Creates privacy and protection concerns

There are many nuanced cost benefits to using a financial advisor like financial gain, risk reduction, enhanced well-being and monitoring and helping you adjust your investment behavior that robo advisors do not. We’re always happy to speak with you and answer your important questions if you are searching for a financial advisor near you.

 

 

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