Robo advisor VS. Financial Advisor: Which Should You Choose?

Managing your investments can be an arduous task, especially when the market feels extremely volatile or you’re nearing a major milestone like retirement and you’re afraid of making a misstep. Luckily, though, you have different options to help guide you on your investing journey.

Financial advisors have always been a key asset to wealth management, but robo-advisors have grown in popularity over the years for their hands-off and low-cost approach to managing your investments. Before you decide which route you’d like to take to help you manage those assets, there are a few things you should consider about each option.

It’s important to note that a financial advisor can be more helpful to your overall financial health since robo-advisors are only meant to provide investment recommendations while financial advisors provide a more holistic approach to managing your money. Advisors can provide recommendations on more than just investing, including budgeting, spending, major life events and more.

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What’s the difference between a robo-advisor and a financial advisor?

Costs for a robo advisor vs. costs for a financial advisor

Advantages and disadvantages of using a robo-advisor

Betterment

  • Minimum deposit and balance

    Minimum deposit and balance requirements may vary depending on the investment vehicle selected. For example, Betterment doesn’t require clients to maintain a minimum investment account balance, but there is a ACH deposit minimum of $10. Premium investing requires a $100,000 minimum balance.

  • fees

    Fees may vary depending on the investment vehicle selected. For Betterment Digital Investing, 0.25% of your fund balance as an annual account fee; Premium Investing has a 0.40% annual fee

  • bonus

    Up to $5,000 managed free for a year with a qualifying deposit within 45 days of signup. Valid only for new individual investment accounts with Betterment LLC

  • Investment vehicles

  • investment options

    Stocks, bonds, ETFs and cash

  • educational resources

    Betterment offers retirement and other education materials

Terms apply. Does not apply to crypto asset portfolios.

wealth front

On Wealthfront’s secure site

  • Minimum deposit and balance

    Minimum deposit and balance requirements may vary depending on the investment vehicle selected. $500 minimum deposit for investment accounts

  • fees

    Fees may vary depending on the investment vehicle selected. Zero account, transfer, trading or commission fees (fund ratios may apply). Wealthfront annual management advisory fee is 0.25% of your account balance

  • bonus

  • Investment vehicles

  • investment options

    Stocks, bonds, ETFs and cash. Additional asset classes to your portfolio include real estate, natural resources and dividend stocks

  • educational resources

    Offers free financial planning for college planning, retirement and homebuying

Ellevest

  • Minimum deposit and balance

    No minimum deposit to start investing and no minimum account balance for Ellevest Membership advisory service; however, there are portfolio-specific minimums (ranging from $1 to approximately $240)

  • fees

    Fees may vary depending on the investment vehicle selected. Ellevest Essential membership costs $1/month (or $12/year), Ellevest Plus costs $5/month (or $54/year) and Ellevest Executive costs $9/month (or $97/year); fund fees range from 0.05% to 0.10% across all Ellevest Core Portfolios and 0.13% to 0.19% across all Ellevest Impact Portfolios

  • bonus

    Coaching sessions, small group coaching and access to live events

  • Investment vehicles

  • investment options

    Stocks, bonds, ETFs, ESG, mutual, alternative and impact funds

  • educational resources

    Online workshops, email courses and video resources

Advantages and disadvantages of using a financial advisor

bottom line

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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