What Is a Robo-Advisor? 

A robo-advisor is a digital platform that uses algorithms to manage your investments. Instead of sitting down with a human advisor, you answer a few questions about your goals and risk tolerance. The robo-advisor creates and manages a diversified investment portfolio for you. 

Why Use a Robo-Advisor?

  • Simple, hands-off investing – Set it and forget it. 
  • Low fees – Typical fees range from 0.25%–0.50% annually. 
  • Great for beginners – No prior investing knowledge is required. 

Popular Robo-Advisors:

  • Betterment – Low fees, goal-based investing. 
  • Wealthfront – Automated planning tools, like home-buying projections. 
  • Acorns – Automatically invests spare change from everyday purchases. 

 

What Does a Financial Planner Do? 

A financial planner is a professional (often with a Certified Financial Planner or CFP designation) who helps you build a whole financial strategy. While robo-advisors focus on investing, financial planners cover the bigger picture, including debt, savings, taxes, and significant life changes. 

Why Use a Financial Planner?

  • Personalized financial advice – Tailored guidance based on your goals. 
  • Help with big life changes – Marriage, kids, buying a home, or changing jobs. 
  • Comprehensive financial planning – Covers investments, debt, taxes, and retirement. 

When to Use a Financial Planner:

  • If you have complex goals like paying off debt, saving for college, or managing an inheritance. 
  • If you’re facing a significant life change like marriage, having a child, or changing jobs. 
  • If you need a human advisor to walk you through your options. 

 Robo vs. Human: Key Differences

Criteria

Robo-Advisor

Financial Planner

Cost

Lower fees (0.25%–0.50% annually) 

Higher fees ($100/hr or 1% of investments) 

Personalization

Limited, uses algorithms 

High, fully customized advice 

Services Offered

Investments only 

Full financial planning (investments, taxes, goals) 

Human Interaction

None (fully automated) 

1:1 meetings (virtual or in person) 

 

When Should You Use Both? 

Sometimes, using both makes sense. Here’s when this combo could work for you: 

  • Use a robo-advisor for ongoing, low-cost investing. 
  • Check in with a financial planner once or twice a year to tackle big-picture goals. 

 

When Do You Need Neither?

Sometimes, you don’t need a financial planner or a robo-advisor. Here’s when: 

  • If you’re focused on paying off high-interest debt, do that before investing. 
  • If you’re comfortable managing your own budget and investments. 
  • If you’re in the early stages of learning about money and using free resources. 

 

How to Decide Which Option Is Best for You

If you’re still unsure, here’s a quick guide to help you choose: 

  • Use a robo-advisor if you want simple, low-cost, hands-off investing. 
  • Use a financial planner if you have complex goals like managing debt, saving for college, or planning for retirement. 
  • Use both if you want low-cost automation with personalized advice for major life decisions. 
  • Use neither if you’re focused on paying down debt, handling your own finances, or using free online resources. 

 

Key Takeaways 

  • Robo-advisors automate your investments, while financial planners offer personalized guidance. 
  • Use a robo-advisor for simple, low-cost investing. 
  • Use a financial planner for complex goals like paying off debt or managing a major life change. 
  • Sometimes, using both is the best strategy for long-term success. 

 

Reflection Questions

  1. Which option would you choose: a robo-advisor, a financial planner, a mix of both, or neither? Why? 
  2. What are the biggest pros and cons of robo-advisors vs. financial planners? 
  3. If you had to pick one financial goal to work on right now, would you prefer human help or a tech-driven solution?