In recent times, Robo advisor has emerged as a key factor in financial operations. But we always put our eyes in front of Robo advisor vs financial advisor. And the question remains puzzling which is better?
Robo-advisor vs. financial advisor: What’s the difference?
Robo-advisors are online services that use computer algorithms to build and manage a client’s investment portfolio. They require little human interaction. You set your parameters, such as your time horizon and how much investment risk you’ll accept, and let the computer models do the rest. They’re great when you want help choosing investments and managing your portfolio.
Personal financial advisors are professionals you can hire, on an ongoing or temporary basis, to help manage aspects of your financial life, from investing to estate planning and more. The more complicated your financial situation, the more likely you’ll benefit from a human financial advisor.
When You Should Use a Robo Advisor
– When You fully understand the impact that investment fees have on your investment performance. Traditional investment advisors typically charge anywhere from 1% to 3% of the value of your portfolio, while Robo advisors charge less than 1%.
– When You don’t need much in the way of direct contact. Some people like personal contact in connection with their investments, while others do not need it.
– When You don‘t meet the account minimum. One of the significant limitations of traditional investment advisors is the account minimum balance requirement.
– When have no time to do All your investing. When you invest in a Robo investing platform, the site will handle all of your investment activities for you. All you need to do is fund your account.
When You Should Use a Financial Advisor
Despite the rising popularity of Robo advisors, many people still prefer having a traditional investment advisor. For some reasons:
– When You’re not comfortable transacting business online.
– When Direct human contact is very important to you. If you prefer having direct human interaction regarding your investments, you’re best to stay with traditional investment advisors.
– When You want at least some measure of control over your investments. One of the limitations of Robo advisors is that they’re pretty much hands-off activities.
Finally, we can say that perhaps the growth of Robo advisors may actually be beneficial to financial advisors because it highlights one of the most valuable roles that an advisor can bring to their clients: helping them overcome their behavioral biases. So, Companies are blending the two.