Robo-Advisors and Financial Consultants: How to choose

Robo-advisors have skyrocketed in popularity over the past decade, as robo-advisors rapidly increase their assets under management, often into the tens of billions of dollars. But how do they compare b traditional financial advisors ?

Perhaps surprisingly, after an initial period of rejecting these newcomers, the industry has begun to embrace them, merging traditional financial advice with robo-advisor automation.

But each approach has its pros and cons. Here’s how to choose the right one for you.

Robo-Advisors and Financial Consultants: How to choose
Robo-Advisors and Financial Consultants: How to choose

Robo-advisor vs. Financial advisor: what do they do?

Let’s take a look at both types of advisors to see what they do and what benefits they provide to investors.


You may know names like my small investment. It is one of the most popular independent bot advisors, which has been very popular over the past 5 years. Robot advisors are the best Investment solutions “do it for me”Something you can set and leave.

Bot-advisors seem very complicated, even a little dangerous. After all, it seems dangerous to entrust your money to a computer program. And that’s what a bot advisor is: a computer algorithm that invests your money based on your answers to a few questions, such as when you need the money, your risk tolerance, and how much to invest.

By applying good investment practices, such as asset allocation and diversificationthe robo-visor will automatically build you a custom portfolio according to your needs, using perhaps up to a dozen exchange-traded SICAVs that you own proceduresfollower CommitmentsAnd cash and so on likely Asset types.

Robo-advisors offer a number of benefits to retail investors. They tend to be relatively cheap, charging a management fee of around 0.25% of your assets per year, or €25 for every €10,000 invested.

This level is the industry standard, although some bots offer a higher level of service (such as access to human advisors) at a slightly higher cost. Other robo-advisors may charge a monthly fee or even offer a free service like Mon Petit Placement.

The money you invest in also charges an expense ratio, which is a fee paid to the money management company. The funds usually charge between 0.05% and 0.35% per annum (i.e. between €5 and €35 ​​per €10,000 invested). You will pay this fee regardless of which robo-adviser you choose.

When you add the two fees together, you could be paying around 0.3-0.6% of your assets per year for a robo-adviser. This is usually the fee range, meaning you’ll have a clear idea of ​​your costs.

All additional services are usually included in the administrative fee. Many bots provide automated services that are difficult for a human to replicate, such as recovering daily tax losses. They can too Automatically rebalance your portfolio when it deviates from the predetermined target distribution.

Another positive point: It is easy to open a robo-visor account online. With some financial information, you can complete the form and open the account in about 15 minutes.

You can then add funds to the account regularly, and the robo-adviser takes care of everything else, distributing your money among the funds. You don’t have to worry about anything else.

While indie players like Mon Petit Placement are widely known for their automated advice offerings, Brokerage firms more important like IQ Option And revolution Also offering this type of managed wallet.

Financial advisors

Financial advisors can range from simple salespeople paid by a money management company to fee-only trustees who really put your interests first.

Human financial advisors can give you all kinds of advice, from the most mundane (basic banking) to the most complex (estate planning and trusts). Skills and experience vary from one counselor to another, of course.

A financial advisor does what a robo-advisor is supposed to do, but it can do a lot more. In fact, unless you are a true stock market analyst or portfolio manager, they probably use the same basic tools as a robo-adviser. Build your investment portfolio.

A good advisor is also well-versed in all the basic financial needs most people are likely to have – insurance, investing, retirement accounts, banking, bequests, and basic estate planning, as well as general planning.

As bot-advisors have become more prevalent, human advisors have often become more targeted in order to compete with them. Where human advisors can really excel is in specialized assignments that require detailed expertise – unusual or highly specific tax advice to help you improve your situation and other legal advice such as that relating to real estate and trusts.

Some advisors may focus on specific issues for certain areas, such as owners small projectsdentists or athletes. Then they specialize in questions that are likely to arise in these areas. They not only provide investment advice but also other essential skills.

Typically, a human advisor may charge 1% of the assets as an annual fee, in addition to any other fees you may pay for And or some UCITS.

Some advisors may also charge hourly fees, while others — who present themselves as advisors — charge nothing because they are paid by a fund company or insurance company, essentially acting as salesmen.

What type of advisor is right for you?

The type of advisor that is best for you depends on your financial needs. For basic investment and planning advice, a robo-advisor is a great solution because it automates much of the work that a human advisor would do. And they charge less for it – potential savings for you.

Also, the ease of account opening and management cannot be overemphasized. Everything is done online and can be easily accessed at any time of the day.

The robo-adviser is also capable of performing other tasks that a human would find terribly tedious, such as harvesting daily tax losses, which involves buying and selling securities day in and day out in order to get tax relief.taxes.

For all of these mundane tasks, a robo-advisor is a smart choice. In fact, your human advisor probably already uses some version of the robo-advisor to guide your portfolio building.

Today, even many great wealth managers can rejoice in the freedom that investment algorithms provide, as it allows advisors to focus on the specialized services that add the most value to clients.

This is where the unique skills of human advisors come into play. If you need a service that thinks outside the box in finance where the rules are very complex and any mistakes can cost you dearly – you need to reach out to a competent financial advisor with proven expertise in this specialized area.

But there is another huge benefit of a good human advisor that can be more evident during turbulent market times like 2020. A good advisor helps you follow the long term plan that allows you to Earn money And it motivates you to do the right thing, even if you don’t always feel like doing it. However, it is sometimes difficult to find a counselor who has your best interests at heart.

Of course, it is not about choosing between one or the other. You can use a robo-advisor to perform your basic investment tasks and hire an advisor for specialized tasks or one-time tasks that require expertise. But you have to choose the right kind of counselor for the job you have to do.


An automated advisor can be an excellent choice for Manage your moneyEspecially when you do Your investment journey has just begun And that your needs are relatively simple and straightforward.

As your needs become more complex, it is a good idea to consult a financial advisor who is invested in your success so that you receive the best advice.