Robo-advisors are still classified as new financial services since we just have it in 2010. It allows you to turn over money to an automated advisor, which later will buy you some assets. Basically, both Robo-advisors and financial advisors offer similar services.
Robo-advisors have various services ranging from asset allocation of your investment (stock, bond, and others), automated rebalancing, tax-loss harvesting, to educational investment tools.
Here are 2 reasons why Robo-advisors are better than financial advisors.
Costs and Minimums
Many financial advisors (if not all) charge upwards of 1% from AUM (assets under management) of your investment portfolio. Contrarily, Robo-advisors fees range from zero.
Further, some financial advisors will require you to have a large minimum account balance. In contrast, some Robo-advisor, like Betterment, has no minimum to open an account. While, other Robo-advisors, like Wealthfront, will let you own an account with only $500.
You may have heard many experts suggesting you rebalance your investment portfolio. It is one of the strategies to keep your percentage constantly invested in stocks, bonds, and other funds. Besides, it also helps your percentage stay in line with your preference.
Thanks to their algorithm, Robo-advisors can do this tedious investment task for you in a more efficient way.
Despite those two advantages, there are still tasks best left to a human.
A Comprehensive Financial Plan
If you are now on a high six- or seven-figure net worth, a Robo-advisor likely won’t be enough for you. You’ll need a trusted financial advisor who can examine your entire financial picture, including estate, tax, trusts, and life insurance considerations.
For a broad economic concern, you better consider a full-service financial advisor with a stable of related advisors.
Also read: Concisely Reviewing Digital Gold Investment
Specific Financial Assets
If you are going to invest in peer-to-peer lending, closed-end funds, individual stock, bonds, currencies, options and more, then consider a financial advisor. Most Robo-advisors are limited in their types of available investments. In fact, there aren’t many Robo-advisors that provide access to more than 12-25 funds.