Robo-Advisor vs. DIY Investing vs. Financial Advisor – Which is the Right Choice?

financial advisor vs. robo advisor vs. DIY investing

Choosing between robo advisor vs DIY investing is a challenge.  Add in a the financial advisor choice and it can feel as if you’ve got too many choices. This article will simplify your robo-advisor vs. DIY vs financial advisor investing decision. Hint – it doesn’t need to be an either/or choice!

While investing can be simple, like choosing a target date fund or a couple of index funds – choosing between robo investing vs human advisors is another matter.

Then add in robo advisor vs. index fund DIY investing, and choosing the best investment management method can get confusing quickly.

This article will clear up the robo-advisors vs. do it yourself investing vs. question and get you started building wealth through investing.

Robo-AdvisorDIYFinancial Advisor
Fees are low and range from free to .97% of assets under management.No fees.Fees typically start at 1.0% and go up based upon assets under management.
Financial advisors are available at some. Many robos are digital advice only. No financial advisor. Can hire financial advisor per hour.Main feature is financial advice. Investment management is second.
Good for beginning through advanced investors.Best for intermediate and advanced investors, or those who will learn basic investing.Good for those with complicated financial situations. Many financial advisors only work with wealthier individuals.

What’s a Robo-Advisor?

A robo-advisor is a digital financial advisor. Using computerized algorithms, robo-advisors choose an investment mix based upon your age, risk tolerance and other factors. But don’t think that robo-advisors are all the same. There is variability within robo-advisors including management fees, investment funds, additional products and services.

In fact, many robo-advisors also offer human financial advisors.

What’s a Financial Advisor?

A financial advisor refers to any individual who helps you manage your money. Within the broad financial advisory category there are many distinctions including level of expertise and credentials. Pricing varies among financial advisors as well. Financial advisors provide services from investment management, to tax and estate planning.

Like robo-advisors, there are many distinctions among financial advisors.

What is DIY Investing?

Do it yourself investing means picking stocks, bonds and investment funds on your own. Self-directed investing isn’t too difficult with a bit of financial education and is appropriate for anyone willing to devote some time to learning about investing.

Just be aware, that it’s sometimes wise to pay a small management fee in order to have someone handle your investment management tasks.

If your head is swimming and it’s difficult to sort out the similarities and differences between a robo-advisor vs. human, it’s understandable.

Let’s break it down, so that you can make the best choice between a robo-advisor, financial advisor or do-it-yourself investment management.

Decide: M1 Finance vs Betterment – Which Robo-Advisor is the Best for Me?

Robo-Adviser vs Financial Advisor v DIY investing

When is DIY Investing Best?

You understand the investment markets, properties and volatility.

You’re willing to learn about investing.

You grasp the types of available investments – stocks, bonds, mutual funds, exchange traded funds, REITS and more.

You’re secure choosing a target date fund for retirement and several index funds for intermediate term investing.

You have the time to pick and choose investments, monitor their performance and rebalance when necessary back to your preferred asset allocation.

You’re level-headed enough not to sell after a market drop and buy at the market peaks.

You want to try to beat the average market returns.

You’re a control freak and are hesitant to trust other with your hard earned cash.

If you want to DIY investing, with a bit of investment management guidance, you might like M1 Finance. It’s a combination DIY and robo-advisor investment platform.

Choose the best robo-advisor for you with the Robo-Advisor Selection Wizard.

When is Robo-advisor Investing Best?

You’re seeking a set it and forget it investment portfolio.

You want a diversified managed investment portfolio that includes international stocks and bonds.

You want to opportunity for investment management plus financial advisor access. Betterment, Personal Capital and many other robo-advisors offer this feature.

You want an investment portfolio that will match market returns. Many robo-advisors invest with the highly regarded passive index fund investment strategy.

You want specific active management investment strategies, for low overall management fees.

You want automatic investment portfolio rebalancing.

You’re seeking a free or low fee robo-advisor.

You want a robo-advisor for women‘s style and personality.

You want automatic tax-loss harvesting for your taxable account.

You’re seeking access to hedge fund investing and alternative investments, without the management hassle. The Titan Invest App is great for hedge fund investing!

You want investment management help, but also the opportunity to invest in individual stocks with a robo-advisor. M1 Finance is great for DIYers who also want to pick stocks and funds.

You want a digital investment advisor that allows you to view all of your accounts on one dashboard.

You want a digital investment portfolio with access to impact or socially conscious investing.

Robo-advisors aren’t monolithic. The industry has evolved with digital investment managers differentiating themselves. The ‘robo-advisor’ label encompasses a multitude of investment styles and strategies, as well as fee structures.

Bonus: 2020 Best Robo-Advisor Performance

When is Investing With a Financial Advisor Best?

You have a complicated financial situation.

You need tax, estate planning and business succession advice.

You enjoy the comfort of having someone to call to discuss your financial situation. (Although, many robo-advisors also offer financial advisor access)

You want someone to consult with about specific investment strategies.

You’re seeking guidance with more niche investing such as options trading or insurance strategies.

You want a fee for service or hourly pay model for your investment management.

You want a detailed and comprehensive financial plan.

You’re willing to pay a bit more for personalized service from an expert Certified Financial Planner.

Free: Financial Management Toolkit, Better Than Quicken


Is a robo-advisor worth it?

It depends upon your investment needs. If you want free or low fee investment management and potential access to investment management, then there is a robo-advisor for you. Check out our robo-advisor comparison chart.

Do robo-advisors beat the market?

Some robo-advisors attempt to beat the market by employing active management strategies. Here’s a list of 7 robo-advisors who strive to beat the market.

Which robo-advisor has the best returns?

This varies from year to year and returns are typically based upon how well a robo-advisors portfolio matches up with the best performing investments during a specific time. Here’s the Best Robo Advisor Performance data for last year.

Can you make money with robo-advisors?

Yes, investing in general is a sound way to make money over the long term. Robo-advisors use sound investment strategies to grow your wealth. Although, in the short run – 1 to 5 years – your investments might go up or down. So, investing is best to make money over the long term

Wrap Up

Whether you fall into the DIY, robo-advisor or financial planner categories, there is some overlap. For example, several robo-advisors provide access to human financial advisors such as Personal Capital, Betterment, Vanguard, Ellevest, SigFig and TD Ameritrade.

In fact, you might allocate part of your investment dollars for DIY investing and consider robo-advisors vs. financial advisors for the rest.

Betterment even allows all of its investors to text with a financial advisor.

Many individual financial advisors are lowering their fees and offering both human contact and digital investment management.

The hybrid robo-advisor plus financial advisor is becoming more and more popular.

Then there’s the DIY – robo combo, like M1 Finance. M1 Finance allows you to set up your own portfolio with as many types of assets as you desire, and they will rebalance your investments for a FREE. Or you can choose from a pre-made investment portfolio at M1.

Read more: Robo-Advisor v Financial Advisor – Which is Best?

The lines are blurring between robo-advisors, DIY and human financial advisors.

Human advisor fees are dropping.  In fact, the hybrid robo-advisor model combining humans and automated investment management is becoming one of the most popular investment options.

My advice is to assess exactly what you’re seeking in investment management. If you prefer investing with a financial advisor, make sure to ask about fees and check credibility with broker check.

Although I manage our investment portfolio myself, we do have a few robo-advisor accounts as well. And, I must admit, it’s convenient to turn rebalancing and investment management over to a digital investment manager.


Updated: May 31, 2020

Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t believe is valuable.

Featured image credit: Photo by You X Ventures on Unsplash

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