Key Takeaways
- Robo: Great for 90% of people. Low fee (0.25%), automated, efficient.
- Human: Costs more (~1%). Worth it if you have complex problems (Estate, Taxes, Business) or need a psychologist during a crash.
- Hybrid: Many firms now offer both.
Introduction
Investing used to mean calling a guy in a suit who charged you 2% to pick stocks.
Now, computer algorithms can build you a perfect portfolio for pennies. Is the human advisor dead?
Deep Dive: Algorithms vs. Empathy
The Robo-Advisor (Betterment, Wealthfront)
- What it does: You answer a questionnaire about your risk tolerance. It builds a portfolio of low-cost ETFs. It rebalances automatically. It "Harvests Tax Losses" to lower your tax bill.
- Cost: ~0.25% per year ($25 for every $10,000 invested).
- Verdict: Unbeatable for pure portfolio management.
The Human Advisor (CFP)
- What they do: They don't just pick stocks (computers are better at that). They do Financial Planning. They help you decide if you can afford a beach house, how to set up a trust, and talk you off the ledge when the market crashes 30%.
- Cost: ~1.00% of Assets Under Management ($100 for every $10,000).
- Verdict: Worth it if you have a net worth > $1M or complex life (Divorce, Business Sale).
Summary
If you are just accumulating wealth, use a Robo. If you are trying to preserve complex wealth, hire a Human.
