Robo Advisors vs Financial Advisors: Which Offers the Better ROI?

There’s a hot debate between robo advisors vs financial advisors – which one should you use? Here’s how to decide which one will give you the best ROI.

Today, automated investment platforms manage over 200 billion in assets. A financial advisor may be managing your investments. But, have you considered robo advising?

If not, you should consider using a robo advisor to take your investment portfolio to the next level. Yet, depending on your approach and investment objectives, hiring a financial advisor might be your best bet. Don’t know which advisor is your best call to improve your return on investment?

We’ve got you covered. We’ll tell you the basics and main differences between robo advisors vs financial advisors. Keep reading to learn which advising is the best one to boost your return on investment today.

Robo Advisors vs Financial Advisors: Which Advisor Is the Right Call

Besides developing a realistic investment plan, choosing the right advisor is essential to boost your return on investment. When you get into the investing game, you may think it’s enough to save money and invest it. Yet, your long term investment strategy will determine your portfolio profitability.

Most investors follow the advice from their investment advisors in their investment strategy. But, is it the best way to boost your return on investment? The only way to decide is by learning the basics about your investment advising options.

What Is a Robo Advisor?

You might’ve heard about the new developments in investment management known as robo advisors. This type of advising leaves all the analytical and market research work to the robo advising software.

Robo advisors are a great choice for investors who want their investments to run on autopilot. The platform places any trades and manages your investments. The software follows your risk profile and investment objectives.

If you choose a robo advisor, the platform will ask you to submit your form to open your investment account. During your onboarding process, they will ask you certain questions to get an idea of your investment approach. The questions will relate to your investment goals, risk profile and investment plan.

The software will determine your approach to develop an investment plan that fits your needs. Based on this information, the software will create a diversified portfolio.

Once it invests your money, the software will take care of adjusting your investments depending on the markets and other conditions. Don’t think that you’re stuck with the investment objectives you chose when you opened your account. Robo advising platforms allow you to update your account by adding any life-changing events.

You may think robo advising is available only for trading stocks. Yet, you can use a robo advisor for investing from ETFs to cryptocurrency.

Even if you decide to use a robo advising to skyrocket your portfolio, you should learn the basics about your investments. An example is how if you decide to invest in crypto you should learn about investing in Bitcoin and other cryptocurrencies. Your knowledge will help you monitor and understand your progress.

What Is a Financial Advisor?

If you want personalized advice, you should consider financial advisors over robo advising. A financial advisor will educate you, and recommend sound investment strategies that fit your investment goals. The biggest advantage about choosing financial advisors is that you’ll be able to discuss all your financial worries with an expert.

Their experience and knowledge will help you make the best trades at the right time. Believe it or not, boosting your return on investment depends on more than just investing in the right assets. You must analyze the markets and make trades that help you achieve your investment goals.

Financial advisors will educate you about the markets and investments. They will suggest investments according to your goals. Yet, at the end of the day, you’ve total control over your investments.

If you decide to hire an investment advisor, you will submit all your forms to open your account. During your onboarding process, you may meet with your advisor or have a phone call with them to discuss your investment goals. They want to learn about you as much as they can to determine your risk profile and define your investment plan.

Financial advisors hold all the regulatory required brokerage and financial advising licenses. These regulations protect investors and make advisors responsible for providing the best investment advice.

Financial Advisor vs Robo Advisor: Which Advisor Wins the Game?

You may think the only differences between a financial advisor vs robo advisor is how both types of advising work. Yet, that’s far from the truth. Each type of advising has their own approach when it comes to the budget, technology, human contact, and control.

Don’t know which advisor wins the game? Here are the most relevant factors that can help you choose between them.

Budget

Robo advising is a great option if you don’t meet the minimum requirements to open a typical investment account. Consulting financial advisors may require a larger investment because you will pay for their advice one way or another. Robo advisor fees may be lower than accounts overseen by financial advisors.

Technology

If you don’t like making business transactions online, robo advising may not be the right call for you. When you use a robo advisor, you will monitor and make your investments online. If you’re old school, an investment advisor should manage your investments to boost your portfolio value.

Control

When you choose a robo advising over financial advisors, you give away all your control over your investments. Remember robo advisors manage your investments on autopilot.

In contrast, financial advising allows you to control your investments. At the end of the day, your investment advisor can’t place a trade you don’t approve.

Human Contact

Robo advising allows limited human contact. In contrast, financial advisors will be with you every step of the way. They will provide one on one sessions to discuss your financial future.

The Bottom Line

Learning the differences between robo advisors vs financial advisors is the first step to boost your return on investment. There isn’t a rule of thumb you should follow when choosing your advisor. You must choose the advisor that fits your investment goals.

While a robo advisor will cost you less, you won’t get the personalized advice from an investment advisor. If you can’t afford to hire an advisor, you should consider robo advising to boost your return on investment.

Choosing the right type of investment advising is half the game. Before investing you must learn as much as you can about your investments and the markets. Want to assess the potential risks and rewards of your investments?

Check out our Markets section for insightful articles about your potential investments.