In the past, when we wanted to invest in the stock market, we would go to a financial stock investment advisor. This meant having a human talk with a financial advisor so that we can explain our financial goals. However, these days we have Robo advisors, also known as automated advisors. These also exist for other areas – some make use of these options for cryptocurrencies, especially after investing on cryptoevent.io or similar platforms – which makes them more accessible than ever.
So, which one among the two is the best type of financial advisor? Let’s find out their benefits and disadvantages in this article.
Cost Comparison
Robo advisors are a cheaper alternative compared to financial advisors. For example, Robo advisors charge us a service fee of 0.25% in a year, and a financial advisor will charge us 1%. We may see the difference in the two prices being little, but it makes a massive difference in the long run.
The ideal way of comparing the prices is to know the number of years that we will be investing. This way, we can see if we are wasting money on service or not. Other Robo advisors do not charge management fees. So, is a human advisor worth it? From a cost perspective, yes, but as far as effectiveness goes, you should always explore the pros and cons depending on your investment’s nature.
Financing Experience
It’s an obvious fact a human advisor has more years of financial experience than a Robo advisor. A financial advisor is excellent for us if we have complex trading needs and have a huge investment portfolio. They can craft a sound investment plan that can save us losses in the future.
On the other hand, Robo advisors are good when it comes to financing experience because they have the ability to show us our investment performance and the steps that we should take. The only disadvantage is that they won’t be able to craft an excellent financial investment plan for us like the financial advisor.
Human Contact
It’s important to have human contact when dealing with money. Unlike Robo advisors, financial advisors can show care and empathy. This is something we all need as investors. If something goes wrong, we need someone who can humanly guide us.
On the other hand, Robo advisors use algorithms to buy and sell stocks for us. They can react to a change in the market immediately. This is efficient compared to a human advisor, where we have to go for regular updates.
Control of Our Finances
With Robo advisors, we have no control over our finances. The robot advisor has all the control of making our investments for us according to the algorithms. However, with a financial advisor, we can be involved in as much as we want.
The decision here lies with us, if we need to control our investments, we know who to go to, and if we don’t need to have control, we know the one to choose.
Variety of Services
For those of us who need only investment services, then Robo advisors are the best. If we need more services like retirement planning, tax education, insurance, and so on, then we should go to a financial advisor.
In short, a financial advisor is more than an investment person. We are assured of even more services for those of us who manage to get the right financial advisors. This is majorly why a financial advisor is more expensive than a Robo advisor.
Conclusion
Robo and financial advisors are both good, depending on the services that we want to get. No one outshines the other in many aspects. The important thing is to do adequate research before choosing to settle with either of the two.
