What’s the Difference Between Robo-Advisors and (Human) Investment Advisors?

February 7, 2020 - 4 minutes read

What’s the Difference Between Robo-Advisors and (Human) Investment Advisors?

Robo-advisors or human investment advisors?

There are things that robots can and cannot do.

Robo-advisors (automated online investment platforms) certainly have appeal. The idea of “hands-off'” or “cruise control” investing, managed by algorithms and digital brains, is a fascinating new capability. By removing the cost of humans from investment management, robo-advisors can charge investors less. Many new and younger investors seem to like the approach. So, if the robots can do it all, do we even need human investment advisors?

What Can Robo-advisors Do and Not Do?

Let’s look at what robo-advisors can and cannot do:

Robo-advisors CAN manage your investments for a lower cost than a human investment advisor. But is cheaper always better?

A robo-advisor CANNOT have a real conversation with you. This means they cannot really find out what your investment goals are or what your risk tolerance is. Some platforms have a pre-programmed quiz you can take. But, no matter the true reasons behind your multiple-choice answers, you end up in one of a few pre-determined investment buckets. As a result of these pre-set templates, they CANNOT customize an investment portfolio for you. So you just have to choose something off-the-shelf.

Robo-advisors CAN provide investment management services for smaller investors. For instance, some accounts can be opened with less than $100.

A robo-advisor CANNOT pick up the phone and talk with you when the market drops. This is usually when an investor most wants to speak to a real person. But because there is no one available, they cannot answer questions about your specific investments.

Robo-advisors CAN take it all off your hands and do all the thinking for you. All you have to do is fund the account. You don’t even have to talk to anyone.

A robo-advisor CANNOT collaborate.  Your human investment advisor, CPA and other professionals work together to plan strategies for taxes, estate planning, insurance, etc. There are additional investing strategies and asset classes that just can’t be figured into a one-size-fits-all algorithm.

Robo-advisors or humans?

They do only what they are programmed to do.


Robo-advisors and human investment advisors have their respective advantages. Which one is right for you? That largely depends. For instance, what’s the size of your investment portfolio? Do you know your investment needs? What is your risk tolerance? What is your desire for off-the-shelf vs. customized strategies?

If you are actively investing, or thinking about starting, you’ll want to visit with a Registered Investment Advisor. To learn more, download our free eBook 3 Things an Investment Advisor Should Do for You”.

3 Things an Investment Advisor Should Do for You








Anatoliy Cherevach is a Chartered Financial Analyst and a Portfolio Manager with Kunath Karren Rinne & Atkin, LLC, with over 19 years of portfolio management and security analysis experience. Prior to joining KKRA, he was a Portfolio Manager and Research Analyst with Cohen & Steers. Anatoliy holds an MBA in finance from Pacific Lutheran University. He is an active member of the CFA Institute and CFA Society Seattle. He is not a robot.

Anatoliy Cherevach