Financial Planning

For Your Money, Which is Better: The Algorithm or the Adviser?

When choosing between a human financial adviser and a robo-adviser, the best thing for most people is not either one: It's both.

We’ve seen a massive movement toward convenience and automation in nearly every industry. As consumers move toward the option of ordering products online from sites like Amazon, the retail world has seen a record-breaking number of brick-and-mortar store closures. Fortune even predicts that nearly half of retail jobs will be lost to automation, as self-checkout features and other human-less technology advances.

This movement has spread to the financial advisory industry, with the emergence of new technology affecting the way advisers give financial advice.

The reality is, the rapid growth and early-stage adoption of financial technology (FinTech) indicates an industry disruption is underway. Algorithm-based, digital advisory technology has brought us the increasingly popular “robo-advisers,” which replace human advisers with software programmed to understand and advise on clients’ needs. Robo-adviser firms have witnessed triple-digit growth since 2013. Research firm Cerulli Associates reported they had about $60 billion in assets under management (AUM) at the end of 2016, and could amass an estimated $385 billion by 2021.

According to the Labor Department, there are over 200,000 personal financial advisers in the U.S., of which roughly 20% are certified financial planners (meaning they passed an exam administered by the Certified Financial Planner Board of Standards, completed qualifying work experience and have agreed to adhere to the CFP board’s ethics code) and a mere 1.7% are chartered financial analysts (a designation awarded by the CFA Institute after passing three difficult exams related to advanced investment analysis and portfolio management).

If you’re weighing your options for financial services, keep this in mind: The key is in assembling a well-rounded team. The team should consist of an investment adviser or a robo-adviser, a financial planner or wealth manager (depending on net worth), a CPA and an insurance agent. Be wary of calling just one person your financial adviser. That can lead to gaps in your overall financial life. However, you may identify one person as your “trusted adviser,” which means, out of all the individuals on your financial team, you lean on the opinion and advice of that person more than the others.

Many people believe they have chosen to work with a “financial adviser,” but while that term appears on many professionals’ business cards, once you look at their licenses and pay attention to what they actually do, you will find they are one of the following:

  1. Investment Adviser/Portfolio Manager: Engages in the business of providing advice or issuing reports or analyses regarding securities.
  2. Financial Planner: Develops detailed strategies around financial goals, such as retirement, college planning, debt reduction, taxes and estate planning.
  3. Insurance Agent: Provides general financial advice around retirement, college planning and estate, with a major focus on insurance placement and risk reduction.
  4. Certified Public Accountant (CPA)/Business Manager: Heavy focus on tax strategy and expense management with general financial advice around retirement and real estate.
  5. Wealth Manager: Provides advice and strategy around non-liquid assets (i.e., real estate, art, collectibles). Includes not only risk management, but also asset protection, advance estate planning utilizing trusts, business structures, etc.

As you decide which option is best for you, it’s important to consider all aspects that are associated with your own financial situation. This may include cost, personal connection and competence.


The recent surge in robo-adviser popularity can be partly credited to its affordability, compared with the costs and fees charged by human advisers. For example, Millennials are a famously financially troubled generation, and software designed to fit their budgets and lifestyles is making wealth management cheaper. Traditional financial advisers usually charge fees or commissions (most at about 1% of assets under management or more), but this isn’t the case for robos. These platforms typically have lower fees, around 0.15% to 0.25%. If your account balance is under a certain limit, some won’t charge any fees at all.

Robo-advisers have opened up investment options to everyone. In a sense, they are democratizing investment advice, regardless of age or income.


There is one substantial advantage human advisers have over their robot counterparts — the human touch. We all know managing money is an emotional process. You want someone you can trust and who understands your long-term goals. Younger generations are known for favoring technology and convenience, but the human touch isn’t lost on them. A recent study found that 70% of Millennials surveyed said that a human adviser would bring them a higher return on their investment than robots.

The bottom line is that many financial advisers are used to catering to older generations. It’s crucial they adapt to the investment preferences and styles of a younger generation who present unique challenges and monetary goals. The client base will continue to change, and advisers’ services should grow with them. If they don’t modify their advising styles, the robo-advisers will.


Financial planning is a comprehensive process that requires integration of all areas of your financial goals. With that, each individual has separate needs that must be catered to their situation.

Robo-advisers may be able to assist with where to allocate your money for investment opportunities, but they may not be able to adapt to your changing needs. For instance, what if you are planning to start a family or you need to refinance your debt?

Vanguard published a paper in which they found that a client’s wealth is typically increased 3% each year with a financial adviser. It further suggests that financial advisers play a role in keeping a focus on long-term goals and prevent investors from making impulsive decisions.

Solution: Co-exist

The ideal financial advisory team consists of advisers who can co-exist for the benefit and best interest of the client.

Traditional financial services offer customized advice and plans based on a clients’ needs, which competes with lower fee ranges offered with digital tools. However, we can’t reject the benefits that robo-advisers provide. A Capital One survey showed that nearly 70% of Americans want services that offer a blend of human and digital guidance: a hybrid solution. It also found that an overwhelming majority like the idea that technology offers an option to connect with a human adviser.

A value-added approach is key to thriving in the ever-changing financial environment. Advisers whose clients reach multiple generations need to establish relationships to educate and provide personalized expertise on their new holdings and potential options and demonstrate the value they add above and beyond the apps.

As a society, we are technologically inclined, but we also prefer personalization and real relationships when it comes to our financial health and security. The key is to decide what works best for your individual needs and to have a team behind you to fulfill those needs.

About the Author

Justin Brimmer, CFP®, CAP®

Wealth Planner, Miracle Mile Advisors

Justin Brimmer, CFP®, CAP®, is a wealth planner at Miracle Mile Advisors, an independent registered investment adviser in Los Angeles. He advises clients on matters of complex wealth protection strategies. He works holistically with individuals and families to create customized plans that integrate portfolio construction, risk management and legacy planning.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
The 25 Cheapest U.S. Cities to Live In
places to live

The 25 Cheapest U.S. Cities to Live In

Take a look at our list of American cities with the lowest costs of living. Is one of the cheapest cities in the U.S. right for you?
October 13, 2021
15 U.S. Cities With the Highest Average Home Prices
real estate

15 U.S. Cities With the Highest Average Home Prices

Home prices have rocketed higher across most of the country, but housing costs are acutely painful in these 15 U.S. cities.
October 20, 2021


Don't Give Up on Investing in China
Foreign Stocks & Emerging Markets

Don't Give Up on Investing in China

Turmoil in China has been all over the financial news, but the volatile market is too big to ignore.
October 28, 2021
Is Hybrid Long-Term Care Insurance Right for You?
Long-Term Care Insurance

Is Hybrid Long-Term Care Insurance Right for You?

If you hate the idea of paying for long-term care insurance you may never use, a hybrid policy could be for you. The money you paid in premiums doesn’…
October 28, 2021
Smart Year-End Move: Manage Your Employee Benefits
Financial Planning

Smart Year-End Move: Manage Your Employee Benefits

For 2021, employers may provide a 12-month grace period for both types of flexible spending accounts.
October 27, 2021
Boost Your Retirement Savings for 2022
Financial Planning

Boost Your Retirement Savings for 2022

If you were self-employed or had a side hustle in 2021, you can save even more in a tax-advantaged account.
October 26, 2021