Robo-Advisor vs. Digital Advisor: What’s Right For You?

Robo-Advisor vs. Digital Advisor: What’s Right For You?
Image Credit: plantronicsgermany / Flickr

There’s no arguing that technology has made an indescribable impact on our everyday lives.  With all of the innovations staring at us practically every minute, it makes it hard to remember the “old days.”

Harken back to when your print newspaper was waiting for you on the front step in the mornings as you walked out of the house to go to work.  With the rise of the Internet, and much print media replaced by online news sources, those days seem long gone.  Nowadays, millions of people rely on getting their news from social media sites like Twitter.

In the transportation services sector, we’ve gone from the days of predominately using yellow cabs to Uber, which according to Bloomberg is valued at $40 billion.

How about when you used to check out at the grocery store and the clerk asked you if you wanted to pay by cash or check?  In the 2000s, we moved into the phase of electronic payments via credit card or debit card.  Nowadays, even credit cards seem old-fashioned with the flurry of payment tech apps like Google Wallet, and ApplePay.

The financial services industry is no different.  There used to be one way to receive your financial advice, which was from the traditional, generally high-fee financial advisors such as Dean Witter, Merrill Lynch, Shearson and Smith Barney.  As technology evolved, a bevy of online discount brokerages for the self-directed investor such as Ameritrade and E-trade came onto the scene.  And now, we’ve seen the rise of the robo-advisors and digital advisors, each offering automated financial planning with varying levels of human engagement.

ARTICLE: Clark’s Investing Guide

What’s the difference between a robo-advisor and a digital advisor?

A robo-advisor is an online financial advisor that uses algorithms and model portfolios based on certain information that has been obtained from the client.  While robo-advisors are attractive based on their low costs and convenience, there is minimal human interaction.  The focus is on investment allocation, not financial planning.  No one is there to hold your hand while you’re making life’s big financial decisions like how to pay off college loans, having questions about buying that next house, or the deciding on the best savings plan to reach retirement goals.

ARTICLE: When Can You Retire? It Could Be Sooner Than You Think

A digital advisor is a hybrid of a robo-advisor and a traditional financial planner.  Offering the online ease and convenience of a robo-advisor, a digital advisor adds in the human element by making a personal advisor accessible to every client via chat or phone.   Digital advisors offer more than investment advice.  Because users have access to an actual financial planner, they can speak with someone directly about their unique set of circumstances and work together to create a financial plan based on their specific situation.

Which one is right for me?

The players in the space range from robo-advisors that are primarily fully automated with low fees that provide investment planning, to digital advisors that offer a combination of automation and the human element and provide financial planning as well.  Below are a few of the well-known players in the space.  It’s important to understand the nuanced differences between all of these advisors if you are considering using a robo-advisor or a digital advisor.



Wealthfront is the world’s largest automated investment service with over $1 billion in client assets.  Wealthfront is fully automated with very little human interaction.  In terms of fees, they do not charge an advisory fee on the first $10,000 in assets under management.  On amounts over $10,000, Wealthfront charges a monthly advisory fee based on an annual fee rate of 0.25%.  The only other fee incurred is the one embedded in the costs of the ETFs that a client owns which averages 0.15%.  The minimum investment is $5,000.


Betterment is also a fully automated investment service with very little human interaction.  Like Wealthfront, Betterment begins the process with their clients by asking them a series of questions and then recommends an investment plan.  Betterment charges a maximum 0.35% monthly portfolio fee which decreases as balances grow.  There is no minimum investment.


Learnvest is an online digital advisor that doesn’t manage investments, but clients do have access to a Certified Financial Planner that they can contact by phone or email to ask questions.  Upfront fees range from $89 for basic budgeting help to $399 for more comprehensive planning, plus a $19 monthly fee.  According to Learnvest’s website, they do charge a $299 set up fee as well.

Personal Capital & Wela

Personal Capital and Wela are digital advisors that have very similar offerings.  Both advisors offer free financial advice to all of their users.  Users can access a financial advisor for all their financial questions who can also help set up a unique game plan based on that client’s specific circumstances.  Users can also access all of the financial planning tools on these sites at no charge.  In both cases, fees are incurred only if a user decides to become a client of the advisor’s paid financial advisory services.

Personal Capital charges a management fee of less than 1% to connect users to a registered investment advisor who provides personalized wealth management advice online.   Wela works in a similar way.  If a user decides to become a client only then will the user be charged.  Wela starts their annual fee schedule at 1% for an account size of $0 – $250,000 and fees are reduced as the amount of the account size increases.

(Full disclosure: Author Wes Moss is a vital partner of Wela.)


What are your thoughts on robo-advisors and digital advisors?  If you’re worried about putting your money with a fully automated system, consider a digital advisor that will provide online convenience as well as access to a personal financial planner who’ll be your partner in making life’s big financial decisions.

About the author: Wes Moss is the host of the Money Matters radio show on WSB Radio, host of the TV show Atlanta Tech Edge on Atlanta’s NBC affiliate, and Chief Investment Strategist at Capital Investment Advisors. In 2014, he was named one of America’s top 1,200 financial advisors by Barron’s Magazine. He is the author of several books including his most recent, You Can Retire Sooner Than You Think  – The 5 Money Secrets of the Happiest Retirees, which has been one of Amazon’s best-selling retirement books in 2014. Contact him at [email protected], @WesMoss365, or

  • Show Comments Hide Comments