Robo-advisors vs traditional advisers

Online investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition advisers, also known as “robo-advisors” or “online advisers”, use technology to lower costs and create processes, such as opening an accountAccount An agreement you make with a financial institution to handle your money. You can set up an account for depositing and withdrawing, earning interest, borrowing, investing, etc.+ read full definition, that require minimum or no direct human contact. You’ll likely be offered standardized model portfolios containing lower-cost investments, such as exchange-traded funds (ETFs). As such, online advisers charge lower fees because of their lower operating costs.

Traditional advisers provide more personalized services. A human adviser will be your point of contact and is responsible for providing services, managing your portfolioPortfolio All the different investments that an individual or organization holds. May include stocks, bonds and mutual funds.+ read full definition, and answering your questions. You may also be offered more investment choices and strategies. While traditional advisers may charge higher fees compared to an online adviser, you may find these services of value if, for example, you have complex financial needs or large financial assets. You may also prefer dealing with one dedicated individual who you can build a professional relationship with.

Online investment adviser
Traditional adviser
Costs Low Varies
Minimum balance None to low High
Investment approach Model portfolios Tailored asset mixAsset mix The percentage distribution of assets in a portfolio among the three major asset classes: cash and cash equivalents, fixed income and equities.+ read full definition
Investment products Exchange-traded funds (ETFs)

Mutual funds

Wide range (including ETFs and mutual funds)
Technology use High Varies
Point of contact Automated and self-serve solutions.

A team of professionals managing multiple accounts.

A dedicated professional to manage your portfolio and answer your questions.
Additional products and services Limited Varies; wide range
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