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Should I Hire a Robo-Adviser to Manage My Investments?

Automated investing platforms offer low-cost management. But that savings could come with a different cost

5-minute read

Alicia Adamczyk,

AARP

Published October 27, 2026

A green robot sitting at a desk with financial charts, petting a white cat sleeping on its lap.

Glenn Harvey

Key takeaways

Generally, robo-advisers assess risk, construct portfolios and automatically rebalance investments as customers age.
In 2024, the median annual robo-adviser fee was 0.25 percent of assets, compared with the 1 percent typically charged by human advisers.
Limited customization can be a drawback for investors with complex needs, though many platforms offer some access to human advisers.

With over $1 trillion in assets under management, robo-advisers have matured from a Silicon Valley novelty to a mainstream wealth-building tool used by millions of everyday investors. But those nearing or in retirement may want to think twice before hiring a robo to manage their portfolio.

Robo-advisers are digital investing services that use algorithms to build and manage portfolios based on a client’s goals, risk tolerance and other factors. They can manage money in standard brokerage accounts as well as tax-advantaged retirement savings options like traditional and Roth IRAs. Some are even offered by employers for 401(k) plan management.

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The first major robo-advisers, Betterment and Wealthfront, launched in 2010 and 2011, respectively. David Goldstone, a certified financial analyst at Condor Capital Wealth Management in Martinsville, New Jersey, says they are generally best for those who need basic, low-cost investment management. In fact, that’s who they were created to appeal to.

“They’re good products, but as your complexity and your wealth grows, they may be somewhat limited,” says Goldstone, coauthor of Condor Capital’s digital advice report, a study of robo-advisers’ portfolio performance.

That said, many robo-adviser providers are expanding their products and services to appeal to a broader swath of investors. Depending on the company, you may also be offered estate planning tools, as well as limited access to human advisers who can help with more complicated financial planning needs.

In 2024, the median annual robo-adviser fee was 0.25 percent of assets under management, according to a Morningstar report. That’s significantly lower than the 1 percent that human financial advisers typically charge.

Curious about letting a robo-adviser manage your investments? Here’s what to know before using one.

How robo-advisers work

Today, major robo-adviser players include Acorns, Betterment and Wealthfront, as well as banks and brokerage firms such as Charles Schwab, Fidelity and Vanguard. Their services typically include:

Risk assessment. Usually, when you sign up for an account, you will complete a questionnaire that the platform uses to determine your risk tolerance. Questions often focus on an investor’s feelings toward losses and their likelihood of selling in a market downturn, according to Morningstar. Providers will also consider your age and when you plan to retire when assessing your risk profile.

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Portfolio construction. Robos will construct a portfolio based on your responses in the risk assessment questionnaire, though the assets offered may vary. Some robo-advisers hold only a handful of stock and bond ETFs and some cash, while others might hold dozens of funds and also invest in assets like gold, real estate and cryptocurrency.

Portfolio management. Robo-crafted portfolios are generally more aggressive and stock-heavy for younger investors, and are automatically rebalanced as the customer ages to a more conservative, bond-heavy allocation.

Tax benefits. Many robo-advisers now offer tax-loss harvesting, which is when you write off losses against gains to lower your tax bill.

Limitations of robo-advisers

Some critics say the biggest drawback of robos is the limited advice and customization they may offer beyond basic asset allocation.

“The term ‘robo-adviser’ has now, and for a long time, really conjured up a more complex product … than what it really is,” says Goldstone, noting that people often think the platforms are actively trading stocks when, in fact, “most of these portfolios are very index-focused, well-diversified, low-cost portfolios.” Because their investment options are limited by design, a robo-adviser may not appeal to everyone.

“The value of a [financial] planner is much, much more complex than following the stock market,” says Bill Schultheis, a registered investment adviser and financial planner for Edelman Financial Engines in Kirkland, Washington. “I’m not sure the robo-adviser or AI is able to appreciate the emotional part of the decision.”

Nonetheless, some robos are working to provide more tailored investment options to customers based on their goals and risk profile. While retirement savers are Betterment’s bread and butter, the company is targeting DIY investors who are saving for nearer-term goals like buying a home, says Mindy Yu, Betterment’s senior director of investing.

“You’re telling us you need this specific fund in three years, we’re going to recommend this asset allocation to you, and we’ll de-risk you over time toward that time horizon,” says Yu.

And virtually every robo now offers some form of access to a human financial adviser, but the level of service varies, sometimes based on the customer’s total invested assets. Access to a human may also come with a higher annual fee.

Notably, some financial institutions, including Goldman Sachs, JP Morgan Chase and U.S. Bank, have scaled back, sold off or shut down their robo-adviser services in recent years, finding that many of their customers still prefer to have a human manage their investments.

Other financial institutions, like U.S. Bank, have moved to hybrid models that combine access to human advisers with digital tools. These typically cost more than a traditional robo-adviser but less than what a human financial adviser might charge for full-service wealth management.

Where AI fits in

You may be wondering how robo-advisers are incorporating artificial intelligence into their offerings. While some robos — and some human financial advisers — use AI, most are not using it yet in a significant way, says Goldstone, likely because regulation is moving slowly and financial firms do not want to run afoul of their fiduciary duties.

“The problem with a lot of AI is it’s great most of the time, but it does get things wrong, and when you’re talking about somebody’s retirement, or you’re talking about investing for somebody, getting it right 98 percent of the time isn’t quite enough,” he says. “Giving somebody bad advice in this area can really have pretty large and long-term impacts on their life in very real terms.”

Edelman Financial Engine’s Schultheis says that clients will often use AI chatbots like ChatGPT, Claude or Gemini to think through financial questions and topics that they then bring to him for more nuanced discussions.

Betterment’s Yu says investors’ ability to work with a human adviser through the platform is a value-add — perhaps ironic for a tool some once thought would replace living-and-breathing financial advisers. “The human element is always going to be there, because there’s a lot of comfort in speaking to someone,” she says.

The key takeaways were created with the assistance of generative AI. An AARP editor reviewed and refined the content for accuracy and clarity.

Alicia Adamczyk has covered personal finance, business and the economy for over a decade for outlets including The New York Times, The Washington Post, Kiplinger, Fortune, CNBC, Money Magazine and more. She is the executive editor of The Purse, a personal finance and culture website.

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