Let's face it. For most of us, the words "financial planning" can be about as delightful as a trip to the dentist. The financial landscape is overrun with unfamiliar terminology, overwhelming calculations, and a feeling in your gut that we should be doing something else with our funds than having them collect digital dust in a savings account. We all have goals; that may include an enjoyable retirement, a college fund for the kids, a house down payment, or just the comfort of knowing you are financially sound. The question that lurks for so many of us is simply, "How do I get from here to there?"

For decades, the answer was to find and work with a financial advisor. You would sit down with an advisor across a mahogany desk, and they would guide you, build a plan and manage your investments—building that relationship with trust and personal interaction. Then, the financial crisis of 2008 came; combined with the advent of the smartphone, the robo-advisor revolution took place, with these digital platforms that could invest smarter, cheaper, and more efficiently. In effect, the decision was made, and so began a whole new total confusion. Which would be better, the old approach of a person or machine that's driven by algorithms?

Remember, however, it is not an either/or choice space. The essence is in appreciating the unique powers and flaws of both. This is not about a winner; it's a question of the right tool for the situation, in the moment you require it in your life. Treat it less like deciding between a custom suit and off-the-rack, and more as when you need a master tailor, or an off-the-rack piece that fits you well, and sometimes even better. This exploration is about demystifying both experiences, taking out the marketing obscura, and giving you clarity on how to line your money to your life goals.

Part 1: The Rise of The Machines - Demystifying the Robo-Advisor

If you've used services like Netflix or Spotify, you understand the essential concept of a robo-advisor. These services rely on algorithms (a.k.a. fancy math) to automate the investment process. The deal is, you interact with an app or web interface rather than a person. It is incredibly simple; you answer questions about your financial status, your investment goals [i.e. saving for a house in 10 years or retirement in 30 years], and most importantly, your risk tolerance. Are you the kind of person who checks your portfolio daily, and at night loses sleep over a 2% drop? Or are you the kind of person who is comfortable with the natural rollercoaster of the market, and know that it has trended up historically over time?

The platform takes your answers into consideration and assigns you a "risk profile," then automatically builds and maintains for you a diversified portfolio, typically using low-cost exchange traded funds (ETFs). It's a set-it-and-forget-it model for the digital age. Its allure is real, and it is built on several fundamental benefits that are changing the financial services sector.

The Allure of Accessibility and Cost

Investment management was a service for the wealthy professional for decades. Traditional advisors would create account minimums at $100,000, $250,000, or higher—leading to exclusion for young professionals just starting out or middle-class families with no substantial accumulated wealth. And robo-advisors removed that barrier. The downside is the no or low minimums imposed by firms such as Betterment and/or Wealthfront making it available to anyone who has a few hundred dollars to start investing.

The fee structure is revolutionary as well. A human financial advisor may charge 1% or more of assets under management every year (and decades of such fees may add up to tens-thousands of dollars). In contrast, robo-advisors often charge 0.25% on items like ETFs. All this is okay, but in the space of investing, fees are the "silent killer" of wealth. To illustrate a point, 0.75% may seem insignificant, but when you are investing for decades, the difference between your adviser charging 1% and 0.25% can mean whether your retirement is comfortable or exceptional.

Let's put some numbers to it because dollars and percentages make most eyes glaze over! You are 35 years old, have 50,000 to invest, and are going to add 500 every month until you retire at 65. Assuming a return of 7%, if you have a 1% advisor fee, you can expect to have about 672,000. If we compare the same situation with a robo-advisor paying 0.25%? The numbers work out to: approximately $757,000 (an $85,000 difference, nearly two years' worth of retirement income for many people). And I haven't even touched on the expense ratios of the investments themselves, where robo-advisors tend to win using ultra-low-cost index funds.

Now, here's where things get interesting, and this is where the discussion becomes less black-and-white, as marketing materials would suggest. The $85,000 assumes everything is equal. It assumes you never panic-sell in a down-market. It assumes you continued to save with discipline in a recession and boom. It assumes you never need to consult with someone on whether you should pay off your mortgage early or invest the extra cash instead. In other words, it assumes you are a perfectly rational robot. Very few of us are.

The Beauty of Automation and Behavioral Guardrails

Human beings are, by nature, emotional beings. We are susceptible to cognitive biases from which we can develop disastrous habits as human investors. The most common is to buy when it is euphoric in the market (high prices) and sell in panic when the market gets crushed (low prices). That "buy high, sell low" is the anti-thesis of a successful long-term plan.

Robo-advisors have no such emotional baggage. They invest with a cool, mechanical process. And they employ a systematic strategy called "tax-loss harvesting," which can help offset your capital gain taxes. They will automatically rebalance your portfolio, which means that when one asset class outpaces the other, and your target allocation is skewed, you will automatically sell a little of the winner, and buy a little more of the loser meaning you are essentially forced to "buy low and sell high" without the effort or emotions involved. This automation is like a set of guardrails that will keep you on track with your investment strategy, even when your gut is telling you to do the wrong thing.

I remember back in the March of 2020 when the markets were crashing due to COVID-19. My neighbor, who is a dentist, and a self-proclaimed investment expert, called me in a panic. He had already sold half of his stock position and was ready to sell the rest. "I will get back in when things settle down," he told me. Classic mistake. By the time he felt like it was ok to go "back in," the market had regained most of its losses and he missed one of the best turns around in the market ALL TIME. The robo-advisors just continued to do their thing, rebalancing, harvesting tax losses and buying stocks at bargain prices. No fear, no doubts and no costly mistakes.

This is the superpower of a robo-advisor, it should not be taken lightly. The gap between returns by investors and the returns of the market—what the market delivers compared to what the average investor earns—could not be further apart. Research shows repeatedly that the average investor underperforms the market by several percentage points annually because of their timing and emotional decisions. Even if all a robo-advisor does is help you stay invested in accordance with a plan, you are likely better off than paying expensive investment fees several times over.

The Algorithm's Limitations

While robo-advisors are very smart, they are not omniscient. They work within a defined, albeit smart, box. Their strengths stem from managing a relatively simple combination of stocks and bonds, but complexity is this sort of account's downfall. Just go ahead and ask a robo-advisor what to do if you have stock options to exercise from your employer. Or ask it how to manage your finances as a freelance contract worker whose income varies greatly. Or if you can afford to assist your aging parents with medical bills, and still save for your child's college education. Or what to do with an inherited IRA. The algorithm will stop helping.

Since a robo-advisor cannot consider all of the variables that inform your financial secrets, it can't return any kind of personal advice on estate planning or taxes (beyond basic harvesting). It also cannot help you decipher your insurance needs or what steps to take in the event of significant changes in your life related to wealth (being a sudden financial beneficiary, getting fired, experiencing a divorce, etc.).

Furthermore, while the "one-size-fits-most" algorithm is efficient, it does feel impersonal. It would be more truthful to say that your financial life is not a series of questions that suggest you choose your own adventure. Money is tied into your career, your family, your health, and the things that matter most to you. In short, a robo-advisor would optimize your portfolio for the lowest fee possible which is true; however, it cannot understand the "why" behind your money. It might meet with you when the financial market declines and it might have a steady voice while looking you in the eye to remind you about your long-term plan. A robo-advisor won't be there to see you honored for achieving your savings milestone that may have took you long-term effort to achieve. To do this, you will need a different type of guide.

Let's discuss another limitation which has not been emphasized enough in the polished advertisements for robo-advisors. The robo-advisor is really smart about managing your liquid assets – stocks, bonds, and cash. But what about the rest of your financial life? What about the equity in your home, which for most Americans is their single biggest asset? What about the pension from your old job, or your spouse's deferred-compensation plan, or the small business you are thinking about starting on the side? The robo-advisor cares about what is in its accounts it does not consider your complete financial picture. It is like putting together a jigsaw puzzle but only looking at a quarter of the pieces. You might optimally arrange one-quarter of the pieces, but you have no idea if the pieces fit in your entire financial picture.

This limited vision can lead to actual bad recommendations. The algorithm may suggest an aggressive 90% stock allocation because, based upon your age and risk tolerance, it believes you can afford to be aggressive, not recognizing that you are also carrying $80,000 in variable-rate student loans and no cash in an "emergency fund." Context matters, and robo-advisors exist in a contextual vacuum.

Part 2: The Continued Value of the Human Financial Advisor

The traditional financial advisor has had to evolve. The days of simply picking stocks and collecting a fat fee are, for the most part, over. In the 21st century, the core value proposition of a great human advisor is not solely about investment performance; it is largely about holistic life planning and behavioral coaching.

The process of a human advisor is fundamentally different than a robo. It does not start with a digital questionnaire. It often begins with a discussion—often a long, rambling discussion. A good advisor will seek to understand your entire financial ecosystem. They will want to ask questions about your debt, your cash flow, your employment stability, your health, your family situation, and your hopes for the future. They will want to know what keeps you up at night. Are you worried you will run out of money in retirement? Are you paying off student loans? Are you hoping to start your own business? The in-depth discovery process will allow the advisor to present a financial plan that is as unique as you are.

When I first met with my financial advisor, my meeting lasted nearly 3 hours. I had expected a sales pitch. In fact, the first hour was full of what seemed to be questions completely unrelated to investing. She wanted to know about my parents' health and health care costs. She asked about my job and where I felt I was headed in regard to my career. She wanted to know about my wife's student loans from graduate school, even though we had kept our finances semi-separated at the time. She wanted to know about whether we planned to have children, and if so whether we would help pay for college. She inquired about my childhood relationship with money (did I save like my parents modeled, or was money a source of anxiety as a child?).

Initially, I wasn't clear on the relevance to mutual fund selection. Well clearly everything. Since my life and financial life are not occurring in isolation. My wife is working towards a doctorate which implies a single small income for some years to come. My mother's declining health may mean I will have to help manage and pay for care ahead. My own relative ambivalence about my corporate job implied that someday, I may end up in a lower-paying but more satisfying position to work at. All of these variables, none of which are of course going to be on a robo-advisor questionnaire, fundamentally influenced possibilities for what type of financial planning makes sense for us.

The Integrated Approach

A robo-advisor would help me manage my investments; a human advisor can help to manage my financial life. An advisor would contextualize everything. The advisor would work with my CPA to create a tax efficient withdrawal plan in retirement. The advisor would work with my estate attorney to align my will, my trusts, my beneficiaries, and my financial plan. The advisor would help contextualize what type and amount of insurance (disability, life, long-term) make sense to help preserve the wealth I have been accumulating. In terms of the big picture, integration that an advisor would be undertaking for me I can assure you algorithms are nowhere close to replicating at this point in time.

My point about integration, brings to mind a couple I know who are both doctors in their early forties. On paper, everything was working out—income nearing to $500,000, a bit of debt, and good savings. A robo-advisor would gladly have taken their money, put it into a diversified portfolio, and moved on. But when they met with a human advisor, the story became more complicated. They both worked for the same hospital system. If that system had a financial situation that changed, they could both be out of work at the same time. Their insurance was almost completely through that employer. Their retirement investments were driven primarily through that employer's stock in compensation plans.

Their advisor wasn't just reorganizing their brokerage. She was helping them understand their concentrated risk and create some organization around that. They need a bigger emergency fund than the average person—with a full year of expenses instead of six months. In case they both became zero income at the same time. They need individual disability insurance in case the employer coverage didn't address an issue. They need to systematically sell and diversify the employer stock as it vested, even if that felt like being disloyal betting against their own hospital. The issue was not about better investments; it was about organizing their life in a more robust financial moment. No algorithm could do that.

This more whole life approach also works then life throws curveballs, which is has and does. Divorce, losing a job, receiving an inheritance, caregiving for older parents, raising a special needs child, a business opportunity that needs capital - these are not edge cases; these are the realities of life. When you find yourself in the midst of one of those situations, the last thing you want to do, quite the opposite in fact, is to do the thinking for yourself and consider the financial ramifications of something event based on your own potentially erroneous Google search of the tax code at midnight while feeling your blood pressure rising into the red zone.

A human advisor is then your thinking partner. Should you rollover your 401k from your old employer, or is it fine just to leave it? Is this a good time to be converting some traditional IRA money into a Roth based on a temporary drop in your income due to a career transition? Can you really take 6 months off from work to care for your father after a stroke without blowing up your retirement plan? There are no algorithmic answers to these types of questions. There are human answers that are dependent upon your priorities, your risk preference, your family commitments, and not to mention, what you are trying to build.

Behavioral Coaching - The Secret Weapon of the Advisor

Perhaps the greatest and single most important value a human advisor offers is not proven through their upside potential of being able to pick a stock or group of stocks, but rather by simply playing the role of a behavioral coach for an investor. The financial markets are an arena of fear and greed. In a bull market, it is so easy to forget your plan and chase after the latest "hot stock" or "hot fund" that the market is touting or recommending. The opposite is true during a bear market where the urge to cash all your investments and pile it all into the mattress is so incredibly overwhelming.

An advisor can serve as your strategic partner through those highly emotional times. The advisor can serve as the voice of reason and as the steward of your long-term plan. Some else is that they have a depth of experience and shared that same emotional situation multiple times through several market cycles. They can literally call you, remind you of your goals, and provide the context, perspective and historical data point you need to keep you on track and more importantly, on plan. That effort alone could help save an investor from an emotional mistake that would be in a class and harmful beyond even just the fee charged by the advisor for their time.

As another famous investor Nick Murray once said, "The business of the financial advisor is not contrived and theoretical management of money. The business of the financial advisor is the management of emotion."

Let me tell you about the most valuable phone call I never made one day in October of 2018. The market had fallen by almost 20% over the previous several weeks. Every day, I would wake up to that feeling of getting punched in the gut seeing my various portfolio values down another $15,000 one day, then $20,000 the next day, or $30,000 the next reporting of value, you get the point. Each morning the financial news was diabolically apocalyptic, trade war with China, rising interest rates, political chaos, tech stocks getting crushed. The talking heads on television were despairingly talking about whether this was going to turn into a repeat of 2008.

I found myself awake and checking my account more than several times a day, which is always a bad indication. I seriously start considering moving all of my investments to cash, just until things calm down. If I could just protect myself from the next 10% drawdown, I could then get back in at lower rates and would be ahead on the rebound, right? Every misguided market timer would tell themselves this. I didn't make that fateful call to my advisor to get to cash. Not because I was disciplined or rational but because I could hear her voice in my mind – one of the reasons I called her would have been to ask for that reason.

There were many times when I heard her voice in my mind reminding me that we had built a portfolio that cost her time and headache to withstand volatility just like this. We planned for multiple crashing the market during the thirty-year time horizon. The worst thing I could do would be to lock in a paper loss as a real capital loss, selling my way through. I was thinking about my portfolio in the same way people think about dollars, not shares, and when you stacks cash in a declining market, it's a good thing – you will be able to accumulate shares on sale. I did not need to her talk me off the ledge because of her planning process, well in advance of a volatile market. By the time the storm hit, I was anchored.

And sure enough, by the time January came around, the market retraced all its losses. Had I sold in October, I would have locked in significant losses and stayed in cash well after the market had begun its rebounce - missing the very upside I was trying to protect. It's very typical to miss ist when they calculate the cost of a financial advisor. It is not strictly for investment management. You pay an advisor's fee or a commission for insurance against the worst versions of yourself. And insurance can be more valuable than its premium.

The Challenges of the Traditional Model

The human model is not without complications. The most unmistakable consideration is the cost. As noted above, 1% annually seems high when viewed alongside a robo-advisor. However, it's important to understand what you're receiving for that fee. Are you getting comprehensive holistic financial planning and ongoing coaching, or simply portfolio management that you could obtain from someone else at a lesser cost?

There's the question of access and potential conflicts of interest. The financial advice landscape is quite complex with respect to titles, compensation, etc. Some advisors are fiduciaries and legally obliged to act in your best interest at all times. Others operate under a suitability standard, with which is a lower threshold. Some are fee only and directly charged by you to minimize conflict and commission. Others are fee based or commission based that earn from selling you specific financial products. Regardless, it's important, to do your own diligence in making sure your advisor's motivations are aligned with yours.

And, let's be candid in stating, something the industry doesn't always talk about, there are a lot of mediocre financial advisors out there. The barriers to entry for becoming a financial advisor are not particularly high. So, just because someone has a business card that says "financial advisor" doesn't mean that person is well qualified to help you making complex financial decisions. In fact, some are basically sales people, with basic licenses, that have been trained to get assets and sell products at all cost. Even others may just be mediocre yet competent, but still trying to beat the market with stock price. Regardless of professional experience, we know, and we have known for decades, that the odds are very low that beating the market through stock picking, especially versus investing in popular market index ETF's, will defeat the average professional experience investor in the process, let alone an average amateur do it.

Discovering an authentic, sound financial advisor can often feel like discovering a good physician, or good therapist. It can take research, referrals, interviews and a touch of instinct. It requires pressing questions: How do they get paid? Are they a fiduciary? What is their investment philosophy? How often will we meet? What happens when the markets decline? Are you able to speak with a few current clients?

The costing question should also be looked at more closely. Yes, 1% sounds like a lot of money next to 0.25%. But isn't paying 1% of your assets under management the proper way to pay for financial advice? Perhaps. Or perhaps not. Some advisors are moving to flat annual fees or hourly rates, which makes more sense given some people's situations. For example, if you have a $2 million portfolio, then why should you pay $20,000 a year for advice when somebody with $500,000 pays $5,000 for, essentially, the same advice? Just because someone has $2 million in their portfolio doesn't mean they need four times as much advising.

Part 3: The Blended Future - A Hybrid Approach for the Modern Investor

So, what does this all mean for you? Is it a low cost, efficient, but impersonal combination robot versus a comprehensive, empathetic, but significantly more costly human? For a growing number of Americans, the most powerful answer is: both.

The financial industry itself is increasingly converging on the hybrid combination model! Numerous ordinary advisory firms are understanding and integrating robo-technology into the flow of the practice and as a component of the business to handle the monthly rebalancing, simple account management, etc. This allows the human advisor to focus on big picture/advanced strategies with the clients, while the robo-performance manages the portfolio and all related matters. Additionally, some of the top robo-advisors are also coming to grips with the idea that they too have limitations and have started offering different tiers of service that includes a human Certified Financial Planner (CFP), for a little extra fee. This compounds the spectrum of choices you will have in selecting the right organization to meet your needs and budget.

The Service Continuum

Pretend there's a continuum that looks like this:

The Do-It-Yourself (DIY) Digital Core: You decide to use a robo-advisor like Betterment or Wealthfront as the engine then for your core investment portfolio. It manages the day-to-day grinding of investing and rebalancing and tax-loss harvesting, all through its algorithm, and at a very minimal annual cost. This is great for taxable brokerage accounts, for your IRA, or other typical investment goal (retirement, etc.).

The Human-Guided Check-Up: For a slightly higher fee, you could use a hybrid service like Vanguard Personal Advisor Services, or Schwab Intelligent Portfolios Premium. Here, a robo-advisory service still manages your investment portfolio, but you generally have periodic access to a human financial advisor (by phone or video). This is a great option for someone who wants a yearly financial "check-up" with those in charge of the portfolio, or to validate the plan with someone, and also has specific questions without paying for the ongoing advisory relationship.

The Comprehensive Human Partnership: If you're a complex financial situation, high-net-worth, or just in need of a genuine and continuous relationship, it may be best to work with a human financial advisor (or team). This adviser will similarly utilize technology and perhaps the same robo-engines to execute the investment portion, but the true value of your adviser is undoubtedly in constructing and continually adjusting your whole financial plan, along with delivering ongoing behavioral coaching for you.

However, your spot on this continuum is not fixed. It is likely to change at various points throughout your life. For example, a recent college graduate with student debt and modest income is an ideal candidate for a pure robo-advisor to begin building a nest egg. To make matters more complicated, ten years later, the same individual may be married with a young child, a mortgage, and an increasing 401(k), and therefore may wish to shift to a hybrid model to establish a college savings plan and determine if his insurance is sufficient. Finally, twenty years into the future, as they approach retirement with multiple revenue sources, sophisticated tax questions, and estate planning concerns, the full human adviser will be the critical quarterback for future financial success.

Real-World Examples

Let's get realistic and practical about what this hybrid alternative may look like in your life, because its one thing to be hypothetical, and another thing to actually implement. I've seen this play out firsthand with my friends and family and there are certainly trends to note.

For example, my cousin Jake is 28 years old, works in marketing, and makes decent money, but nothing to write home about, making approximately $65,000 per year. He has approximately $15,000 in student loans at an acceptable interest rate, with the additional $8,000 sitting in a savings account for some time with probably no interest earning potential. Jake is the ideal marquee for a robo-adviser. Trust me, I told him that too. He opened a Betterment account, established an automatic monthly contribution of $400, and almost forgot the rest. Three years later he has almost $20,000 invested while hardly thinking about it. The automation did its job. The fees are negligible. He is building wealth in the background while focusing on his job and, quite frankly, living it up in his twenties. Should Jake use a human financial advisor at this stage in his life? Probably not. He does not have the sophistication that warrants the cost. He does not own a home or have children or worry about estate planning, etc. Sure, he could probably optimize his student loan payoff strategy a bit, but he can figure that out with a quick search and an online calculator on a Saturday afternoon. The robo-advisor is doing exactly what it needed to do: it got him in the game with little resistance.

Now let me put this next to my friend Sarah. Sara is 52, divorced three years ago after a 25-year marriage, recently inherited $300,000 from her mom's estate, has two kids in college, and is a freelance graphic designer which means her income is wildly variable. She's trying to figure out if she can actually afford to retire at 65 or if she needs to work until 70. Sarah needs a human being, full stop. Her life is complicated enough that a robo-advisor would essentially be a waste of time. She simply does not want her investments managed, She actually wants someone who can help her to sort through all of the components which will involve the inherited IRA, her ex-husband's Social Security benefits (which she can claim under certain circumstances), her own money sets up for retirement, financial aid applications for her children, and an irregular flow of income. Furthermore, she needs some tax planning. She needs help with an income strategy for retirement. She needs help to consider whether it even makes sense to downsize her house. None of that will be done with a robo-advisor.

Next is what I think many people experience, a middle-ground situation. My neighbors are a couple of family, maybe late thirties, with two kids in elementary school, they earn decent dual incomes, they have a mortgage, they have some savings saved in a retirement account, and they do not have any family financial drama or complexity. They're not financially wealthy enough to justify paying $8,000 per year for a comprehensive financial planning service, but they're not in the "set it and forget it" level of in-depth engagements like Jake. Their situation would benefit from an individual looking at their overall situation once per year. Someone to review insurance, confirm their on track for retirement, and maybe see if the tax situation could be optimized- once per year. For them, hybrid makes sense. A robo-manager not to spend much over a couple of hundred dollars yearly, but can use an advisor once a year. Cost/value sweet spot.

Flexibility and Customization

Lastly, you can mix and match to make sure you have kind of what you want. There are no regulations to state that your money must be organized one way or managed in one location. You might use a robo-advisor for your IRA and your taxable account, periodically paying a flat-fee advisor on an annual basis for guidance on your overall financial planning. Or, perhaps, you might hold most of your assets in a relationship with a human advisor, but keep a separate "fun money" account with a robo-advisor where you would take on a little more risk. Flexibility is the key. Flexibility implies these are neither-or choices.

One model that I have found to work fairly well is what I would refer to as a "staged transition." It would look like this: you start with a robo-advisor when you're young and the finances are relatively simple. As life gets more complex, you work a one-time consultation with a fee-only financial planner—you pay them $2,000 or so for a comprehensive financial plan. They look at everything, provide suggestions, and you take the plan away writing a method for how to implement it with your robo-advisor and other accounts. Then as you accrue wealth and complexity begins to build, you move toward a relationship with a human advisor and layer in that service. Every stage you'll be receiving appropriate help for what you need at a price that's appropriate.

"Our journey" means having an appropriate response to be honest with yourself about what you actually need vs. what you feel comfortable with. Some individuals do not want a human advisor simply because they do not genuinely need one: they are disciplined, have a baseline of knowledge, and their situation is relatively simple. Other people do not want a human advisor because they are in denial about their own behavior or the complexities of their situation. Yes, they will avoid the cost of an advisor, but they would also like to avoid the accountability. If you are the type of person who tinkers with your portfolio and second guesses your allocation, or perhaps can not sleep at night if there is a dip in their allocation/market decline, the cost of having an advisor is not a cost at all—it's an investment in your own well-being and regulating your financial behavior.

Conclusion: It is About Your Journey

The struggle of whether you should go with a human advisor or a robo-advisor is often pitched as a battle and an old vs. new notion. However, this is a little bit misleading. Both are just tools, and the best investors know how to utilize a tool that is suitable for what they are trying to do. The idea is not to try to find the "best" or "right" investment platform that is best or right in an abstract sense. The idea is to find what is the best for you.

Start by taking a brutally honest assessment of your own life financially. How complicated is your situation? How disciplined are you when faced with financial fear or greed? What are you trying to do? What is the "why" behind the money you are saving and investing?

If you are simple; low cost; and self-disciplined, a robo-advisor is an innovation that is amazing and can deliver professional finance wealth management at a price not possible until now. It makes investing accessible in ways that only two decades ago would have seemed impossible.

If you are navigating complex life situations and have a desired trusted guide, and you know in the back of your mind that your own emotions are your worst financial asset or liability, the benefit of a good human advisor can be extraordinary. They won't just provide a plan, they will provide peace of mind.

In addition, for many, the roadmap for the future will be a combination of optimizing digital efficiency for the simple parts of investing; while hiring an excellent and trusted human advisor in order to work with them for the more complex, emotional, vulnerable, and deeply personal, long term journey of successfully investing money well for a life lived well.

Take Action Today

In the end, whether you make the decision to use a human, a robot or a combination of both, the most important step is to begin. Have the conversation, open the account, take that first little step. Your future self will appreciate you for finding your way clearly and with intentionality. Because here's what I've noticed over the years watching people make good and catastrophically bad financial decisions: a great plan that you never execute is worthless. But a mediocre plan that you actually implement is worth its weight in gold. Analysis paralysis prevents more people from building wealth than market corrections do.

Maybe you're reading this and saying, "Okay, that all makes sense, but I still don't know what to do." That's fair. Here's my two cents, for whatever it's worth.

If you're under 35 with less than $50,000 to invest and relatively straightforward financial life, I'd encourage you to start now with a robo-advisor. Go open the account, link your bank account, set up automated investing and stop overthinking it. You can always change directions later.

If you are between the ages of 35 - 55 and your life is getting more complicated - kids, mortgage, jobs, retirement, maybe some inheritance or stock options thrown in the mix - I would look into a hybrid approach or at least meeting with a fee-only planner once to pressure test your existing situation. You don't need a full-time advisor yet, but you need someone in your corner to help you identify potential blind spots.

If you are over 55 and nearing retirement, or have substantial wealth regardless of your age, or if your financial life involves multiple states and/or business ownership, or complex estate planning, don't be cheap now. Try to find a good human advisor and make sure they are a fiduciary. Interview several different potential advisors. Ask difficult, thought provoking questions. Check their references. And then, settle in for the journey. Pay for them if they have demonstrated competency. The price of good advice will pale in comparison to the price you could pay of not receiving competent advice at this stage.

Final Thoughts

But, above all else, this should be the crux of your conclusion: financial planning is NOT perfection. It is reasonable progress towards your goals, while avoiding catastrophic errors along the way. The person who simply invests their money in a simple robo-advisor portfolio and sticks to it regardless of what the markets are doing will almost certainly outperform the person who spends their time trying to confirm the best strategy, with no intention of investing. The person that pays for the human advisor and actually follows his advice will most likely outperform the person who plays the market or tries to time financial decisions on whatever social media post they come across.

Your financial life is a marathon, not a sprint. There will be market declines. There will be years that you earn less than expected or spend more than expected. There will be windfalls and there will be surprises, both bad and good. The goal is not to be perfect with every single decision. The goal is to build a system, human, digital or a hybrid that can help keep you on track even through the ups and downs of real life.

And here's potentially the most important thing: your relationship to money is personal and very much rooted in emotions that have nothing to do with math. Some people are always going to feel better having a human advisor they can speak to, even if it costs more, and ending that uncertainty has enormous value. Others will feel that the mere process of using robo-advisor will be fulfilling enough due to being self-sufficient and sufficient, and that satisfaction is invaluable. Unless you feel a moral obligation or your finances are such that you need to use a professional, there is no shame in paying a little more for something you find better-suited to how you're wired; your ability to sleep at night is equally valuable. There is also no shame in using the cheaper option if you are confident enough in your ability to dutifully apply discipline to your plan. What you should feel shame over is letting the perfect be the enemy of the good; allowing yourself to be indecisive when you are missing out on years of possible compounding and growth.

Therefore, after you finish this paragraph, stop reading anything else and take some type of immediate action. Open the robo-advisor account you've been contemplating. Connect with that financial planner that someone at work recommended. Move your money from a savings account earning 0.1% and put it somewhere that at least has an opportunity to keep up with inflation. Whatever your first step is, do it today, not Monday, or after the weekend, or after next month (after you've done more research). Your 65-year-old self is already counting on your 30? year old self, or your 40?, or your 50? year old self to make decent decisions; not perfect decisions. Give your future self that benefit. Make the best decision for where you find yourself today and think about adjusting your course as your life changes. The territory between wherever you find yourself now and wherever it is that you ultimately want to end up in is not traveled through the perfect map, but literally walking one step at a time but being willing to adjust your direction when you need to.