You've Got a Complicated Financial Life. Find Out if You Should Ditch Your Robo Advisor for a Human

Have you been toying with the idea of hiring a financial advisor once and for all? You'd find yourself in the minority.

A whopping 75% of Americans manage their own finances, with no help from a professional or online service, according to a new CNBC and Acorns Invest In You Savings Survey. A low 17% of Americans say they use a financial advisor.

The truth is, people's financial lives are way more nuanced than what a robo advisor can juggle. For example, what if you say, "My special needs child will graduate from high school in three years and we need to set up some sort of fund to provide for him. In the meantime, our daughter will graduate from high school in eight years, and we need to develop a college plan for her. Plus, I think my wife and I may be getting a divorce. What should I do?"

Naturally, your robo advisor will greet your long-winded monologue with silence. 

All in favor of getting a financial planner on your team? Say "Aye!"

Reasons to Get a Financial Advisor Over a Robo Advisor

Let's take a look at the reasons you may want to get a financial planner instead of a robo advisor. 

Reason 1: They offer a comprehensive investing plan that reflects your life.

Robo advisors like to hawk their asset allocation, tax-loss harvesting and tactical investing prowess. However, what about the various detours that occur on your way to retirement? It might be more difficult to tell a robo advisor, "I want to save for a house for three years, then buy a house, but then sell it, travel for a year for my mini-retirement, and then have a baby and save for college for the next 18 years. Oh, and on top of that, save for retirement."

You miss out on the opportunity to actually sit down with a live person and share these future plans. A robo advisor's algorithms usually can't help you unless you have one major trajectory.

A fee-only financial planner to help you chart out an actual plan for your many twists and turns. 

Reason 2: You get thoughtful advice.

A financial planner can give you advice. For example, he or she might say, "I don't think you'll have enough money saved up for a mini sabbatical if you keep saving at your current rate. You're going to need to save $X in order to make that dream happen."

Here's a good example. When my husband and I were first married, we had been pumping money into our separate retirement accounts. Our financial advisor said to us, "Whoa, whoa. Where are your liquid assets? I'd like to see you put money into an account so that you can access it if you hit a major obstacle." 

It was good advice, and if we'd had a robo advisor then, we'd probably have skipped our emergency fund for years. We'd been so laser-focused on saving for retirement early on so we'd benefit from compound interest later.

Reason 3: They can hold your hand.

Remember the last time you panicked because all your investments tanked? (By the way, in most cases, you shouldn't panic at all.)

A financial planner serves as a "gatekeeper" who may say to you, "No, I'm not going to sell your investments because chances are, the market will rally in six months."

And then, by golly, in most cases, it does. The result: Your investments could look better than ever before because you bought more shares when prices were low. 

Your financial planner can talk you off the ledge when things get rocky. Unfortunately, your robo advisor would just sell because you told it to. Because it's a robot. A robo advisor can't prevent you from making mistakes.

Reason 4: Not all financial planners cost big bucks.

Robo advisors, financial institutions and the media all do a great job of complaining about how your savings will eke out in the form of fees and more fees. Sure, most robo advisors have low price schedules, but they don't all cost a meager penny a year. 

Furthermore, not all financial planners cost a lot of money, either. Some financial planners charge 1% of assets under management (AUM) for their services. 

Guess what? You could pay that same amount of money for a robo advisor as well.

You can also choose from financial planners who charge you on a per-hour basis, which helps you control costs and receive a more personalized and detailed financial plan. You can even opt for a Zoom call as well for lower fees — that way, you're not indirectly paying for a financial planner's fancy office. 

Reason 5: Your life isn't set-it-and-forget-it.

Robo advisors love to target young people right out of college, hawking their platform as a "set-it-and-forget-it" opportunity. The truth is, that's a dangerous assumption — that you can set up an account and forget about it until you retire. Building wealth on autopilot seems like  a dream come true, but you should always monitor your investments.

At the end of every year, it's a good idea to review your investments and review how each one has performed. Should your equity-to-fixed-income ratio stay the same or change? Should you allocate more money to short-term savings or switch up your long-term investing strategy? Your financial planner can help you sort through your priorities and come up with a plan that makes sense, with proper diversification to meet those twisty life goals. 

You know what happens when your life goes on autopilot: You get up, get dressed, brush your teeth, go to work, go to bed. Repeat. Why should your investments be on autopilot if you have goals and dreams that change as you grow older? You develop and change, and your investments should do the same to meet your newfound goals.

Ready to Ditch Your Robo Advisor?

A financial planner may offer many perks and benefits, and one of the best includes the ability to get objective advice. When you try to have a robo advisor help you map out many different financial paths all at once, you may end up forgoing an important part of your financial life. 

A financial advisor can help you put together a thoughtful, systematic plan to build a portfolio that can accommodate your complex financial needs. Humans aren't one-dimensional and your portfolio shouldn't be, either.