Humans vs. Robots: Which investor is better?

With all the buzz surrounding artificial intelligence, many people question how AI, personal finances and investment should intersect. As AI continues to revolutionize industries, including banking, many are pitting two options for financial advisors against each other: humans vs. robots.

Artificial intelligence has changed investing and made it more accessible to more people. In fact, the robo-advisory market is experiencing explosive growth—it’s projected to grow from US$9.5 billion in 2024 to US$72 billion by 2032, according to Polaris Market Research.

This growth is being driven in large part by millennials, who are attracted to the lower fees and account minimums of robo-advisors. A survey conducted by Investopedia found that 20% of millennials (ages 23 to 38) use robo-advisors for investing along with 31% of Gen Z (ages 18 to 22)—compared to just 13% of Gen X respondents.

On the other hand, human advisors bring a holistic approach to investing, along with a personal touch that robots can’t replicate.

So, which is right for you?

Whether you’re a tech-savvy millennial or a traditional investor, this article will illuminate the pros and cons of each approach, helping you decide who to trust with your investments and financial future: robot, human or maybe both!

The pros and cons of each type of advisor

Whether you’re better suited to using a human advisor or a robo-advisor for investing depends on what you’re looking for, as well as your experience as an investor. There are pros and cons to both approaches.

Before you decide, it’s important to understand each option. Contrary to popular belief, cost is not the main driver. That’s just one of many considerations. As long as you gain value from the solution, the cost is justified for either option.

Robots

If you’re not familiar with the term “robo-advisor,” in a nutshell, it’s a digital platform that provides automated, algorithm-driven investment and financial planning.

As you might expect, robo-advisors are geared towards the do-it-yourself investor. They offer a one-and-done solution at a lower cost. But there’s a reason for the lower cost, since on their own they don’t offer advice or any financial planning. You’re largely on your own.

However, they’re an easily accessible, inclusive, low-barrier entry into investing. This typically translates into lower minimum investment requirements. For those who couldn’t easily get guidance on investing—such as members from underserved communities—they can now access guidance with less risk.

Robo-advisors are also becoming increasingly more sophisticated. They’re able to rapidly sift through massive amounts of data—including news and social media—to understand market trends and make automatic portfolio adjustments.

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Learn more: Ready for digital investing? These 2 tools are your gateway

Humans

A human advisor means you’re able to sit down with an advisor and get financial advice in real time. Unlike robots, human advice provides a holistic approach that is highly personalized to your needs.

Even though an in-person experience costs more than a robo-advisor, you can access more investing advice on many levels. Personal services include budgeting, tax planning, family education planning and retirement planning.

Working with Aviso Wealth advisors at ACU comes with other benefits, too. Our advisors are local and promote responsible investing, while ACU reinvests profits back into economic activity in the community.

How to stay cool as a cucumber when investing.

Humans vs. robo-advisors: pitting them against each other

Now that we understand the key differences between humans and robots, let’s pit them against each other and see who wins the battle of the investor!

If you’re tech-savvy and looking to understand investing better as you start your investing journey, you may be suited to a robo-advisor. You’ll get more hands-on experience and, because of that, you’ll grow your knowledge base as a DIY investor. The robot wins in the first battle.

Now let’s say you’re a more knowledgeable investor. You’re comfortable investing on your own and have years of experience, having learned about the market and what funds you’re comfortable with—and you understand your risk level and returns. You’re looking for a platform to invest in. If that describes you, you may be leaning towards a robo-advisor. In this second battle, the robot also takes the crown.

In our third battle, let’s say you’re starting out and don’t have a clue about investing. You have a small amount to invest, so fees aren’t a big concern. In this case, investing with a human can make a lot of sense. Although the fees will be a bit higher, the one-on-one relationship will pay dividends (pun intended) by helping you grow as an investor. That’s a win for humans.

In our fourth and final battle, let’s say you’re a baby boomer nearing retirement. You’re looking for advice on how to draw down your sizable investment portfolio in a tax-efficient manner. That’s when a human advisor can make even more sense. That’s another win for humans.

In the end, who wins in the humans vs. robots financial advisor debate depends on your personal situation.

In our third battle, let’s say you’re someone starting out and you don’t have a clue about investing. You have a small amount to invest, so fees aren’t a big concern of yours. In this case, investing with a human can make a lot of sense. Although the fees will be a bit higher, the one-on-one nature will pay dividends (pun intended) by helping you grow as an investor. That’s one win for humans.

In our fourth and final battle, let’s say you’re a baby boomer nearing retirement. You’re looking for advice on how to draw down your sizable investment portfolio in a tax efficient manner. That’s when a human advisor can make even more sense. That’s another win for humans.

In the end, it’s a tie!

Who’s better for you? You decide!

As you can see, it all depends on what you’re looking for. There’s no one size fits all solution. Depending on where you fall, one solution might be a better fit than the other.

The bottom line is that it’s not all about fees. Good financial advice from a human is worth paying for if it will set you on the right financial path.

Ready for the next step in your investing?

Speak with an advisor from ACU Wealth and Aviso Wealth about your finances and investment strategy. Call us at 204.958.8588 (toll-free at 1.877.958.8588) or book an appointment online.

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Online brokerage services are offered through Qtrade Direct Investing. Mutual funds and other securities are offered through Aviso Wealth. Qtrade Direct Investing, Qtrade Guided Portfolios and Aviso Wealth are divisions of Aviso Financial Inc. Qtrade, Qtrade Direct Investing, Qtrade Guided Portfolios and Aviso Wealth are trade names and/or trademarks of Aviso Wealth Inc. and its subsidiaries.

The information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This material is for informational and educational purposes and it is not intended to provide specific advice including, without limitation, investment, financial, tax or similar matters.

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