In today’s increasingly digital world, Australians have more options than ever when it comes to managing their finances. Whether you’re saving for a home, planning for retirement, or investing for long-term wealth, the choice between working with a financial advisor or using a robo-advisor is a critical one.
In this guide, we explore both approaches—defining how they work, comparing their costs, services, performance, and helping you decide which is right for your financial goals.
What is a Financial Advisor?
A financial advisor is a qualified professional who provides tailored guidance on all areas of personal finance—including budgeting, investing, insurance, superannuation, retirement, and estate planning.
Qualifications in Australia
Certified financial advisors in Australia must meet ASIC requirements and typically hold:
- A Bachelor’s degree in finance or a related field
- A Graduate Diploma in Financial Planning
- FASEA-approved exam certification
- Ongoing CPD (Continuing Professional Development)
Services Provided
- Wealth creation strategies
- Superannuation and SMSF advice
- Tax-effective investment planning
- Insurance and estate planning
- Retirement and aged care advice
How the Process Works
Clients typically begin with a consultation, followed by a Statement of Advice (SOA), implementation of recommendations, and ongoing portfolio reviews.
Regulation & Consumer Protection
Licensed advisors operate under strict ASIC regulations and must act in the best interests of their clients.
What Is Robo-Advice?
Robo-advisors are digital platforms that use algorithms to create and manage investment portfolios automatically.
💡 How It Works
Users answer questions about their risk tolerance and goals. The platform then recommends a diversified portfolio, usually built from low-cost ETFs.
Technology Behind Robo-Advisors
- Algorithms built on modern portfolio theory
- Automated rebalancing
- AI-driven forecasting in some cases
Robo-Advisors in Australia
Popular platforms include:
- Stockspot
- Six Park
- Raiz
- Spaceship
Growth in Australia
Since their introduction around 2016, robo-advice platforms have grown in popularity among younger investors and those seeking low-cost, passive investing options.
Cost Comparison: Financial Advisors vs. Robo-Advice
Financial Advisors
- Hourly rate: $200–$400
- Flat fee: $2,000–$5,000+ for a comprehensive plan
- Ongoing fee: 0.5%–1.1% of assets under management
Robo-Advisors
- Management fees: 0.25%–0.50%
- Account minimums: As low as $5
- Other costs: ETF management fees (usually 0.10%–0.40%)
💡 ActOn Insight: While robo-advisors appear cheaper, human advisors can help avoid costly mistakes—potentially saving far more in the long run.
Service Comparison
| Feature | Financial Advisors | Robo-Advisors |
|---|
| Personalisation | High | Moderate (based on algorithms) |
| Financial Planning | Comprehensive | Limited to investing |
| Accessibility | In-person & virtual | Online only |
| Ongoing Support | Human contact | Automated updates |
Historical Performance
- Robo-advisors generally track market performance via ETFs.
- Human advisors may outperform or underperform depending on strategy, but can tailor approaches to individual tax and income situations.
Volatility Response
- Advisors: May shift strategies in response to market changes
- Robo: Automated rebalancing, but no emotional coaching or real-time pivoting
Risk Management
- Financial advisors can employ advanced diversification, tax strategies, and scenario modelling
💡 ActOn Tip: Performance isn’t just about returns—it’s about managing risk, emotions, and financial outcomes across life stages.
Who Should Choose a Financial Advisor?
Best suited for individuals who:
- Have complex financial needs
- Are going through major life changes (e.g. divorce, inheritance, retirement)
- Own a business or multiple assets
- Want personal accountability and education
Who Should Choose Robo-Advice?
Best suited for individuals who:
- Are just starting to invest
- Have straightforward financial goals
- Are comfortable using digital platforms
- Prefer low-cost, passive management
Hybrid Models: Combining the Best of Both Worlds
Some financial providers offer hybrid models, blending automated investing with access to human advice when needed.
Examples Include:
- Digital-first platforms with real advisor access
- Traditional advisors who use robo tools for efficiency
Pros:
- Lower costs than full-service advice
- Some level of personalisation
- Good for mid-complexity investors
How to Choose Between a Financial Advisor and Robo-Advice
Ask Yourself:
- Do I understand my financial needs and goals?
- How comfortable am I managing finances digitally?
- Do I need help beyond investing (e.g. tax, estate, insurance)?
- How much time do I want to commit to managing my portfolio?
Red Flags to Watch:
- Hidden fees (in both models)
- Lack of transparency or limited contact options
- One-size-fits-all strategies
The ActOn Wealth Approach
At ActOn Wealth, we believe in blending the power of technology with human expertise. Our advisors are dedicated to helping you make confident, informed decisions—whether you’re just starting out or managing a growing portfolio.
What Sets Us Apart:
- Independent, tailored advice from certified experts
- Technology-driven tools to simplify financial management
- Long-term relationships focused on your goals
- Transparent, value-based pricing
“We don’t just manage money—we mentor your financial journey.”
Making the Right Choice
Whether you choose a financial advisor, robo-advice, or a hybrid model, the key is choosing a solution that fits your goals, confidence level, and complexity.
At ActOn Wealth, we’re here to help you take the next step with confidence.
Book your complimentary consultation today to discover how our personalised approach can guide you toward long-term financial success.
Disclaimer: This article is general in nature and does not constitute financial advice. Always seek personalised advice from a licensed professional before making investment decisions.
Frequently Asked Questions (FAQs)
What is the difference between a robo advisor and a financial advisor?
A robo advisor uses algorithms to provide automated investment guidance, while a financial advisor offers personalized advice and considers broader life goals.
Are robo advisors safe?
Yes. Most robo advisors are regulated and secure. However, they may lack human nuance in complex scenarios like estate planning or retirement transitions.
Who should use a robo advisor?
They’re ideal for beginners, tech-savvy investors, or those with straightforward financial goals and lower investment amounts.
When should I choose a human financial advisor?
If your finances involve inheritance, retirement, or life transitions, a human adviser can provide tailored insights a robot may miss.
Can I use both?
Yes, many people use robo platforms for investments while consulting a human planner for complex decisions.
What is the main difference between a financial advisor and robo-advice?
The primary difference is human expertise versus algorithm-based advice. Financial advisors offer personalized guidance, comprehensive financial planning, and emotional support during market fluctuations, while robo-advisors use algorithms to provide automated, low-cost investment management based on predetermined parameters and risk profiles.
How much does a financial advisor cost compared to robo-advice?
Financial advisors typically charge 0.5–2% of assets under management annually, or $2,000–$5,000+ for comprehensive financial plans, while robo-advisors generally charge 0.2–0.5% of assets managed, with some offering free basic services. Human advisors have higher costs but provide more comprehensive and personalized service.
Can robo-advisors handle complex financial situations?
Most robo-advisors are designed for straightforward investment management and struggle with complex scenarios like business succession planning, intricate tax situations, or estate planning for high-net-worth individuals. Such situations typically benefit from a human financial advisor’s expertise and judgment.
Do financial advisors outperform robo-advisors in investment returns?
Research shows mixed results on performance. While robo-advisors often deliver market-matching returns with low fees, human advisors may add value through behavioral coaching, tax-loss harvesting, and strategic adjustments during market volatility. The true value comparison should include both raw returns and additional services provided.
Are robo-advisors regulated in Australia?
Yes, robo-advisors in Australia must hold an Australian Financial Services License (AFSL) issued by ASIC and comply with the same regulatory requirements as human advisors. However, oversight methods may differ, so consumers should verify the regulatory compliance of any robo-advice platform.
Can I switch between a financial advisor and robo-advice?
Yes, you can transition between advice models as your financial situation evolves. Many investors start with robo-advice for basic investing and later engage a financial advisor as their wealth and complexity increase. Some also use hybrid models that combine both approaches.
How personalized is the advice from a robo-advisor?
Robo-advisors typically provide personalization based on questionnaires assessing your goals, time horizon, and risk tolerance. However, this personalization is limited compared to a human advisor who can understand nuanced personal circumstances, family dynamics, emotional relationships with money, and adapt strategies to life changes in real-time.
What credentials should I look for in a financial advisor that a robo-advisor doesn’t need?
Look for qualified financial advisors with certifications like Certified Financial Planner (CFP), Financial Adviser Standards and Ethics Authority (FASEA) qualifications, and membership in professional bodies like the Financial Planning Association of Australia (FPA). Also verify their ASIC registration and request their Financial Services Guide (FSG).