🎯 In 30 seconds: You can run your own portfolio, pay a robo-adviser to do it automatically, or hire a person. The right choice depends on how complicated your situation is and how much you trust yourself in a crash. What matters most is how the helper is paid, what standard they must follow, and what it all costs in dollars each year.
The menu
| Option | What you get | Typical way it is paid | Fits |
|---|---|---|---|
| Do it yourself | You choose funds and rebalance | Fund expense ratios only | Simple situations, steady temperament |
| One-fund DIY | A target-date fund does the rebalancing | The fund’s expense ratio | People who want no upkeep |
| Robo-adviser | Software builds and rebalances a fund portfolio from a questionnaire | A yearly % of assets, or a flat subscription, plus fund costs | People who want automation, some tax features |
| Hybrid | A robo platform plus access to human planners | Higher % or subscription | Occasional questions |
| Advice-only planner | A plan you carry out yourself | Hourly, flat project or retainer fee | One-time decisions, second opinions |
| Ongoing adviser | Plan plus portfolio management | Often a yearly % of assets managed | Complex finances, or someone who wants it handled |
| Commission salesperson | Recommends and sells products | Commissions from what you buy | Only if you understand the conflicts |
What fees cost over time
Example fees, not quotes. Omar has $200,000 invested for 25 years earning 6% a year before advice fees.
| Advice cost | Balance after 25 years | Difference from no advice fee |
|---|---|---|
| None (DIY, fund costs only) | About $858,000 | |
| 0.25% a year (example robo fee) | About $809,000 | About $49,000 |
| 1.00% a year (example adviser fee) | About $677,000 | About $181,000 |
A 1% fee sounds small, but on $500,000 it is $5,000 every year. Good advice can be worth it: avoiding one panic sale, a better tax plan or the right insurance may save more than it costs. The point is to know the dollar figure and judge it.
Fiduciary, best interest, and how they are paid
Investment advisers owe you a fiduciary duty over the whole relationship. Brokers must act in your best interest when they make a recommendation, under Regulation Best Interest. The Check your broker and adviser page explains both and how to read Form CRS. Three pay labels matter:
- Fee-only: paid only by you. No commissions from products.
- Fee-based: charges you a fee and may also earn commissions on some products. The name sounds like fee-only; it is not.
- Commission: paid by the companies whose products you buy. Ask how much on each recommendation.
Robo-advisers: what to check
The SEC suggests looking at a robo-adviser’s Form ADV brochure and asking:
- What does the questionnaire ask, and can I override the portfolio it picks?
- What is the total cost: the platform fee plus the funds’ expense ratios plus any trading costs?
- How is the firm paid, including by the funds it uses, and does that create conflicts?
- Are there fees to move or close my account?
- Is a human available, and what are they qualified to do?
Credentials: what the letters mean
FINRA’s free professional designations tool lists more than 260 sets of letters people put after their names and shows what each requires. Some take serious exams, education and ethics oversight; others take a weekend course. Look up any you do not recognize. For a planner who says they hold the CFP mark, the CFP Board lets you verify it.
An interview script
- Are you a fiduciary for all the advice you give me, at all times? Will you put that in writing?
- How are you paid, in total, and by whom? What would I pay in dollars this year?
- What is your Form ADV or CRD number? (Then look it up on Investor.gov.)
- Who holds my money? (It should be an independent custodian, with statements sent to you directly.)
- What will you do for me beyond picking investments: taxes, insurance, retirement income?
- What do you do when markets fall 30%?
Choosing in practice
- Under about $50,000 and a simple situation: many people do fine with a target-date fund or a three-fund mix. See the simple portfolios page.
- A one-off question (pension choice, Social Security timing, inheritance): an advice-only planner for a flat fee.
- Complex finances (business owner, stock options, a large estate): an ongoing fiduciary adviser may pay for itself.
- On $200,000 over 25 years at 6%, about how much does a 1% yearly fee cost in the example? Answer: About $181,000.
- What is the difference between fee-only and fee-based? Answer: Fee-only is paid only by the client; fee-based may also earn commissions.
- Which document describes a robo-adviser’s services, fees and conflicts? Answer: Its Form ADV brochure (and Form CRS summary).
- Who should hold the money an adviser manages for you? Answer: An independent custodian that sends statements to you directly.