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Self-Investing vs. Robo-Advisor: Which Is Right for You?

by Geoff Williams |October 4, 2023

For years, there was pretty much one investment playbook: If you weren't working with a financial advisor, you'd self-invest. Now, with robo-advisors there's an automated option too, and it can be tricky to pinpoint which strategy — or strategies — will work best for you.

To bring some clarity, we're sharing the ins and outs of each. Read on for details that can help you make a smart decision.

What is self-investing?

Many people also refer to self-investing as DIY investing, or do-it-yourself investing, and the concept is just what it sounds like; you are the one building and managing your financial portfolio. To get started, you sign up and open an account with a self-directed online brokerage. From there, after funding your account, you purchase and eventually sell stocks, bonds, mutual funds, certificates of deposits and other investments. The method comes with a mix of advantages and disadvantages.

A woman uses her laptop to invest
  • Pro: You'll pay lower fees. Self-investing isn't free, but it is less expensive than using a robo-advisor or working with a financial advisor to self-manage portfolios. That's because there's no external management fee other than the costs already included in ETFs and mutual funds, says Eric McAlley, an assistant teaching professor of finance at Quinnipiac University who previously worked at an investment management firm as a fixed income portfolio manager, risk manager and head of operations. At most firms you'll pay no commissions on your trades.
  • Pro: You'll have substantial freedom. If you're the type who enjoys working alone, self-investing can be fulfilling, allowing you to be hands-on with your finances. You get to listen to your gut and invest in whatever you want without having a financial advisor or robo-advisor chiming in. You are only limited by the universe of securities offered by the firm where you opened your account.
  • Pro: You can learn as you invest. You'll likely develop a better understanding of how the market works, which can give you the confidence to keep building your wealth without having to pay advisor fees.
  • Con: Learning takes time. And time is money. In order to become a skilled investor, you'll need to continually stay on top of the market by researching your investments and individual companies, if you're buying stocks. And it's not just about learning to pick stocks that increase earnings, but also about how to properly allocate your assets among the available asset types (stocks, bonds and others) to reduce risk. It can be a while before you actually see earnings from your self-investing, and there is of course the real possibility of losing money when investing, which can be stressful. (Remember, professionals do this sort of thing for a living, and there wouldn't be robo-advisor programs if self-investing was a skill everyone could easily learn. The financial tool exists because successfully self-investing can be a challenge.)
  • Con: You need to stay organized. Self-investing entails rebalancing your portfolio from time to time because the status of your financial investments are always changing, and it's a good idea to minimize your risk as you get older. If you're 25 and investing, you can afford to lose more than if you're, say, 65 and approaching your retirement. (Some investors recommend the "rule of 100," which entails reducing your exposure to stocks every 10 years. In other words, if you're 30, up to 70% of your investments could be in the stock market, and by the time you're 70, no more than 30%.) While tasks like rebalancing are "relatively straightforward," McAlley says, "it's common for investors to occasionally forget."

Self-investing can be best for…

Experienced and knowledgeable investors, McAlley says. And Lisa Whitley, a Washington, D.C.-based accredited financial counselor and chartered retirement planning counselor, agrees. "The right person to self-invest is someone with the discipline to sit on their hands when their emotions tell them to do otherwise," she says. "This means not only avoiding selling at the wrong time but also having the self-control to pass on concentrated, risky bets."

Obviously, every self-investor starts out as inexperienced, and if you're new to this, it doesn't mean you shouldn't try to self-invest. But the prevailing wisdom is that you never want to invest more than you can afford to lose. Experienced investors have seen enough market shifts to know that it often takes a lot of time and patience for investments to accumulate wealth.

A man checks his investments on a phone while drinking his morning coffee

What is robo-advising?

Essentially an automated, algorithm-driven software program that offers financial planning and investment services, robo-advising takes the human element out of the decision making. The investor answers questions from a robo-advisor on an investing website and shares their financial goals. In response, the robo-advisor matches you to a portfolio that is appropriate based on your answers. Once you fund your account or accounts, such as a Roth IRA or mutual funds, it will automatically make your investments and, just as importantly, monitor them 24/7. There are upsides and downsides to this approach.

  • Pro: You can set it and forget it. "One of the great things about robo-advising is that it will automatically rebalance your portfolio for you," McAlley says. "For example, if your target allocation to stocks was 70% and your target allocation to bonds was 30%, the platform would maintain those targets and automatically rebalance a few times per year."
  • Pro: It's more affordable than you think. DIY investing is inexpensive, but robo-advising can be too. "Costs and fees vary from service to service. Some robo-advisor services are free of management fees for basic rebalancing services," McAlley says. Other firms may charge a management fee for their robo advising, he adds, "but the fees are generally lower than those from a full-service wealth manager." (Typically, annual fees are around 0.25% to 0.50% of an investor's assets for a robo-advisor compared with 1% to 2% of assets for a human advisor. That means if you had $100,000 in assets in a given year, you might shell out $1,000 to $2,000 for a human advisor to watch over your accounts while, during that same time, you'd spend only $250 to $500 for the robo-advisor to cultivate your wealth.)
  • Pro: It's emotion-less. "Robo-advisors follow a predetermined, automated set of rules when making investment decisions, and these decisions consistently align with an investor's goals and risk tolerance," McAlley says. "They autonomously handle portfolio rebalancing and adjustments according to these rules, without human intervention or emotional influence. This frequently results in more informed and streamlined decision-making processes." That said, you will still need to monitor your accounts regularly. If you think you spot a mistake, report the issue to your bank or investment firm right away in case any fees should be returned.
  • Con: Robo-advisors aren't human. Sometimes it is nice to be able to ask an experienced financial professional for answers or guidance on deciding where your money goes, especially if you're more of a newcomer to the financial market. That said, there are robo-advising hybrid models that offer the ability to bounce ideas off of a human financial advisor, and generally, those fees are going to be less than they'd be if you were using a dedicated advisor.

A robo-advisor can be best for…

Someone who is serious about investing but has no interest in doing all of the work that goes into it themselves. If this is you, you can go with either a robo-advisor or a hybrid version that entails paying a little more for access to professional financial advisors who can answer questions. It also helps if you have a good sense of what type of financial future you want and can clearly articulate your investment goals, Whitley says. "Robots are pretty smart," she notes, "but they can't read your mind."

If you're on the fence about self-investing or using a robo-advisor, you can always dab your toe in both to see which suits your financial personality best, or even stick with a mix long-term. Eventually if you feel you need a professional's touch, you can always start working with a financial advisor on a regular basis.

Of course, the most important thing isn't whether you self-invest, use a robo-advisor or get advice from a financial advisor. It's that you're investing in building your future, such as creating wealth during your retirement years, in the first place.

Geoff Williams

is a Loveland, Ohio-based author and journalist. He has written for The Wall Street Journal,, and U.S. News & World Report.

The content reflects the view of the author of the article and does not necessarily reflect the views of Citi or its employees, and we do not guarantee the accuracy or completeness of the information presented in the article.


This article is for informational purposes only and is not designed to recommend any action regarding an investment product or strategy; please consult your advisor to determine whether this strategy is right for you.

Diversification and asset allocation do not guarantee a profit or protect against loss.

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