Should You Hire an Online Financial Advisor?

Dann Albright 06-05-2016

When it comes to best managing your finances A Beginner's Guide to Managing Your Money with Mint When it comes to free online budget tracking, Mint is king. Read More , there’s no replacement for professional advice. Financial advisors are trained, experienced, and — if they’re good — have your best interests in mind. But some professionals could charge you thousands of dollars just to get a suitable financial plan set up.


Isn’t there a more affordable option? Fortunately, with online financial advisors, there is.

While their offerings are a bit different from those you’d get with a face-to-face advisor, they’re generally within the price range of a much larger group of people. But is it worth hiring one? Is it risky to get your financial advice online? Here’s what you need to know.

The Cost of Financial Advice

This is going to be the question on many people’s minds: just how much are we talking about here? Perhaps unsurprisingly, this is an exceedingly difficult question to answer.

Stone Steps Financial gives a range between $400 and $5,000 for various financial services, and mentions ongoing plans that could run you up to $300 per month. Of course, this depends greatly on how much of the work you’re willing to do yourself, the exact certification of the financial professional, and how complicated your situation is.



When Hull Financial Planning was in business, it charged $150 an hour and stated that you should plan on paying between $1,800 and $2,400 to get your plan set up. So if your situation is relatively simple and you don’t want an ongoing plan, you can probably expect to pay in the $750 to $1,000 range.

Obviously this varies a lot, but it’ll work for the purposes of comparison.

So how much money might you be able to save by getting your financial advice online? LearnVest [No Longer Available], a financial services website and a great online money management tool 4 Ways You Can Save Money With Apps and Websites It's vital to have enough money in your savings accounts. Take the first steps to financial security by using these apps and websites. Read More , charges a $299 setup fee and then $19 per month from there on out.

If you decide to go with Personal Capital, you’ll need at least $25,000 in assets, and you’ll pay 0.89% of the value of those assets up to $1 million in assets (the percentage goes down from there). In comparison, Vanguard charges 0.3% of your assets… but requires a $50,000 minimum to get started.


As you can see, figuring out exactly how much you’ll pay is rather complicated, and it’s worth your time to do some research to see where you can get the best deal. Of course, it’s not only about price: there are many other factors you want to take into consideration, too. But it’s a good place to start.

What Your Money Gets You

When you choose a financial advisor, you’re generally looking for one thing: financial advice 8 Websites to Help You Plan Your Financial Future Personal financial planning is a vital aspect of modern living and you need to understand it. These websites will help you improve your bank balance or wipe out your overdraft. Read More . You want to know if you’re saving enough for retirement Are You Saving Enough for Retirement? Find Out With These 9 Tools Saving for retirement is one of the most important things you can do - but how do you know if you've saved enough? Here's 9 tools to help you find out. Read More , where you should be investing, the best way to use your money to your advantage, how to meet your financial goals How to Visualize Your Debt & Stay Motivated While Paying It Off It's tough to stay motivated to keep paying off your debt, but visualizing it can make the process easier. Read More , and so on.

Hiring a financial advisor from a big-name firm like Charles Schwab, Vanguard, or Morgan Stanley means you get to sit down with a certified professional and talk about anything related to your finances.

They’ll take into account your goals, your current financial situation, the condition of the market The 10 Best Finance Sites to Help You Stay on Top of the Market Looking for the best finance websites to keep you on top of the market? Here are the best sites for news, investing, and more. Read More , your potential investments, and put together a solid financial plan for you. It’s exactly what you’d expect of a financial advisor.



Exactly what you get online is a little bit more difficult to pin down. For example, LearnVest offers email access to a certified financial planner, emailed reminders from your planner for what you need to do, “planner-recommended” financial products, and a host of articles, videos, and classes.

The “planner-recommended” products may or may not actually be from your planner, and it’s likely that they’re either algorithmically chosen 4 Machine Learning Algorithms That Shape Your Life You may not realize it but machine learning is already all around you, and it can exert a surprising degree of influence over your life. Don't believe me? You might be surprised. Read More or simply sponsored products from partners. It’s also important to note that LearnVest does not manage any of your assets, as the big-name offline firms do.

Personal Capital’s advisors are available via email, phone, web conference, or chat, though only customers with over $1 million invested get “personalized service.” Many of the other benefits offered by this service look like they could be from automated systems, like “smart indexing,” “smart portfolio management strategy,” and “custom investing strategies.”



Online financial advising sites do usually provide high-quality tools that will help you monitor your current financial situation The Online Budget Battle: Mint vs. You Need a Budget (YNAB) When it comes to online budgeting and expense tracking, there are plenty of solutions, but two of the biggest names in the business are Mint and You Need a Budget (YNAB). Read More , see where your money is, and look at the progress you’ve made on your goals. These are accomplished through online dashboards as well as mobile apps.

Is a Financial Advisor Worth It?

Obviously, whether you decide to hire an online financial advisor has to take many things into account, including your age, current financial situation, how much money you have invested, and many other factors. So it’s a good idea to do some research on your own and ask questions of potential financial advisors.

That being said, from what we’ve reviewed so far, it looks like an online financial advisor is a good way to go if you’re not investing a huge amount of money.

If you’re investing upwards of $750,000 or $1 million, you’re probably going to benefit from a very detailed look at your investments and you’ll want to entrust that investment to someone you can meet with on a regular basis to make sure it’s going to meet your goals.

On the other hand, if you’re like most people and aren’t investing that much, an online financial advisor might be a really good way to save some money and still get the benefits of professional financial planning. You’ll still be working with a certified professional, but the amount of time that they’ll have dedicated to you will be a little less, which will save you money.

Despite the financial industry being hesitant to embrace the internet as a vehicle for advising, some companies are ahead of the curve and have already started offering their services online.

Whether or not they’re a good fit for you depends largely on your circumstances, but don’t discount them solely because they don’t come with a storied name and a big price tag!

Would you consider using an online financial advisor? Why or why not? What appeals to you about online or face-to-face financial advising? Share your thoughts below!

Image credits: tsyhun via Shutterstock, racorn via Shutterstock

Related topics: Money Management, Personal Finance, Save Money.

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  1. Yonathan Grey
    May 17, 2016 at 7:02 am

    It makes sense to pay a financial advisor as it is about the safety of your money and investments you make.

    • Dann Albright
      May 25, 2016 at 12:49 pm

      So you think that your money isn't safe with one of the robo-advisor companies?

  2. Hildy J
    May 6, 2016 at 9:47 pm

    Until you get to the point where you qualify for limited investments (think hedge funds; also think north of $1,000,000), the real question is do you need a financial advisor at all? I had about $750,000 with one of the top rated financial advisor firms (who shall be nameless) and I pulled it out after a year. Their recommendations for diversifying my portfolio performed worse than the overall market and I paid good money to lose that money.

    There is a wealth of free advice on how and how much to save for retirement. A financial advisor can't help you save more, only you can do that.

    When it comes to stock recommendations, financial advisors are like mutual fund managers - they call some right, they call some wrong, their perform ance is inconsistent year to year, and, over time, they under perform the broad market.

    You can do better. There are mutual funds and Exchange Traded Funds (ETFs) that track market indices. They charge minimal fees because market indices don't change that often. My advice would be to start with a large cap (capitalization) index like the S&P500. As you build up your investment, you can diversify into US mid cap and small cap indices and overseas (probably starting with first world big caps like the FTSE100). My other advice is never buy individual stocks - GM can go bankrupt, the S&P500 can't (or, if it does, you'll be worried about surviving the apocalypse, not retiring).

    Don't get cute. There are also index funds that track just about any industry or sector you can imagine. Some will do better than average, others worse, and, unless you are a financial analyst inside one of those industries, your guess as to which is which is no better than mine or a financial advisor [diversifying into the wrong sectors is what made me drop my financial advisor]. Aesop's advice - slow and steady wins the race - should be your investment mantra.

    Take charge of the money you save just like you [should] take charge of the money you spend.

    • Dann Albright
      May 9, 2016 at 9:36 pm

      That's certainly another way to go, but I'm sure that there are some people who just wouldn't be comfortable doing it that way. People hire professionals to get advice and reassurance, and even if there's a lot of information out there that they could get themselves, some people will just feel better about it if they have an advisor. It's not always about investing, either; sometimes it's about saving or retirement, or some other goal.

      That said, I agree with you that if you know what you're doing, you can do a lot of it on your own and save quite a bit of cash in not paying for it. It just depends on where your priorities are, I suppose!

  3. Anonymous
    May 6, 2016 at 8:32 pm

    How reliable are online financial planning services? How do I know that the recommended product(s) is what I need? At least one can badger a human advisor. It's very hard to badger an algorithm.

    It seems like there is an awful lot of money lost to "friction" when using a financial planner or service.

    • Dann Albright
      May 9, 2016 at 9:33 pm

      Not all of these are algorithmic; I tried to point out which services offered algorithmic advice and which offered advisors that you could personally contact. That makes a difference, and the amount of money that you pay makes a big difference, too. If you don't have much of a plan at all, the plan you're likely to get even from a robo-advisor is probably an improvement, and if you don't have enough to pay a traditional advisor, it's probably going to be a good deal.