When it comes to your finances, it helps to have great advice.

Let’s say you’re buying a home, starting a family, or trying to save for the future. Whatever your situation, getting solid advice can make it easier to:

  • build a plan, and
  • turn your goals into reality.  

But where do you find this great advice? Is it through a human advisor or an online tool like a robo-advisor? Is it both? Before you decide, it helps to know what they each have to offer.

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How do robo-advisors and financial advisors compare?

Here’s a quick comparison of what you can get from each. 

Do you want online investments AND help with financial planning?

Yes. 

Result: You may want a combination of BOTH a robo and a human advisor. Some people use financial tech for investments and an advisor for insurance, retirement and estate planning.

Do you want online investments AND help with financial planning?

No. 

Are you looking for investment management only?

Yes. 

Do you consider yourself financially savvy?

Yes. 

Result: You may want a robo-advisor. Among people who use a robo-advisor, 43% rated themselves as extremely or very knowledgeable about financial products

Do you want online investments AND help with financial planning?

No. 

Are you looking for investment management only?

Yes. 

Do you consider yourself financially savvy?

No. 

Result: No. You may want a human advisor. Among people who work with an advisor, 77% rated their advisor as good or excellent at explaining financial topics, listening and developing a plan that meets their needs.

Do you want online investments AND help with financial planning?

No.

Are you looking for investment management only?

No. 

Do you want customized advice for your evolving personal goals?

No. 

Result: You may want a combination of BOTH a robo and a human advisor. Some people use financial tech for investments and an advisor for insurance, retirement and estate planning.

Do you want online investments AND help with financial planning?

No.

Are you looking for investment management only?

No. 

Do you want customized advice for your evolving personal goals?

Yes. 

Is your financial situation complex?

Yes. 

Result: You may want a human advisor. Among people who work with an advisor, 77% rated their advisor as good or excellent at explaining financial topics, listening and developing a plan that meets their needs.

Do you want online investments AND help with financial planning?

No.

Are you looking for investment management only?

No. 

Do you want customized advice for your evolving personal goals?

Yes. 

Is your financial situation complex?

No. 

Result: You may want a combination of BOTH a robo and a human advisor. Some people use financial tech for investments and an advisor for insurance, retirement and estate planning.

Note: Only advisors who hold CFP (Certified Financial Planner), CH.F.C. (Chartered Financial Consultant), F.Pl. (Financial Planner in Quebec), or equivalent designations are certified as financial planners.

 

For more details about each of your options, keep reading. 

How do you choose between an advisor and a robo-advisor?

Everyone’s financial situation is different. So choosing to work with an advisor or a digital tool like a robo-advisor depends on what you need.

Here are a few questions and suggestions to get you thinking about what you might want or need.

Feature

Robo-advisor

Human advisor

Provides personalized advice

No.

Yes.

Advisors can provide advice on your specific situation.

Can provide a financial plan

No.  

However, some provide access to a financial advisor who can provide a financial plan.

Yes.

They work with you to build a fully personalized plan that can include both investments and insurance.

A good advisor will ask if you have a will and power of attorney, an accountant, etc.

Answers personalized questions

No.

They can provide fact-based answers to common financial questions.

Yes.

They can answer specific questions to your situation.

Can help protect your finances with insurance

No.

Robo-advisors don’t sell life or health insurance products.

Yes.

Most advisors can help with your life and health insurance needs to protect your savings and loved ones.

And, they can help adjust your financial plan in case of negative events like job loss, health scares or premature death.

Tailors your investments to your risk tolerance

Yes.

They may ask you to complete a financial survey. They will use that data to help you make decisions about your investment portfolio.

Yes.

Your advisor will use a tool, like Conquest Planning, to help make a personalized plan.

Allows you to manage your own investments

Yes.

Most robo-advisors allow you to buy and trade on your own. You will need some financial and tech know-how.

No.

Your advisor and fund managers will manage investments for you.

Offers investment options

Yes.

Each will differ on offerings but will have investment options to choose from.

Yes.

Your advisor can offer investment options for you to choose from. They'll provide trusted advice and insurance options that fit your life.

Manages investments for you

Yes.

Uses technology to manage your investments.

Yes.

Read more about asset management styles.

Charges fees

Yes.

Robo-advisors tend to use exchange-traded funds (ETFs) that carry lower fees compared to mutual funds.

Yes.

Some investments, like mutual funds, include management fees. The advisor selling the investment receives a portion of these fees.

Note: Only advisors who hold CFP (Certified Financial Planner), CH.F.C. (Chartered Financial Consultant), F.Pl. (Financial Planner in Quebec), or equivalent designations are certified as financial planners.

For more details about each of your options, keep reading.

What can a human advisor do for you?

A human advisor can help you make well-informed decision for growing and protecting your money.

Qualified advisors customize their advice based on your specific needs and goals. They work with you to build a fully personalized plan to help you achieve those goals. And yet, over half of surveyed Canadians (52%) don’t have a financial plan in place, according to a recent survey. 

What are the benefits to working with a human advisor?

Along with offering money management tips and building a plan, here are some additional ways an advisor can help.

1. They can tell you things you may not know about. 

78% of Canadians who have an advisor say that working with one has helped them feel financially secure.* This is partly because an advisor can tell you about financial products or services you may not know about. For example, an advisor can:

  • tell you about how a registered retirement savings plan (RRSP) works,
  • explain how you can use a tax-free savings account (TFSA) to grow your money,
  • talk to you about insurance and what type is best in various situations, and
  • help you prepare for risks that may affect your financial plan (e.g. an unexpected loss of income or an unforeseen health incident).

By working with an advisor, you can learn more about your finances and feel confident in your decisions.

2. They can answer questions you may have about financial topics and products. 

Whether you’re looking at investment or insurance options, financial products aren’t always easy to understand. A 2019 survey* found:

  • only 51% of Canadians believed they were “somewhat knowledgeable” about financial products and services, and
  • 13% of Canadians said they were “not knowledgeable” about these topics.

Unless you have enough expertise, making financial decisions on your own can seem intimidating. This is where an advisor can be of great help. They can:

  • answer your questions,
  • clear up misconceptions or confusion you may have, and
  • explain things in plain, easy-to-understand language.

3. They can help you revise your plan as your needs change. 

You may have a growing family, a career change, or an unexpected health issue. Most events in your life – good or bad – will affect your finances in some way. Working with an advisor means you have someone who:

  • understands your situation, and
  • can help you alter your plan as you go through various life moments.

They know you’re on a lifelong financial journey. Planning, saving, protecting your wealth, and moving to retirement is a process – not a one-time event.

Getting the human advice you need

Thinking of meeting with an advisor? Remember, there are many different types of advisors. Some are qualified to help only with managing your money. Others can help you build a broader financial plan to meet your goals.

Many advisors specialize in certain areas, like:

An advisor may also refer you to another professional who can help you with specific financial needs.

What can financial tech or robo-advisors do?  

There’s so much you can do online. Banking, buying groceries, booking vacations. You can even get advice online. Robo-advisors and financial tech tools can provide automated services with little to no human interaction.

How do these digital services work?

  • They may first ask you to complete a survey about your financial situation and goals.
  • They’ll then use the data they’ve collected to help you make decisions about your investment portfolio or specific products like life insurance. 

1. Digital financial tools like robo-advisors can help manage your investments.

They can:

  • use their software to buy and sell assets and rebalance your portfolio over time, and
  • provide fact-based answers to common questions people have about their finances.

But how do Canadians feel about them? The same survey noted that 3% of Canadians use a robo-advisor, while 40% use services like direct investing or an online discount brokerage.*

2. Robo-advice and online financial services can be helpful and easy to use.

All you need to access a robo-advisor is an internet connection. Most robo-advisors are designed to be straightforward and easy to use.

However, for very specific questions about your financial situation, you may also have to consult a real-life advisor for a personal opinion. For instance, you may:

  • have questions about how starting a family will affect your finances in the next five years,
  • be starting a business and need to know what this means for you in terms of taxes,
  • need help with estate planning or retirement planning
  • get divorced and need to make changes to your life insurance policy.

Human advisors are likely to provide more personalized advice for your financial needs.

Need an advisor?
 

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* Value of Advice study conducted by Ipsos, August 2019.

This article is meant to provide general information only. Sun Life Assurance Company of Canada does not provide legal, accounting, taxation, or other professional advice. Please seek advice from a qualified professional, including a thorough examination of your specific legal, accounting and tax situation.