Broker vs Robo-advisor, which is best? If you compare brokers, you might think the best choice is the cheapest broker for commissions and fees. Or you might think the broker that has the fastest order execution is best, especially if you are a day trader that relies on technical trend changes and chart studies to make fast decisions to buy or sell stock. We found a good thinkorswim review that will convince you one variable alone isn’t enough to sway a trader into choosing a broker.

The best broker in fact is the one that combines a host of important variables. You want a broker that has low fees and commissions, as well as fast and accurate order execution. But you should also choose your broker based on what tools, analyzers, back-testing simulators, chart studies, virtual trading platforms, customer support quality, and accessibility via mobile, web-based, or desktop devices the stockbroker makes available.

If it sounds like a lot of work figuring out which broker to select and the self-directed path does not appeal to you, you can consider robo-advisors. Robo-advisors are a new class of financial advisor that automate investment management on your behalf. You simply transfer your money to them and they handle the rest – after quizzing you on your risk profile and financial goals.

The leading robo-advisors will feature tax-loss harvesting, automatic portfolio rebalancing, and financial calculators. Some robo-advisors such as Betterment feature socially responsible investing which is a class of funds that allow you to invest philosophically in a way that aligns your investments with your ethical values.

If you are not sure whether you should invest with a robo-advisor or choose a self-directed path, the decision largely comes down to control. Do you want to be hands-off and let someone else do the work? Or do you want to be in charge and make the investment decisions yourself.

By choosing autonomy, you will need to roll up your sleeves more and conduct due diligence to pick stocks to buy. A broker won’t charge you an annual fee typically however, but it will cost you time. When you pick a robo-advisor, you will free up your time but you will pay a cost for the privilege of algorithms managing your money for you. With that said robo-advisors tend to be fairly inexpensive when compared to traditional advisors, so for most people the value proposition is worthwhile picking the robo-advisor.

Categories: Stock Market