The Risk With Robo Advisors

Guest Blog Post by Charles Donalies

What are you risking when you choose to work with a robo advisor exclusively?


Your personal finances are what you might expect: personal. And each of us comes from different money situations and has a different set of goals as it relates to personal finances. While one person may be focused on getting out of debt, the other person may be focused on saving up for a vacation or starting a 529 plan for their children’s education.

The thing with robo advisors is that even though it is an investment tool, it can’t set financial goals for you or tell you how you can make necessary changes in your life to be able to reach your goals.


Here’s What Robo Advisors Do (and Don’t)

A robo-advisor is an online wealth management service that provides automated, algorithm-based portfolio management advice without the use of human financial planners.

So, if you put all your money into a robo-advised investing account, you will miss out on some pretty serious financial advice that would otherwise help to inform an appropriate investment strategy for you. With a robo advisor, you will also miss out on having important money conversations around your goals and what you’re trying to accomplish – something that should very much be at the center of your investment decisions.


Reaching Your Financial Goals

The strength of robo advisors lies in the automation of a single part of your overall financial plan. Whereas the strength of a financial advisor lies in the personalization and proper implementation of a financial strategy that is uniquely designed to serve your financial best interest. Without a financial advisor, it’s on you to make the appropriate financial decisions and actions to reach your financial goals.

Remember, a robo advisor can’t tell you the best way you should invest. It offers recommendations based only on the inputs you provide, regardless of your goals.



Money is a means to help you achieve what you seek to achieve and to get where you want to go in life. But if all you do is work, spend, and invest the rest with a robo-advisor, you may not be fulfilling your goals as effectively as you could.

That's where financial planning comes in with a trained and experienced financial advisor. A good plan will take into account your earning potential, your education, your goals, your personal situation, your family, and your future. A financial advisor can take whatever your dreams are turn them into financial goals, complete with a plan to get there.

Don’t risk your future with tools. Leverage tools and the expertise of a financial advisor to help you achieve all that you want from your financial life.



Charles Donalies is the founder of Donalies Financial Planning, a fee-only financial planning firm located in Washington, D.C.

Charles and I became friends after meeting at an industry conference, and I asked him to write some thoughts as a guest topic for this site.