A robo-adviser builds and manages an investment portfolio for you automatically, for a fee. DIY investing means choosing and managing your own investments through a brokerage account. Neither is automatically “better”: the right choice depends on how much time, knowledge and discipline you want to put in, and how much you are willing to pay for help. This guide compares the two on cost, control, risk and protection.
Reviewed October 2026. This article is general information, not personal financial advice. All investing involves risk, including the possible loss of the money you invest. Fees and features change; check each provider’s current terms, and consider speaking to a qualified, registered adviser about your own situation.
What is a robo-adviser?
The US Securities and Exchange Commission (SEC) describes a robo-adviser as an automated digital investment advisory program. You usually complete an online questionnaire about your goals, time horizon, income and risk tolerance; the service then recommends a portfolio, invests your money, and keeps it on track over time, for example by rebalancing. Most robo-advisers build portfolios from low-cost index funds or exchange-traded funds (ETFs) that hold a mix of shares and bonds.
Some services add extras such as automatic tax-loss harvesting (selling investments at a loss to offset taxable gains, within the tax rules) or access to human advisers for a higher fee.
What does a robo-adviser cost?
Robo-advisers typically charge an annual advisory fee based on the value of your account, on top of the running costs (expense ratios) of the funds they use. As examples, as of October 2026 Wealthfront lists a 0.25% annual advisory fee for its automated investing account, and Betterment charges 0.25% a year once you have a $24,000+ balance or $200+ in monthly recurring deposits, and a $5 monthly fee otherwise. Some providers advertise no advisory fee but earn money in other ways, for example on the cash held in your portfolio, so read the fee disclosures.
Small percentages add up over long periods. In an SEC investor bulletin, a $100,000 portfolio growing 4% a year for 20 years ends at roughly $208,000 with 0.25% in annual fees, about $198,000 with 0.50%, and about $179,000 with 1.00%. Whichever route you choose, compare the total yearly cost, including fund fees.
How do robo-advisers perform?
A robo-adviser’s returns depend mainly on the mix of investments it chooses for you. A portfolio that is 60% shares and 40% bonds will usually rise less than a 100% stock index in strong markets and fall less in weak ones, so comparing it directly with the S&P 500 is misleading. Results also differ between providers: Backend Benchmarking’s Robo Report found differences of more than 2% to 3% a year between the best- and worst-performing portfolios over five years. No robo-adviser can guarantee returns, and your investments can lose value.
Is the use of a robo-adviser secure?
- Check registration. Robo-advisers in the US are generally registered investment advisers. You can look up a firm’s registration and disciplinary history in the SEC’s Investment Adviser Public Disclosure database, and read its Form ADV brochure and Form CRS for services, fees and conflicts of interest.
- Understand account protection. If the brokerage that holds your investments fails, SIPC protection covers up to $500,000 per customer, including up to $250,000 in cash. SIPC does not protect against market losses or bad investment advice.
- Protect your login. Use a strong, unique password and two-step verification on any investment account.
What is DIY investing?
DIY (self-directed) investing means opening a brokerage account and deciding for yourself what to buy, how much to hold and when to rebalance. Many DIY investors keep things simple with a few broad, low-cost index funds or ETFs; others pick individual shares. You avoid an advisory fee, but you take on all of the research, record-keeping and decision-making.
The biggest risk for DIY investors is often behaviour rather than cost: trading too often, chasing recent winners, or selling in a panic during a market fall. Some activities carry much higher risk:
- Day trading: the SEC warns that day traders typically suffer severe financial losses in their first months of trading, and many never become profitable.
- Leveraged products such as CFDs: contracts for difference are not offered to retail investors in the US. In the EU, regulator data showed that 74% to 89% of retail CFD accounts typically lose money.
- Crypto assets: prices can be extremely volatile, and SIPC says unregistered digital assets are not covered by its protection.
Robo-adviser vs DIY investing at a glance
| Robo-adviser | DIY investing | |
|---|---|---|
| Cost | Advisory fee (for example 0.25% a year at Wealthfront and Betterment) plus fund costs | No advisory fee; you pay fund costs and any trading costs |
| Time needed | Low: set up once, then review occasionally | Higher: research, rebalancing and record-keeping |
| Control | Limited: you choose a risk level, the service picks the investments | Full: you decide every investment |
| Discipline | Automatic rebalancing helps you stick to a plan | Depends on you, especially in volatile markets |
| Extras | Some offer tax-loss harvesting and goal planning | Whatever tools your brokerage provides |
Who are the people who should consider doing their own investing?
DIY investing can suit people who enjoy learning about markets, have time to manage their own portfolio, and are confident they can stick to a long-term plan when prices fall. A robo-adviser may suit people who want a hands-off, diversified portfolio at a lower cost than a traditional adviser, or who know they are tempted to react to market news. People with complex needs, such as estate or business planning, may benefit from a human adviser instead.
Should you invest by yourself or with a robot?
You don’t have to choose only one. Some investors keep their core, long-term savings in a robo-managed portfolio and use a smaller DIY account to learn about investing or to hold specific investments. Whatever you decide:
- Know your goal and time horizon before you invest.
- Compare total annual costs, including fund fees.
- Check the firm’s registration and read its fee and conflict disclosures.
- Diversify, and avoid putting money you will need soon into volatile investments.
- Review your plan once or twice a year rather than reacting to daily market moves.
Related: The Rewards and Risks of Investing in Fintech
Sources
- SEC / Investor.gov: Investor Bulletin: Robo-Advisers
- SEC / Investor.gov: How Fees and Expenses Affect Your Investment Portfolio
- SEC: Investment Adviser Public Disclosure (IAPD)
- SIPC: What SIPC protects
- SEC: Day Trading: Your Dollars at Risk
- ESMA: Restrictions on CFDs for retail investors (2018)
- Backend Benchmarking: The Robo Report, 18th edition
- Wealthfront: pricing
- Betterment: pricing
