Robo-Advisor Performance: Do They Beat Human Advisors in 2025?

When the market crashed in March 2020, something surprising happened. While most human investors froze, panicked, or did nothing, robo-advisors quietly sold off risky assets and moved money into safer ground. The result? People using robo-advisors lost 12.67% less than those managing their own portfolios. That’s not luck. It’s math. And it’s changing how we think about investing.

How Robo-Advisors Actually Work

Robo-advisors aren’t magic. They’re software that follows strict rules built on decades of financial research. Think of them as automated portfolio managers that never sleep, never get emotional, and never forget to rebalance.

They start by asking you a few simple questions: How much risk can you handle? When do you need the money? What’s your goal? Based on that, they build a portfolio using low-cost ETFs-usually a mix of stocks and bonds-and then they watch it like a hawk. Every day, they check if your portfolio has drifted off target. If it has, they sell some assets and buy others to get back in line. That’s called rebalancing.

They also do something most humans avoid: tax-loss harvesting. When an investment drops in value, the robo-advisor sells it to lock in a loss. That loss can offset taxes on gains elsewhere in your portfolio. The IRS lets you do this, but most people don’t. Robo-advisors do it automatically, every single day.

Fees are low-usually between 0.25% and 0.50% per year. On a $50,000 account, that’s $125 to $250 a year. Compare that to a human advisor who might charge 1%-$500 a year on the same amount. And many robo-advisors, like Betterment and Wealthfront, have no minimum investment. You can start with $1.

Where Robo-Advisors Win

The data shows robo-advisors don’t just save you money-they help you make better decisions during stress.

During the 2020 crash, robo-advisor users saw a 1-month loss of -0.86%, while non-users lost -1.22%. Over three months, the gap widened: -2.55% vs. -3.60%. Why? Because algorithms don’t panic. They don’t think, “I should’ve sold last week.” They just follow their rules. When volatility spikes, they reduce exposure to stocks and increase cash or bonds. Human investors? They often stick with their original plan out of habit, fear, or hope.

They’re also great for people who don’t have time or interest in managing investments. If you’re a 28-year-old teacher who just opened a Roth IRA and wants to forget about it until retirement, a robo-advisor is perfect. It handles everything: contributions, rebalancing, tax efficiency, even automatic adjustments as you get older.

And the numbers back it up. As of mid-2024, over $1.5 trillion is managed by robo-advisors globally. Betterment, Wealthfront, Schwab, Vanguard, and Fidelity are the big players. Millennials-people aged 25 to 40-are the biggest users. Nearly half of them rely on robo-advisors exclusively or in combination with human help.

Where Human Advisors Still Rule

But here’s the thing: robo-advisors aren’t financial planners. They’re investment managers.

If you’re trying to figure out whether to buy a house before having a baby, how to fund your kid’s college without tanking your retirement, or how to pass your business to your kids without paying half of it in taxes-robo-advisors can’t help. They don’t know your family dynamics, your emotional triggers, or your hidden debts.

Human advisors do. They ask, “What’s keeping you up at night?” They notice when you’re avoiding talking about your aging parents’ finances. They help you structure a will, set up a trust, or negotiate a divorce settlement that affects your assets. They can adjust your plan when your income drops suddenly or when you inherit a rental property.

Vanguard’s research found that 67% of robo-advisor users end up needing human advice within 18 months for something complex. That’s not a flaw in the system-it’s a sign that investing is only one piece of your financial life.

And let’s talk about trust. People with complex needs-like retirees managing multiple pensions, small business owners, or those with high net worth-still prefer human advisors. They want someone who remembers their name, understands their history, and can say, “I’ve seen this before. Here’s what most people do wrong.”

The Hybrid Model Is Winning

The future isn’t robo vs. human. It’s robo + human.

Major firms are already shifting. Vanguard now offers “Advisor Access”-a feature that lets robo-clients book a 30-minute video call with a human advisor for just $20 per session. Schwab and Fidelity have similar options. You get the automation of low fees and daily rebalancing, plus the ability to call someone when your life changes.

This hybrid approach is growing fast. By 2027, 47% of all advisory relationships will be hybrid. Only 28% will be pure robo. The rest will be human-only.

Why? Because people want efficiency for the routine stuff-rebalancing, tax-loss harvesting, automatic contributions-and personalization for the big, messy life events.

A 35-year-old software engineer might use a robo-advisor for her 401(k) but hire a human advisor to plan for her aging parents’ care. A 55-year-old small business owner might use a robo-advisor for his brokerage account but rely on a human for estate taxes and succession planning.

Who Should Use a Robo-Advisor?

You’re a good fit if:

• You’re comfortable with a simple, rules-based approach to investing
• Your goals are straightforward: save for retirement, buy a house in 10 years, fund a college account
• You don’t have complex assets like real estate, businesses, or inheritances
• You want to pay less than 0.5% in fees
• You’re tech-savvy and prefer apps over phone calls

Who Should Stick With a Human Advisor?

You need a human if:

• You’re navigating divorce, inheritance, or business sale
• You have multiple accounts across banks, 401(k)s, IRAs, and taxable accounts
• You’re retired and need income planning, Medicare strategy, or long-term care advice
• You’re emotionally reactive to market swings and need someone to talk you off the ledge
• You want someone who knows your whole story-not just your risk tolerance score

What You Need to Know Before Choosing

Even the best robo-advisor won’t fix bad habits. If you keep adding money during bull markets and pulling out during crashes, you’ll lose money-no matter who’s managing it.

A 2024 study from the Financial Planning Association found that users who understood basic investing principles-like diversification, fees, and compound growth-achieved 18% better results than those who just clicked “start investing.”

So don’t treat a robo-advisor like a black box. Learn the basics. Understand what’s in your portfolio. Know why it’s being rebalanced. That way, you’re not just trusting an algorithm-you’re partnering with it.

Final Thought: It’s Not About Beating Each Other

Robo-advisors don’t “beat” human advisors. They do different things better.

Robo-advisors win on consistency, cost, and automation. They’re the ultimate tool for executing a simple plan with precision.

Human advisors win on context, empathy, and complexity. They’re the only ones who can help you navigate life’s unpredictable turns.

The smartest investors aren’t choosing one or the other. They’re using both. Automation for the boring stuff. Human insight for the big stuff.

That’s not a compromise. It’s the future.