Robots Can Manage Your Money. But Even They Need Humans.

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The robots may need some help from humans after all.

The rise of so-called roboadvisers has been among the most significant changes to how consumers obtain financial planning advice in the past several years. With low minimum investment requirements and reasonable fees, the automated services have popularized a new way of getting professional help. Customers answer simple questions online, creating investment portfolios that are set on autopilot — all without much interaction with a person.

But a growing number of these online services are adding warm-blooded financial planners to the mix, often at less than half the cost of what a traditional adviser charges.

Betterment, with $15 billion under management, is one of the more established firms in the category. (Others include Wealthfront and SigFig.) It began as digital only, then added human advisers last year. Now it is driving the cost of its inexpensive advice even lower with a set of financial-planning packages that range from the price of a pair of fancy jeans to the monthly payment on a modest new car.

“While we are strong believers in technology’s ability to provide financial advice, there are some areas that technology hasn’t been able to solve yet,” said Nick Holeman, a certified financial planner at Betterment who helps lead its advisory team. “Money is also an emotional thing.”

The company’s new product is built on the idea that we seek advice only when we really need it. For some people, it’s when they realize they are financial adults. For others, it may be with the birth of a child who will one day require a college education.

Until that moment arrives — whenever that is — “people are fundamentally lazy and don’t want to work on their finances,” said Jon Stein, Betterment’s chief executive, during an interview at the company’s offices in the Chelsea section of Manhattan. He added: “This is about making packages of advice available to anyone.”

Not all roboadvisers are adding a human touch. Wealthfront — with $11.3 billion in assets under management, the second-largest independent firm — is committed to remaining digital only.

For those who want guidance from a professional, the online options are multiplying. The big question that looms for roboadvisers, some analysts say, is whether they can make enough money by charging customers so little. In the past few years, several independent online advisers — including WorthFM, Hedgeable and, after Northwestern Mutual acquired it, LearnVest — have closed. Others, including Invessence, have switched to selling their technology to other money management firms.

Betterment, which has nearly 400,000 customers after eight years in business, says its economics are sound. The company’s new advice packages, which it introduced this week, are geared toward five distinct circumstances: “getting started” for $149; financial checkup or college planning ($199 apiece); marriage planning ($299); and retirement planning ($399). Even the company’s priciest package is less than a quarter of the cost of a full financial plan from a traditional adviser.

The plans differ slightly, but each includes at least one 45-minute phone call with a financial professional who is required to act in the customer’s best interest.

The newlywed package includes two 45-minute calls with a certified financial planner and a comprehensive financial plan delivered via email with an “action plan” for the couple to execute themselves. The retirement package includes a one-hour call and a month of email and chat access to a team of Betterment advisers.

Although Betterment doesn’t offer insurance, it can help customers determine what, if anything, they need, and has teamed up with the online insurance brokerage PolicyGenius to help them buy it.

The new product will potentially help Betterment sell more of its own investment accounts, but company executives said that wouldn’t get in the way of providing sound advice.

“As fiduciaries, we always put our customers’ interest ahead of our own, even if it means not investing with Betterment,” Mr. Holeman said. If, for example, paying off high-interest debt or maxing out a 401(k) before investing with Betterment makes the most sense, that is what Mr. Holeman and his colleagues recommend.

Last year, Betterment introduced a premium package for people who want advice on a continuing basis. It requires a minimum investment of $100,000, costs 0.40 percent of the assets being managed plus the cost of investing (0.10 percent of assets on average) and includes unlimited advice from a team of a dozen planners. By comparison, traditional advisers often charge 1 percent or more for such a service.

Its cheaper, digital-only service is still the preferred option for the typical Betterment customer, a man in his mid- to late 30s with roughly $120,000 in income and a $40,000 average balance. That costs 0.25 percent of the money managed (there’s also the cost of investments, which averages 0.10 percent) and includes access to the company’s online investing service and tools to help customers gauge whether they are on track to meet specific goals and what may be required to improve their chances of doing so.

How does Betterment compare with some of its online competitors that also offer input from advisers with a pulse? Each has a distinct personality and seems to attract a certain type of customer with specific needs. One hurdle, however, is that some of these services require higher minimum investments.

Vanguard’s Personal Advisor Services, which, with $112 billion in assets, is the heavyweight among roboadvisers, seems like the more experienced but less tech-savvy member of the group. Its website isn’t nearly as slick as its competitors’, but it has offered unlimited access to a human adviser since its 2015 inception. It is also tailored for retirement investors. (Full disclosure: I’m more than two decades from retirement, but I signed up for Vanguard’s service a while back because I already had a rollover I.R.A. and a 401(k) with the firm.)

The Vanguard service has limitations. When I asked whether it could also make specific investment recommendations for my employer’s Vanguard 401(k), the answer was … no. The company cited regulatory restrictions. That said, the assets in 401(k) accounts are factored into the overall Vanguard plan, as are what’s in outside accounts. It can also help establish plans geared toward other goals, like saving for college.

At a cost of 0.30 percent of assets (investing generally costs another 0.08 percent), it’s a solid service but not quite as comprehensive as the human independent adviser I visited after my son was born. It generally won’t recommend how much term insurance you might need or how expensive a home you can afford. I have, however, found all of the Vanguard planners to be professional and helpful within the confines of what the firm offers.

With most of its customers being over 50, Vanguard has plans to introduce a tool to help people better estimate their health care and long-term care costs in retirement. It is also testing other new features in areas where it is lacking, including a “What if?” tool that lets you see how various factors affect your savings.

Schwab, with $33 billion in assets, introduced its own digital service three years ago. The firm added an online service with a human financial planner last year; it costs 0.28 percent of assets, or about 0.42 percent of assets when the cost of investing is included. (Schwab’s advisers are salaried and act as fiduciaries, meaning they promise to put customers first.)

The tools are comprehensive: Planning for college? You can pull up the actual costs of a specific university, estimate what percentage you expect to pay and plan around that goal with a 529 account, even if it’s not held at Schwab. Selling your home in retirement? It can estimate how much you expect to clear, and how that might factor into your planning.

Schwab’s investment recommendations were criticized when the firm introduced its online service, in part because of its allocation to cash — a larger slice than many financial advisers recommend. The cash component makes money for Schwab, which earns revenue on the difference between the interest it pays to customers and what it can earn on that money invested elsewhere.

There are many others that provide distinctive services. Ellevest, which focuses on helping women and is run by the former Wall Street executive Sallie Krawcheck, now offers a premium service that goes as far as providing career coaches. Then there’s Wealthsimple, based in Canada but available to customers in the United States. Its premium “black level” service includes access to airport lounges. Rebalance provides advice largely for those over 45, while Personal Capital is an established player that describes itself as a “bionic adviser” — and carries higher fees as a result.

There are also, of course, the human-led practices, more of which offer advice with flexible price options, including monthly subscriptions. And if robots and humans can keep playing nicely, even more people who don’t have piles of money will be able to get affordable financial advice.

A version of this article appears in print on
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Roboadvisers Get By With Help From Their (Human) Friends
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