What is a Hybrid Robo-Advisor & Should You Use One?

Hybrid Robo-Advisors Unveiled: Putting Trust to the Test

A hybrid robo-advisor offers automated investment management services but also provides access to a human financial advisor.

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Hybrid robo-advisors use algorithms with help from a financial expert. This ensures a balanced portfolio tailored to the user’s individual goals and risk tolerance level.

With hybrid robo-advisors, users can confidently know their investments are managed by an experienced professional who can provide advice on complex financial topics.

A Hybrid Robo Advisor Is A Mix Of Human & Machine Advice
A Hybrid Robo-Advisor Is A Mix Of Human & Machine Advice

What Is A Hybrid Robo-Advisor?

A hybrid robo-advisor brings together the accessibility, reporting, and automation advantages of a robo-advisor application with the benefits of having a human, financial advisor to speak to about the finer details of your investments.

In other words, a hybrid robo-advisor combines a digital algorithm with a human investment advisor. The idea is to bring the reassurance of a person to those who are not fully comfortable with an automated investing solution.

Hybrid robo-advisors exist because many customers will feel better if there is a person to talk to. In addition, some people are uncomfortable with machines managing their finances.

Specifically, the average robo-advisor combines a standard package of algorithms with a person. The robot advisor will handle most of the investment chores. However, customers can talk to a human whenever they want to.

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An obvious use for hybrids is to get people comfortable with robo-advisors. Asset managers often use hybrid advisors to deal with older customers and people who know little about finance.

How Do Hybrid Robo-Advisors Work?

Hybrid robo-advisors have two parts: a computer and a human. The robot advisor will set up an individual portfolio for the customer, which might include investments in stocks, bonds, mutual funds, and ETFs. Then, a person will manage the asset allocation and ensure that it meets customer goals. A human can also answer questions that arise during the process and provide additional guidance if needed.

A hybrid robo-advisor is a great way for customers to get comfortable with investing while also having the support of a person when they need it. It’s also much more cost-effective than having an individual financial advisor handle all of their investing needs. Hybrid robo-advisors are quickly becoming one of the most popular options for investors who want to take control of their money and have the support they need when needed.

Overall, a hybrid robo-advisor gives customers the best of both worlds – low costs and personalized advice tailored to their investment goals. The software handles most of the day-to-day operations and monitors performance while a person is available for additional guidance if necessary.

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A human financial advisor could recommend robo-advisors or algorithms to customers. The human advisor could also interview a customer and decide which robo-advisor is right for her.

Interestingly, hybrid financial advisors are becoming popular. An Accenture survey estimates 68% of affluent investors prefer hybrid advisors, Investment News reports. Moreover, hybrid advisors could manage 10% of the investment wealth in the United States by 2020, MyPrivateBanking claims.

Under those circumstances, hybrid advisors could be the future of wealth management in the United States. An obvious advantage to hybrids is that they will enable human financial advisors to keep their jobs.

On the other hand, some investors could be more comfortable with robo-advisors than human financial advisors. Many people distrust financial advisors because they view them as salespeople.

Moreover, younger people who grew up playing video games, surfing the internet, and using apps could prefer robo-advisors. In particular, people under 35 could view a robo-advisor as another useful app rather than a threat.

Hybrid vs Robo Advisors
Hybrid vs. Robo-Advisors

Hybrid Advisors vs. Robo-Advisors

The real question is whether hybrid advisors can offer the same advantages as robo-advisors. In other words, do hybrid advisors have the potential to meet investors’ needs for “low cost, objective advice and portfolio management”?

On one hand, a hybrid advisor could provide more personalized advice than a robo-advisor since they can approach individual investors more personally. They also have the potential to provide more comprehensive advice since they should be better equipped to spot opportunities or threats in a wide array of investment scenarios. However, it is unclear whether this additional value added by hybrid advisors would be enough to make them competitive with robo-advisors.

In addition, hybrid advisors typically require a much larger minimum investment compared to robo-advisors, so many investors may not have the necessary funds available to access these services. It is possible that hybrid advisors could offer additional products or services to attract smaller investors, but this is still uncertain.

Some wealth management firms like Wealthfront refuse to use human financial professionals. Instead, Wealthfront uses algorithms and bots for everything. For example, Wealthfront advertises Automated Financial Management.

However, traditional investment firms like Morgan Stanley and mutual fund managers like Vanguard prefer hybrid advisors. Such organizations use hybrids because they work with customers of all ages and backgrounds.

Notably, those unfamiliar with the financial markets and investing are less trusting of innovations like robo-advisors. However, robo-advisors are more efficient and work better with large numbers of customers.

Strangely, robo-advisors can provide a higher level of customer service. For instance, robo-advisors can instantly respond to phone calls and emails and operate 24 hours a day, seven days a week. In addition, a robo-advisor can instantly fulfill simple requests such as selling or buying equities or providing a balance.

Finally, smartphones and the internet can provide instant connectivity to robo-advisors. Thus, robo-advisors are perfect for people who want constant control over their investments.


Learn More About Robo Advisors With Our 12 Part Q&A Series

1★ What is a Robo Advisor & How Do They Work? 7★ Are Robo Advisors A Good Idea? 8 Advantages Uncovered
2★ Hybrid vs. AI vs. Robo Advisors 8★ Are Robo Advisors Worth It? What Are The Alternatives?
3★ How Do Robo Advisors Really Work? In 7 Steps 9★ Do Robo Advisors Beat The Market? Fund Performance Uncovered
4★ A Hybrid Robo Advisor- What Is It & How Do They Work? 10★ Are Robo Advisors Safe? Security of Assets Examined
5★ Robo Advisors vs. Human Advisors 11★ Top 10 Best Robo Advisors [160 Point Review & Comparison]
6★ Top 20 Best Robo Advisor Returns & Fees Comparison 12★ Review Winner M1 Finance


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