For many investors, Robo-advisors are the best option. Investment management services are provided at a fair price, freeing you up to pursue your passions. All you have to do to get started with a Robo-advisor is put money into an account, which will handle the rest of the planning and management of your investments.

Robo-advisors are able to provide services that a new investor or even a seasoned financial planner would not have access to without spending significant time and effort doing so because of their automation. Here are five questions to ask yourself to determine if a robot advisor is a correct choice.

First, what exactly are you hoping to accomplish by reading this?

According to Greg McBride, CFA, chief financial analyst at Bankrate, "the first thing a professional finance will - or should - address with you is identifying your financial goals, time horizon, risk tolerance, and liquidity needs." Having the ability to define things in your terms is a significant first step. All investment plans should include these as their foundation.

What about the cost of using a robot advisor?

What fees the Robo-advisor imposes on its customers is another critical factor to consider. Aside from the costs the fund charge, you might expect to pay a management fee to your advisor. That's about all the costs you'll pay each year with many Robo-advisors.

What would the potential monetary impact of this be?

You should expect to pay a Robo-advisor a percentage of the funds they handle for you. As with any average, the yearly rate of return might fluctuate widely from its baseline of about 0.25 percent. Consequently, you may expect to pay $25 yearly for every $10,000 you put in.

Fees for exchange-traded funds (ETFs) in your portfolio might cost anywhere from 0.08% to 0.15% of the total amount invested each year. This translates to $8 to $15 for every $10,000 in your portfolio. Fees are withdrawn from your account and sent directly to the fund company, not the Robo-advisor. Because of this, it doesn't matter which robot advisor you choose; you'll still have to pay the fees.

McBride warns that just because you won't have to pay a lump sum every month doesn't mean the service is without cost. That's not the case. Refrain from shrugging off these fees since they're automatically withdrawn from your account rather than requiring out-of-pocket payment.

Is there anything more that you wish the robot advisor provided, but it doesn't?

Robo-advisor's primary function is to construct an investment portfolio consistent with your risk preferences and time horizon. Although helpful, Robo-advisors have untapped potential. They may have advantages over human advisors since they save time and money.

Wauck argues that the fundamental idea behind constructing a portfolio is straightforward. Automatic rebalancing is one way a robot-advisor delivers value because it frees you up from a significant amount of work.

With auto-rebalancing, your real investments will always be near the target allocation established by the Robo-advisor, which will help maintain a suitable ratio between your expected return and your tolerance for risk.

Do you require the assistance of a financial planner?

You could desire a Robo-advisor that provides additional services beyond those listed above. Robo-advisors analyze your spending, savings, and other financial data to help you get your finances in shape; they even factor in your investment strategy.

You can get a "real-time" picture of your financial situation, including where your money is going and where it could be going instead, by linking your accounts to the Robo-advisor, for instance.

Whether you prefer to work with a piece of automated software or a human counselor, financial planning can assist you in establishing long-term savings objectives, such as funding a child's college education or purchasing a home. A more in-depth strategy can help you save and spend more wisely, for instance, so that you have more to invest and can build a giant nest egg over time.

Want to have a conversation or complete all of your tasks online?

With his first question, "Do you need to talk to someone or are you good with everyone online?" Wauck introduces one of the critical distinctions between Robo-advisors.

You can set up your investment plan with some Robo-advisors and then rarely interact with the company again. You'll have round-the-clock access to your plan and can make changes whenever possible. Some decisive clients who know what they want could benefit from this approach. However, that does not imply that assistance is unavailable when required.