Automated investing platforms, or robo-advisors, have made it easier than ever to start building wealth. With just a few clicks, you can open an account, answer a few questions, and get a diversified portfolio built for your goals. They offer an accessible, low-cost entry point into the market—an appealing deal for new or hands-off investors.

But as your financial life becomes more complex, the simplicity that makes robo-advisors so appealing often becomes their main limitation. Here’s when these tools shine—and when it might be time to move beyond them.

Where robo-advisors excel

Robo-advisors do two things very well: they get you invested quickly, and they remove the emotional friction that often derails DIY investors. By focusing on your time horizon (how long before you need the money) and risk tolerance (how much volatility you can handle), they build a portfolio that generally fits your goals (source).

They’re also attractively priced—most charge about 0.25% of your invested assets per year (source). That’s $250 annually on a $100,000 portfolio. For investors just starting out or still in the early accumulation phase, that’s a fair cost for simplicity, diversification, and consistent rebalancing.

Research shows robo-advisors can be competitive with human advisors on returns, particularly for moderate risk investors (source). Additionally, they help investors avoid common behavioral biases like panic selling during market downturns—in fact, studies found robo-advisor users experienced 12.67% less portfolio losses during the COVID-19 market crash compared to self-directed investors (source).

If your investable assets are under $250,000 and you don’t yet have complicated tax or estate planning needs, a robo-advisor could be a reasonable choice.

When simplicity starts to cost you

Where robo-advisors fall short is in scope. Once your balances and financial life grow, their cookie-cutter design may start to show cracks.

The cost scales faster than the value

That 0.25% fee adds up quickly:

• $500,000 portfolio = $1,250 per year
• $1,000,000 portfolio = $2,500 per year

At that point, you’re paying thousands for the exact same templated service. It’s no surprise that some robo-advisor firms now offer “hybrid” products with limited access to human advisors—acknowledging that automation alone may not be able to handle complexity.

You lose a full-picture view

Robo-advisors only manage the accounts you hold on their platform (source). They can’t see your:

• 401(k)s or prior employer plans
• Spouse’s accounts
• IRAs, 529s, or taxable portfolios

Without this visibility, it’s difficult to optimize your full financial picture. You may end up overexposed in certain assets or missing tax advantages.

They can’t handle unique or complex assets

Academic research confirms that robo-advisors typically stick to basic ETFs and mutual funds (source). If your portfolio includes real estate, private company stock options (RSUs), angel investments, or crypto holdings, these won’t be incorporated into your broader strategy (source). That can leave you with a misaligned risk profile and suboptimal performance.

The value of a holistic strategy

As your wealth and responsibilities grow, a more advanced approach can become necessary. This often involves two key layers of planning:

• Asset allocation: The right mix of stocks, bonds, and other asset classes across all your accounts. (source)
• Asset location: Strategically deciding which assets belong in which accounts for tax efficiency. (source)

Academic studies show that proper asset location strategies can add 15-50 basis points of annual after-tax returns (source). For instance, tax-efficient planning might place high-growth assets inside Roth IRAs while keeping income-generating ones in taxable accounts (source1; source2). These techniques can add real after-tax value to your returns—something most robo-advisors simply can’t do.

Research from the Financial Planning Association demonstrates that asset location provides an average 20 basis points per year in after-tax return benefits and can produce consistently positive benefits (unlike tax-loss harvesting, which can hurt performance 25% of the time). For clients with Roth IRAs and taxable accounts, the location benefit jumps to 35 basis points annually.

What we’re building at Enrich

The tools that high-end advisors use to deliver this kind of integrated, tax-optimized planning have historically been locked behind million-dollar minimums (source). Traditional financial advisors typically require $100,000 to $1 million in minimum assets (source), with many charging 1-2% annually (source).

Enrich lets you:

• Connect your brokerage and retirement accounts in one place via Plaid and similar secure services
• Set specific financial goals (home purchase, retirement, college) and assign portfolios to each
• Build and customize your own asset allocations across your connected accounts, and even take holdings within an account and assign it to various goals
• Get intelligent alerts on rebalances, and tax-loss opportunities—without paying a percentage of your assets

This can help you control your assets with the kind of insight and coordination usually reserved for private wealth clients—all in a mobile app at a flat $50 annual cost, regardless of your asset size.

If you’re ready to take a more active role in optimizing your finances beyond what basic robo-advisors offer, join our beta and help shape the next generation of wealth management built for real investors who want sophisticated tools which work to overcome traditional barriers.