Robo-advisors can be a great solution for many investors. They offer investment management at a reasonable cost, letting you focus on doing more of the things you love instead. A robo-advisor sets up an investing plan and manages it, and all you need to do is add money to the account.

Because they’re automated, robo-advisors may offer services that a new investor – or even a seasoned financial advisor – couldn’t access without spending significant time and energy.

“Most people focus on the fees or the account minimum, which are important to know, but one thing people overlook is the value-added services that robo-advisors provide,” says Kate Wauck, chief communications officer at robo-advisor Wealthfront.

However, some investors (especially do-it-yourselfers) may find that paying any management fee is simply not worth it. They may also feel that their investing choices are limited with a robo-advisor and enjoy the process of putting their money to work themselves.

So before deciding if a robo-advisor is worth it, you’ll want to dig in and find out how they can potentially benefit your individual situation.

Five questions to help you figure out if a robo-advisor is right for you

1. What are your needs and goals?

“Identifying your financial goals, time horizon, risk tolerance, and liquidity needs are the first items a financial professional will – or should – tackle with you,” says Greg McBride, CFA, Bankrate chief financial analyst. “Being able to define these for yourself is a great place to begin. These are fundamental to whatever investment strategy is developed.”

So you’ll need to determine what your financial needs are. Ask yourself some of the following questions:

  • How much investing do you want to do yourself? A little? A lot?
  • Do you need a comprehensive financial plan? Or just help with an investing portfolio?
  • Do you need a goals-based financial plan, say, if you’re saving for a down payment on a house?
  • Do you want to consolidate all your accounts with one provider?
  • How much do you want to be involved in your investment plan?

Robo-advisors work well for people who need at least some help with their investing portfolio. And those who need a lot of expertise will likely find robo-advisors to be valuable. Both groups will likely find a selection of robo-advisors with varying services that can meet their needs for financial planning, investing management, goals-based planning and many other services.

Probably the only group that a robo-advisor won’t be an immediately good fit for is individuals who have a high level of expertise and want to do it all themselves.

While you’ll need to do some self-assessment before you start, the actual process of opening a robo-advisor account can be surprisingly quick and relatively straightforward.

2. Can you afford the robo-advisor’s fees?

Another important question is what the robo-advisor charges for its services. Typically you’ll pay the advisor a management fee, and you’ll also pay a fee on the funds you’re invested in. For many robo-advisors, that’s the extent of the fees you’ll pay on an ongoing basis.

How much could that run you? Robo-advisors usually charge you a percentage of the assets they manage on your behalf. The industry standard is about 0.25 percent annually, though it can range higher and lower. So for every $10,000 you have invested, you’d pay $25 a year.

For the exchange-traded funds in your portfolio, you pay a fee that might range from an average of 0.08 to 0.15 percent of the amount invested, or $8 – $15 annually for each $10,000 invested. This fee is deducted seamlessly from your account, and goes to the fund company and not to the robo-advisor, so you’ll end up paying it regardless of which robo-advisor you choose.

“Don’t think that just because you don’t have to pay out of pocket like your other monthly bills that the service is free,” says McBride. “It is not. Don’t ignore these costs just because they’re deducted from your account rather than being paid out of pocket.”

Fees are only one side of the equation, and you’ll have to balance that against what you’re receiving.

3. Does the robo-advisor offer extra features that you value?

The key feature of all robo-advisors is building a portfolio of investments for you based on your risk tolerance and time horizon. While that’s valuable, robo-advisors can really do much more. They may offer features that are too expensive or time-intensive for a human advisor to match.

“The basic concept of building a portfolio is relatively easy,” says Wauck. “A place where a robo-advisor adds value is in automatic rebalancing, saving you a ton of time and stress.”

Automatic rebalancing is a feature that keeps your actual investments close to the target allocation set by the robo-advisor, helping ensure that your return and risk stay aligned.

Wauck points to another valuable feature: automatic daily tax-loss harvesting. With this feature the robo-advisor may sell an investment where you’ve lost some money in order to reap a tax benefit that can offset future gains.

“A robo-advisor can look at your portfolio every single day and maximize your tax savings,” she says.

Wauck says tax-loss harvesting can be a huge value-add for customers, and points to Wealthfront’s research that says over 96 percent of its clients in taxable accounts have had their advisory fees fully covered by tax-loss harvesting gains.

Auto rebalancing and tax-loss harvesting are two of the biggest extra features, and you’ll want to check for others, because robo-advisors may offer a variety of different features:

  • SoFi Automated Investing offers career coaching and networking events as some of many extras.
  • Ellevest offers access to education and online workshops.
  • Wealthfront offers special investment funds for clients with higher account balances and a wider range of available investment funds than many rivals.

So it’s important to look around and find the features that provide you additional value.

4. Do you need financial planning services?

Beyond these automatic features, you may want a robo-advisor that offers more comprehensive financial planning. These robo-advisors may get your financial house in order by looking at your spending, saving and other aspects of your financial life, with investing as part of the picture.

For example, you may be able to link your financial accounts with the robo-advisor and get a full “real time” view of your finances, where your money is going and where it could go instead.

Financial planning, using either automated software or a human advisor, can help you set specific savings goals, such as a college education or a down payment on a house. Or a more comprehensive financial plan could also help you with spending, for example, so that you’re able to invest more money and ultimately roll up a larger nest egg over time.

SoFi and Vanguard Personal Advisor Services, for example, both offer access to financial planners as part of their management fee, while Ellevest offers discounted access to financial planners. Betterment offers unlimited access to a team of certified financial planners as part of its higher-tier service, while Wealthfront offers software-based financial planning.

5. Do you need to discuss with a person or want to do it all online?

“Do you need someone to talk to or are you okay going with all online,” asks Wauck, setting up one of the key differences among robo-advisors.

Some robo-advisors will let you set up your investment plan, and then you’ll basically never have to speak to anyone. You’ll be able to access your plan at any time of day and make adjustments. This may work for some customers who know what they want and what they’re doing. That doesn’t mean customer service isn’t readily available, if you need it, however.

Others need the help of a human advisor at least some of the time, if not more frequently, especially for more complex questions. Depending on what it offers, a robo-advisor may give you access to a certified financial planner on a limited or even unlimited basis. Or it may connect you with a team of planners or just one individual planner focused on your needs.

But don’t forget the value of a human advisor when markets get choppy, especially helping you stay on track with your investment plan during a period when it’s easy to go off track.

“Robo-advisors were born from a desire to do everything online, but lack the calming voice at the other end of the phone when markets are upended,” says McBride.

You’ll have to gauge your requirements from the service and how much human help you need.

Bottom line

In determining whether a robo-advisor is worthwhile, you’ll have to first figure out what exactly you need and whether a robo-advisor might meet those needs. The best robo-advisors offer a ton of different automated features and price points with varying levels of human assistance, so you’ll have a number of options to sift through that may fit what you’re looking for.

If you’re not sure what you need, however, it may be smarter to go with a fully featured robo, since it will be able to scale up or down to your needs and adjust as those needs change.