One of the first things new investors often wonder is: Should I hire a financial advisor to help me with investing questions?

Investing can seem very complex. There are a staggering number of investments out there, lots of acronyms and other jargon, not to mention all the silly metaphors (“headwinds” are … bad?)

Once you start investigating it, the next thing you might realize is that, given all of the recent advances in technology, these days a “financial advisor” might not even be a person at all.

So-called “robo-advisors”—automated, algorithmic, computer-based investment solutions—are all the rage. So do you need one of those too? The answer, of course, depends a lot on you: Your investment/life goals, the amount of money you have (and are willing to spend), and even your personality all play a role.

What does a financial advisor do?

Financial advisor” is a broad term for someone who helps you manage your money.

This potentially includes stockbrokers, insurance agents, money managers, estate planners, bankers, and more. They may hold various credentials, like a Series 65 license or a registered investment adviser certification, which requires them to act in their clients’ best interest.

A “financial planner” is a type of financial advisor who helps companies or individuals create a program to meet their long-term financial goals. They might have a specialty in investments, taxes, retirement, and/or estate planning, and they also may hold various licenses or designations, like a certified financial planner.

In a basic sense, a financial advisor’s role is to help you plan for the future and achieve your financial goals—in the short term, yes, but especially in the long term.

Sitting down with a financial advisor

This usually starts with a conversation. You go into their office, sit in a (hopefully) comfy chair. They offer you a glass of water, maybe even a coffee. Then it’s time to get down to business.

They will want to know things like how much money you plan to invest; whether you have significant short- or medium-term financial goals, like buying a car or house, or getting married; what your long-term goals are and when you plan to retire. That’s an increasingly loose concept these days, which is why it behooves young people to get a handle on this stuff early!

They will also likely try to gauge your “risk-tolerance,” or how willing you are to possibly lose money in order to make money on your investments.

In other words, are you interested in investments that are designed to capture higher returns than average, but may also come with a greater risk of losing money? (Stocks, in general, fall into this category, and certain sectors, like emerging markets, are especially prone to high-risk/high-reward fluctuations.) Or would you prefer investments designed to let your profits accrue more slowly, without taking on as much risk? (In which case, they will likely design a portfolio weighted more toward stocks in historically stable markets and sectors, such as blue chips and consumer staples, as well as bonds).

Bear in mind that when we say “stocks,” we don’t mean they will pick individual stocks for you.  For new investors, a financial advisor will likely recommend some mixture of mutual/index funds and ETFs that are designed to invest in wide swaths of the stock market at once.

Understanding your robo-advisor

If you choose a robo-advisor instead, the process will be similar—there just won’t be an actual person involved.

You’ll be asked to fill out various questionnaires on a brokerage’s website, answering the same kinds of questions a human financial advisor would have asked. Then a computer program will algorithmically assemble an investment portfolio for you, based on your financial goals and time horizon. Robo-advisors usually have lower fees, by the way, because they are automated.

A robo-advisor may not be for everyone. In any case, lots of people still prefer human interaction, especially when it comes to finances.

Money management can be a very emotional topic, and a warm handshake and friendly smile go a long way. And if you do crave the cold, calculating efficiency of a computer, keep in mind that a human financial advisor will likely be using a lot of the same algorithms to assemble your investment portfolio that a machine would. They may recommend periodically rebalancing your investment portfolio as well.

OK, I’m intrigued. But is a financial advisor worth it?

Once again, it depends. The idea of “worth” can be taken a couple of different ways.

Financial advisors will charge you a fee for their services. There are various fee structures, including a flat fee, an hourly fee, or a fee based on a small percentage of your portfolio.

But if you are actively interested in investing and want to dedicate time to researching financial concepts and managing your own portfolio, you might not want to pay someone else to do it. In that case, no matter how small their fee might be, it wouldn’t feel “worth it.”

Planning your own investments can be enjoyable and rewarding. If you want to take a slow-and-steady approach—the kind a financial advisor might recommend, for instance—there are lots of low-cost index funds and ETFs out there that could do the trick.

Stash makes it easy to get started. Bone up on strategies at Stash Learn. You can even do retirement planning on your own—and no, it’s never too early to start! Stash Retire lets you open a Traditional IRA or Roth IRA with a $5 account minimum and low monthly fees.

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