Investing and financial planning have changed dramatically over the past few decades. Advances in technology and user-friendly brokerages have made investing accessible to everyone, and costs have simultaneously dropped, opening even more doors.

The problem some investors now face is not accessibility, but rather an overabundance of choice. In addition to traditional financial advisors, investors can now choose to hire “robo-advisors” and even manage their own portfolios. But what are the pros and cons of each type of investment style, and which one is right for you? Read on to find out how to make the best choice.

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Robo-advisor

A robo-advisor is an automated platform that uses an algorithm to make investment choices. The algorithm uses data provided by a user regarding variables such as investment objectives, risk tolerance, and investment time horizon. With little human interaction, robotic investing is both simple and affordable, with fees that can amount to around 0.25% of assets per year. even less.

The main advantage of robotic investing, in addition to its low cost, is that the process is so simple. Half the battle to be a successful investor is getting in and staying in the game, so a robo-advisor’s automated deposit and investing capabilities can be especially useful for new investors who know that they need to invest but want to take a hands-off approach. to the whole process.

Financial Advisor

If you find a good certified fiduciary financial advisor, you can be sure that you are dealing with an expert in their field. In addition to providing you with investment advice, a good financial advisor can help you with a myriad of personal financial needs, from estate planning and life insurance to tax avoidance and college savings. Of course, in exchange for this multitude of services, financial advisors charge fees. Some charge 1% or more of your assets as an annual fee, while others may charge additional commissions for investment products and/or fixed fees for various services.

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If you need more than a broker to manage your stock trades, a financial advisor may be a good investment. However, if you don’t yet need the additional services that make a financial advisor worthwhile, you might want to hold off on hiring one.

Self-directed investment

Self-directed investing is more accessible than ever. Financial information has never been easier to come by, thanks to the internet and the financial press, and a wide range of brokers, even big names like Merrill Lynch and Chase, offer $0 commissions on most trades on stocks and ETFs. If you’re willing to spend the time to do your own research and have the financial discipline not to blow yourself up with excessive trading, a self-directed investment account might be right for you.

The main caveat with self-directed investments is that $0 commissions often encourage excessive trading. Some investors feel they can enter and exit positions as quickly as they want simply because there are no commission fees, but the reality is that succeeding as a day trader is difficult at best. If you’re ready to invest for the long term and have the financial capacity and discipline to build a winning portfolio, a self-directed investment account might be the cheapest and most effective option for you. But if you don’t have a solid understanding of how financial markets work or the discipline to keep your trading under control, you’re probably better off using a robo-advisor or financial advisor.

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This article originally appeared on GOBankingRates.com: Robo-Advisor vs. Financial Advisor vs. Self-Directed Investing: What’s Right for You?

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