The way people invest is changing rapidly. Gone are the days when you had to sit across from a suit-and-tie financial advisor in a sleek office, worrying whether you had “enough” to be taken seriously. In 2025, for an ever-growing number of retail investors, their first investing conversation doesn’t happen with a person—it happens with an algorithm. That’s where robo-advisors come in.
But what exactly is a robo-advisor? And more importantly, should you trust one to manage your money?
What Is a Robo-Advisor?
At its core, a robo-advisor is a digital platform that uses algorithms to offer automated investment advice and portfolio management. Based on your answers to a few questions—usually about your financial goals, time horizon, and risk tolerance—the platform suggests and manages a diversified portfolio, often built from low-cost ETFs.
Robo-advisors typically automate all aspects of investing: from asset allocation and rebalancing, to reinvesting dividends and even tax-loss harvesting in some cases. And they do it for a fraction of the cost of a human financial advisor.
How Big Is the Robo-Advisory Market in 2025?
As of early 2025, assets under management (AUM) by robo-advisors globally exceed $2.5 trillion, according to Statista. In the U.S. alone, over 20 million users are currently investing through platforms like Betterment, Wealthfront, or SoFi. In Europe, services like Moneyfarm, Scalable Capital, and N26 Invest are seeing steady growth, especially among younger investors.
Italy, in particular, has seen a rise in robo-investing adoption. A 2024 report by Banca d’Italia indicated that over 1 million Italian investors under 35 have tried digital portfolio management solutions, citing accessibility and low fees as key drivers.
The Cost Advantage
One of the most appealing features of robo-advisors is their cost efficiency. While traditional advisors may charge 1% or more in annual fees, most robo-advisors offer management at a rate between 0.25% and 0.50%. Some, like Trade Republic or Revolut, even provide basic ETF portfolios with no annual fee at all—making investing more accessible than ever.
Low fees matter more than you might think. Over a 30-year period, a 1% fee difference on a € 50,000 portfolio can mean tens of thousands of euros lost to costs—money that could’ve been compounding in your favor.
Are Robo-Advisors Safe?
Security and trust are common concerns when dealing with automated systems, especially in finance. The good news is, most reputable robo-advisors operate under the same regulatory frameworks as traditional investment firms. Your money is usually held in custodial accounts with large banks or financial institutions, and many platforms offer up to €100,000 in coverage under European deposit protection schemes.
It’s important to distinguish between the algorithm managing your investments and where your money is actually kept. While the “robo” makes decisions, the funds themselves are stored safely with established partners.
What Robo-Advisors Can—and Can’t—Do
Robo-advisors are excellent at handling the mechanics of investing. They stay disciplined during market volatility, avoid emotional decision-making, and optimize your portfolio based on your preferences. But they don’t offer personalized, nuanced advice like a human advisor might.
If you need help navigating a divorce, inheritance, tax planning, or buying a home, a human planner can offer context that an algorithm can’t yet replicate. That said, many platforms now offer hybrid models—automated portfolios with optional human support for a higher fee.
Who Should Use One?
If you’re just starting out, don’t have a complex financial situation, or simply want a hands-off way to grow your money, robo-advisors can be an ideal solution. They’re particularly popular with millennials and Gen Z investors who prefer digital tools and don’t want to overthink their portfolio.
You may also consider using a robo-advisor as a complementary solution. For example, you could manage your long-term retirement investments via automation while maintaining a separate brokerage account for more hands-on stock picking or experimentation.
Trust the Algorithm—With a Little Oversight
Robo-advisors aren’t magic, but they are practical. They take proven investment principles—diversification, cost efficiency, and consistency—and execute them reliably without ego or emotion. In many ways, they’ve removed the biggest barrier to entry for new investors: complexity.
So, should you trust a robo-advisor with your money? If your goals are clear and your financial situation is straightforward, the answer may very well be yes.
But like any investment strategy, it’s worth reviewing your performance periodically, staying informed, and making sure your financial habits match your long-term ambitions. Even the best algorithm can’t replace your financial mindset—but it can definitely support it.
