Today a few minutes and a smartphone are enough to open an investment account and buy an ETF. It's a real achievement: investing has never been this easy. So the question we hear more and more often is a fair one: why use an advisor when there's an app? The answer depends on three things: how well you know the markets, how complex your finances are and how much time you want to spend on them.
What do investment apps do?
Several different tools sit under the same label:
- Do-it-yourself platforms: you buy and sell shares, ETFs and bonds on your own. The provider executes your orders but doesn't advise you.
- Robo-advisors: after a questionnaire, an algorithm proposes a portfolio, usually made up of ETFs, and rebalances it automatically.
- Banking apps: they let you set up automatic savings plans on a selection of funds or ETFs.
The advantages
- Low costs: low trading fees and instruments, such as ETFs, with low running costs.
- Minimal entry threshold: many apps let you invest just a few euros, or buy fractions of a share.
- Autonomy and automation: you trade whenever you like from your phone and set up a savings plan in a few steps.
- No sales pitch: nobody recommends a product; the choice is entirely yours.
The limits
- Emotional risk: easy access makes it more likely you'll sell in a panic during a fall or buy on impulse after a rise. Research on investor behaviour, such as Morningstar's Mind the Gap series, has found for years that investors earn less on average than the funds they own, precisely because they get in and out at the wrong moments.
- A partial view: the app manages the portfolio you give it, not the rest. Your home, pension fund, insurance cover and passing wealth on to your children stay outside it.
- Little or no assessment: on execution-only platforms nobody checks whether an investment suits your goals; at most the provider checks that you understand the more complex instruments.
- The tax may fall to you: with Italian providers under the administered regime (regime amministrato), tax is withheld automatically; with many foreign providers you're under the self-declaration regime (regime dichiarativo), and you must report capital gains, dividends and assets held abroad in your own tax return.
What does a financial advisor actually do?
The starting point isn't a product but a conversation: goals, family, work, timing, tolerance for ups and downs. From there:
- Tailored planning: a plan that brings together investments, pension, protection and passing on wealth, taking tax aspects into account too.
- Support in difficult moments: when markets fall, having someone to think things through with helps stop a temporary dip from becoming a permanent loss.
- Handing over the day-to-day: for people who don't have the time or inclination to follow markets, statements and deadlines.
- Checks and safeguards: every proposal must pass a suitability assessment against your profile, and the advisor is on the OCF register and supervised by CONSOB, Italy's markets regulator. We covered this in Behind the scenes of financial advice.
The limits, stated frankly
- Higher costs: advice, and the instruments that come with it, cost more than an app. European rules (MiFID II), however, require you to be shown the costs before you invest and, every year, a statement of all the costs you incurred, in euros and as a percentage: it's the document to ask for and read.
- Possible conflicts of interest: advisors who work for a bank or network, as we do, are also paid through the products they place. That's why the law requires this to be disclosed and requires advisors to act in the client's best interest. There are also advisors who work on a fee-only basis: different models, with different costs. Whatever you choose, the question to ask is the same: how much am I paying, and for what?
- The relationship matters: a good working relationship takes time and trust, and not all advisors work the same way. It's worth meeting more than one before deciding.
Do you need a large sum to work with an advisor?
No. It's a common belief, but it doesn't match reality. A regular savings plan lets you start with modest monthly amounts and build capital over time, with the same planning given to larger portfolios. We explained this in How to start investing even with small amounts.
It's still true that apps reach where advice doesn't: truly tiny amounts, a few euros or a fraction of a share, are their natural territory.
App or advisor: the differences at a glance
- Costs: lower with an app; higher with an advisor, who must make them transparent before and after.
- Amount to start: minimal with an app; modest with an advisor too, thanks to regular savings plans.
- Profiling: a questionnaire and an algorithm, or none, with an app; an in-depth conversation with an advisor.
- Tax: automatic or up to you with an app, depending on the provider; part of the overall plan with an advisor.
- In a downturn: you decide alone with an app; you think it through with someone with an advisor.
- Scope: a single portfolio with an app; your whole wealth, and your family, with an advisor.
Which approach suits you?
- An app suits you if your savings are small or still growing, you want to keep costs to a minimum, you know the basics of the markets and you can stay calm when they fall.
- An advisor suits you if you're short of time, your needs are complex (family, home, pension, succession), you want to manage your wealth as a whole, or you know you tend to get anxious in a downturn.
Often the answer is: both. A plan built with an advisor for the important goals, and an app for a small share to experiment and learn with. What matters is that the two are part of the same design and don't contradict each other.
