Real advisor or robo-advisor: where the line is at $250k

The financial advisor industry has spent 20 years convincing people they need an advisor at every wealth tier. The robo-advisor industry has spent 10 years convincing them they never do. The honest answer is in the middle, and it depends on what you're actually paying for.

Tax planning (Roth conversion ladders, tax-loss harvesting beyond what a robo does, location optimization across taxable / Roth / 401k). Equity comp strategy (RSU vesting schedules, ISO vs NSO, 83(b) elections). Estate planning (trusts, beneficiary designations, gifting). Behavioral coaching (the kind that stops you from selling in March 2020). College + family planning (529s, FAFSA optimization).

The first three of those become real money above ~$250k of investable assets. Below that, the robo's tax-loss harvesting is roughly as good as a human's, and you don't have enough complexity in your equity comp or estate to justify $5k+/year of human time.

A robo-advisor at 0.25% on $200k = $500/year. A fee-only fiduciary at 0.85% on $200k = $1,700/year. The advisor would need to add $1,200/year of net value (after their fee, after capital gains taxes on whatever they recommend) to break even with the robo.

At $500k, the same comparison: $1,250 vs. $4,250. Break-even = $3,000/year of added value, which is achievable if there's serious tax planning to be done.

At $1M+: the advisor easily pays for themselves if (and only if) they're actually doing tax + equity + estate planning. If they're just rebalancing a 60/40 portfolio, they're $8,500/year of dead weight that a robo does for $2,500.

A good advisor will spend the first meeting asking about your tax situation, your equity comp, your family setup, and what keeps you up at night. They'll ask to see your tax return. They'll talk about what they'd not do as much as what they would.

A bad advisor will spend the first meeting showing you portfolio performance graphs. They'll talk about "beating the market." They'll pitch you their proprietary fund. Walk out.