That is in comparison to traditional financial planners, who charge around 1 percent or more of assets annually. (Fee-only planners have their own payment structure, billing per planning session instead of charging a percentage of assets.)
The low-fee logic of robo-advisors may work admirably for young savers starting out. In fact many users are converted Do-It-Yourselfers or Millennials with little investable cash, rather than mid-career professionals who have switched from existing planners, Kitces points out.
Why Stay?
You may gain something by opting for low-fee robots - but you lose the long-term financial planning aspect.
"I had a client recently leave for a robo. I told them robos are not financial planners," says Kashif Ahmed, an advisor in Woburn, Mass. "A robo will not call you when markets are going through a rough patch, and you can't call a robo to discuss your protection needs, or to ensure your estate documents are in order."
As you age, and financial responsibilities start piling up - raising kids, dealing with insurance questions, running a business, coping with elderly parents, and so on - the advantages of dealing with an actual person become more evident.
"At that point, when money has grown substantially, you may opt out of robo-investing and go find a real person," says Maggie Baker, a Philadelphia financial therapist and author of the book "Crazy About Money."
Of course, it is not always fees that cause breakups with financial planners. Far from it. In fact, the number-one reason cited by millionaires for switching advisors is due to them not returning client phone calls, according to a report from research firm Spectrem Group.
In cases like that, a robo-advisor is obviously no upgrade. After all, it is hard to get on the phone with an algorithm.
Having 'The Talk'