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Contents
- 1 All About Robo-Advisors For Automated Investing
- 2 Best Robo-Advisors: At-A-Glance
- 3 Best Robo-Advisors List
- 3.1 Personal Capital: Best For High Ballers
- 3.2 Wealthfront: Best For New Robo-Investors
- 3.3 Betterment: Best For Taxable Accounts
- 3.4 Fundrise: Best For Real Estate Investment
- 3.5 Wealthsimple: Best For Socially Responsible Investment
- 3.6 WiseBanyan: Best Newbie On The Scene
- 3.7 Motif: Best For Portfolio Mix
- 3.8 Schwab Intelligent Portfolios: Best From A Major Brokerage Firm
- 3.9 Vanguard Personal Advisor Services: Best With A Human Touch
- 3.10 Blooom: Best For 401(k) Management
- 3.11 FutureAdvisor: Best To Manage Your 529
- 3.12 Fidelity Go: Best For Fidelity Clients
- 3.13 SigFig: 1st $10k Managed Free
Look out financial world, robots are taking over! Aptly named robo-advisors are online tools programmed with sophisticated algorithms to build the right portfolio for your profile.
In 2017, automated investing platforms managed over $200 billion in aggregate assets worldwide. Want to get in on the robo-game? Check out my breakdown of the best robo-advisors on the market.
All About Robo-Advisors For Automated Investing
A robo-advisor automatically selects a pretty darn good investment portfolio to fit your finance needs and realistic wishes. It’s the middle option between doing it yourself and hiring a human financial advisor.
Once your funds are invested, the automated advisor makes changes to your investments when it sees fit and aligns your portfolio back to a target allocation for you. Many will purchase exchange-traded funds on your behalf. All you have to do is tell your robo-advisor your financial goals and how much risk you’re willing to take, then sit back and let your money go to work with minimal thought and effort.
Why Robo?
Using a robo-advisor is not free, but it sure costs much less than hiring a human financial advisor. Robo-advisors will also perform difficult tasks like tax optimization and portfolio re-balancing automatically, which means higher net returns for you.
A robo-advisor is a good fit if you prefer to have very little involvement in your investments and like the idea of someone else doing all the leg work. It’s a great option if you don’t have quite enough assets to hire a human financial advisor and if you have a simple financial profile that doesn’t require the expertise of a human financial advisor.
Factors To Consider
Before I delve into the best of robo-advisors, here are some factors you should consider when picking out the right automated investing service for you.
- Management fee. Paid annually, this fee is usually a percentage of your assets with your robo-advisor. If your annual return is 7% and your management fee is 0.25%, your gross return that year will be 6.75%. Most often, this fee is deducted from your account balance.
- Expense ratio. Like management fees, except they’re not paid to the robo-advisor. Rather, this amount goes towards the investments your robo-advisor utilizes, like mutual funds, index funds and exchange-traded funds (ETFs), to cover their costs.
- Account types. Generally speaking, investments fall under two categories:
- Retirement accounts include IRAs and 401(k)s and have tax advantages for your contributions. However there are contribution limits and stiff distribution rules.
- Nonretirement accounts AKA taxable accounts have no contribution limits or distribution rules.
- Investments. Most fall under two categories:
- An index fund is a type of mutual fund with a portfolio built to match or track the parts of a market index, such as the S&P 500. These index mutual funds provide broad market exposure and low operating expenses.
- An ETF, or exchange-traded fund, tracks an index, bonds, a commodity or a group of assets like an index fund. ETFs differ in that they trade like a common stock on a stock exchange, and will have price changes throughout the day as they are bought and sold. ETFs are attractive to investors because they have lower fees than mutual fund shares and higher daily liquidity.
- Tax-loss harvesting. This strategy sells investment assets at a loss in order to reduce your tax liability at the end of the year. It’s pretty complicated, but luckily some robo-advisors will do it for you!
- Rebalancing. Get your investment portfolio back in order periodically. Failing to do so means you’re taking on added risks as your portfolio becomes heavily weighted by one or several types of investments. Many robo-advisors check for opportunities to rebalance on a daily basis and adjust your portfolio when an allocation varies by a set amount.
- Access to human advisors. Level of access varies from personal advisors for each individual client, to a team of professionals readily available via email or online chat.
- Assets under management (AUM). The more AUM, the more stable the company is, and the more you can trust it.
- Socially responsible investing (SRI) AKA impact investing, or values-based investing, is a way for you to align your investment with your values. Companies that don’t promote social good are excluded from SRI funds and portfolios.
Now, let’s get to the best automated investment services currently.
Best Robo-Advisors: At-A-Glance
| Robo-Advisor | Best… | Management Fee | Minimum Investment | The Good |
| Personal Capital | For high ballers | 0.89% | $100,000 | Smart indexing, dedicated financial advisors and great investment tools |
| Wealthfront | For new robo-investors | 0.25% | $500 | Easy learning curve, daily tax-loss harvesting and automatic rebalancing |
| Betterment | For taxable accounts | 0.25% for Digital | $0 | Fractional shares limit uninvested cash and robust goal-based tools |
| Fundrise | For real estate investment | 0.85% | $500 | 90-day money-back guarantee, diversified portfolio and a user-friendly platform |
| Wealthsimple | For socially responsible investment | 0.50% | $0 | SRI options and free access to human advisors, portfolio analysis and tax-loss harvesting |
| WiseBanyan | Newbie on the scene | 0% for Basic | $0 | Free services and great technology |
| Motif | For portfolio mix | $4.95/mo | $0 | Pre-built portfolio, customizable motifs and SRI options |
| Schwab Intelligent Portfolio | From a major brokerage firm | 0% | $5,000 | Diversified portfolio, access to financial advisors, automatic rebalancing and tax efficient |
| Vanguard Personal Advisor Services | With a human touch | 0.30% | $50,000 | Personal advice, complex financial planning, access to Vanguard Funds and savings on taxes |
| Blooom | For 401(k) management | $10/mo | $0 | Free analysis, investment expense audit and financial advisors |
| FutureAdvisor | To manage your 529 | 0.50% | $10,000 | Free tools, advice and financial advisor support |
| Fidelity Go | For Fidelity clients | 0.35% for Retirement / up to 0.40% for Taxable | $10,000 | Seamless multi-account viewing and investment research (for Fidelity clients) |
| SigFig | 1st $10k managed free | 0.25% above $10k | $2,000 | Low $2,000 minimum investment. First $10,000 managed free. |
Best Robo-Advisors List
Personal Capital: Best For High Ballers
| Management Fees 0.89% |
Minimum Investment $100,000 |
Promo None |
With more than $6.5 billion assets under management, Personal Capital utilizes a hybrid robo-advisor experience with free access to a powerful personal finance management platform. Because of the added human touch, pricing for this management service is a bit more expensive than most other robo-advisors on the market.
The Good. Smart indexing, dedicated financial advisors and great investment tools.
The Bad. High management fee and high account minimum.
Wealthfront: Best For New Robo-Investors
| Management Fees 0.25% |
Minimum Investment $500 |
Promo $5k managed free & more with referrals |
Wealthfront relies on its Modern Portfolio Theory to build portfolios from low-cost ETFs. It offers direct indexing for accounts over $100,000 which mimics ETFs with direct investments to stocks in order to achieve the most tax-loss harvesting benefits.
The Good. Great for beginners, lower fees, easy learning curve, daily tax-loss harvesting, automatic rebalancing and direct indexing on accounts over $100,000.
The Bad. No fractional shares and no large-balance discounts.
Betterment: Best For Taxable Accounts
| Management Fees 0.25% for Digital Plan |
Minimum Investment $0 |
Promo One year free (*comes and goes) |
Betterment is largest independent robo-advisor, managing $13.5 billion in assets, offers a powerful blend of goal-based tools, affordable management fees and no minimum account requirement. You have the choice of human advisor assistance, but that will cost you in higher management fees.
The Good. No account minimum, fractional shares limit un-invested cash, and robust goal-based tools.
The Bad. No direct indexing.
Fundrise: Best For Real Estate Investment
| Management Fees 0.85% |
Minimum Investment $500 |
Promo 90 days free per referral |
Fundrise is an online real estate company that lets average investors buy into private commercial and residential properties by pooling assets via their investment platform. You can gain access to real estate deals without having to foot the entire bill. However, these distributions are taxed as ordinary income so make sure you take that into account.
The Good. Low minimum investment, 90-day money-back guarantee, diversified portfolio and a user-friendly platform.
The Bad. Fees are not transparent, investment commitment and tax consequences.
Wealthsimple: Best For Socially Responsible Investment
| Management Fees 0.50% |
Minimum Investment $0 |
Promo Per referral: $10k managed free for 12 months |
With no minimum balance requirement, human assistance and a user-friendly design, Wealthsimple attracts beginners who are taking their first steps in investment. There’s a slew of SRI portfolios to choose from if you’re big on values-based investing. Lastly, if you’re going to be working with taxable accounts, Wealthsimple provides free tax-loss harvesting.
The Good. Free access to human advisors, free portfolio analysis, free tax-loss harvesting, SRI options and no account minimum.
The Bad. Higher account management fees and limited personal finance tools.
WiseBanyan: Best Newbie On The Scene
| Management Fees 0% for Basic Plan |
Minimum Investment $0 |
Promo $20 for Each Referral |
WiseBanyan is a robo advisor service with no hidden charges. The basic service includes automatic portfolio rebalancing and low minimum deposit. However, if you want to open an IRA, you must pay a premium.
The Good. Offers free services, no minimum balance and great technology.
The Bad. Limited account selection and paid tax-loss harvesting.
Motif: Best For Portfolio Mix
| Management Fees $4.95 per Month |
Minimum Investment $0 |
Promo One month free (*comes and goes) |
Motif is a unique, theme-based and cost-efficient option to a diverse portfolio. You invest in 20 to 30 stocks or ETFs that share similar characteristics, called motifs. Examples include “Biotech Breakthroughs” and “Healthy and Tasty.” It’s also possible to filter motifs by looking at daily change, one year return and even popularity.
The Good. Pre-built portfolios, customizable motifs and SRI options.
The Bad. Other fees like $4.95 per share and $9.95 per motif, no dividend reinvestment and minimal trading tools.
Schwab Intelligent Portfolios: Best From A Major Brokerage Firm
| Management Fees 0% |
Minimum Investment $5,000 |
Promo $100 sign-up bonus |
Schwab Intelligent Portfolio is a fee-free robo-investing service from investment powerhouse, Charles Schwab. With the company’s array of financial services, you have the options of tax-loss harvesting, automatic rebalancing and other tools through Intelligent Portfolios, and you can also take advantage of all the other benefits Charles Schwab has to offer.
The Good. Low cost, diversified portfolios, access to financial advisors, automatic rebalancing and tax efficient.
The Bad. High minimum investment, high cash allocation and tax-loss harvesting not available for investments lower than $50,000.
Vanguard Personal Advisor Services: Best With A Human Touch
| Management Fees 0.30% |
Minimum Investment $50,000 |
Promo None |
Vanguard Personal Advisor Services is backed by the trusted Vanguard brand. You can access human financial advisors via phone. However, the minimum investment requires a whopping $50,000, which usually does not apply to beginner investors.
The Good. Great for advanced users, personal advice, complex financial planning, access to Vanguard Funds and savings on taxes.
The Bad. High account minimum, no tax-loss harvesting and possible transaction fees.
Blooom: Best For 401(k) Management
| Management Fees $10 per Month |
Minimum Investment $0 |
Promo One Month Free |
Blooom makes the complicated task of picking the right mutual funds for your 401(k) easy with online access. However, this robo-advisor service only works with 401(k) and 403(b) plans.
The Good. No account minimum, free analysis, investment expense audit, financial advisors and low cost.
The Bad. Limited investor assessment and aggressive allocations.
FutureAdvisor: Best To Manage Your 529
| Management Fees 0.50% |
Minimum Investment $10,000 |
Promo 6 Months Free for Mint Users |
Not sure if you’ll like robo-advisors? FutureAdvisor lets you test drive its service for free. It’s also one of the very few that can manage your 529 college savings plan.
The Good. Free tools, advice and financial advisor support.
The Bad. High account minimum, high management fee and maximum age restriction.
Fidelity Go: Best For Fidelity Clients
| Management Fees 0.35% for Retirement Accounts Up to 0.40% for Taxable Accounts |
Minimum Investment $10,000 |
Promo None |
Another investment powerhouse entering the robo-advisor market is Fidelity. The pricing is transparent and if you have an existing account with Fidelity, it could turn into a one-stop investment shop. However, Fidelity Go lacks some of the features that other robo-advisors have to offer.
The Good. Seamless multi-account viewing and investment research (for Fidelity customers), low “all-in” annual costs for retirement accounts and taxable accounts.
The Bad. No tax-loss harvesting and only basic goal tracking offered.
SigFig: 1st $10k Managed Free
| Management Fees 0.25% above $10k Diversified Income Portfolio fee: 0.50% |
Minimum Investment $2,000 $100k for Diversified Income Portfolio |
Promo 1st $10,000 managed free |
With a modest minimum investment of $2,000 and no management fees up to a $10,000 investment, SigFig fits the bill for investors looking to dab into automated investing.
The Good. They have a portfolio tracking feature that is free to use and SigFig’s financial advisors will also provide complimentary portfolio reviews. No management fee under $10,000.
The Bad. Diversified Income Portfolio fee is high at 0.50%. Limited investment platform options – you must use Fidelity, Charles Schwab or TD Ameritrade.
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