Learning how to invest can be overwhelming. So much that people avoid trying to manage their investment portfolio altogether.
To help folks better understand what’s out there, I’ve put together this list of the best robo advisors currently in the market, with some tidbits about some of their more meaningful features.
Tip: Bookmark this page as I will update the list of robo advisor services out there.
Contents
Wait! What’s a Robo-Advisor?
Traditionally, when someone had a little extra cash they wanted to invest, they had two options.
Either they could invest the money themselves, or they could hire traditional financial advisors to help them in exchange for an annual fee.
Both options have their pros and cons. But with technological advances over the last decade, a new option for personal investing has emerged, the robo advisor.
With a focus on transparency and automation, robo advisors have made a huge splash in the world of personal finance. And by driving prices down with lower fees, robo advisors have made human financial planners take note to improve their service offerings.
In just a few years, the robo-advisor marketplace has gone from 2-3 start-ups, to where almost every major brokerage firm has its own service offering.
How Do Robo Advisors Work?
Generally speaking, the way they work is:
- You set up and fund an investment account with the robo-advisor platform of your choice
- Answer some questions to determine your risk tolerance and financial goals. For example, “How panicked did you get when the coronavirus pandemic caused the market to drop?” And how did you react when the stock market completely rebounded by the end of 2020?
- Advisor will automatically create an asset allocation and manage your portfolio of assets. These assets are usually a basket of low-cost mutual funds or exchange-traded funds (ETFs), that fit your risk tolerance based on proprietary algorithms that work to continuously optimize your investments.
Pretty cool, right? On to the list of robo advisors!
Acorns
Acorns have an interesting approach to investing. Its investment platform invites you to do “micro-investing” of small amounts.
They do this by linking with your credit card or debit card, rounding up your purchases, and automatically investing the difference.
- Minimum Investment: $0
- Fees: $1-$3 per month
- Account Types: Taxable investment accounts, Roth IRA, Traditional IRA, or SEP IRA
Pros:
- No account minimums
- Automated rebalancing
- Micro-Investments
Cons:
- Limited investment options
- High fees for low account balances
Ameritrade
TD Ameritrade has been in the investment services industry for decades, with a trusted brand.
Their robo-advisor offering focuses on giving clients only the basics. However, they are backed by the traditional human financial advisor offering for clients who feel they need a personal touch.
- Minimum investment: $5,000
- Cost: 0.30% Annual management fee
- Account types: Taxable accounts, IRAs, college savings, trusts, UTMA, etc.
Pros:
- Wide variety of accounts to choose from
- Automated tax-loss harvesting
Cons:
- High account minimum for a robo-advisor platform
- Near-term uncertainty in this product offering after being bought out by Charles Schwab
Betterment
As one of the first robo-advisors, Betterment is one of the leaders in the robo-advisor space. For a long time, Betterment and Wealthfront were the only robo-advisor platforms available.
Betterment’s focus has always been to provide a customer-friendly approach for the hands-off investor, while providing the right variety of cheap, diversified investment options to help do-it-yourselfers reach their investment goals.
- Minimum investment: $0
- Fees: 0.25% Account management fees
- Account types: Taxable accounts, IRAs, trust accounts
Pros:
- No minimum to start
- Fractional share investing
- Enables goal-based investing
Cons:
- No direct indexing
- Competitive advantage is shrinking as institutional investment platforms start to take market share
blooom
Blooom has positioned itself uniquely in the robo advisor space by focusing specifically on employee-sponsored 401k’s. Their goal is to enable smaller businesses to offer sponsored funds as an employee benefit, while keeping 401k plan expense ratios as low as possible.
- Minimum Investment: $0
- Fees: $10 per month
- Account Types: ERISA plans: 401k, 457, 403B, TSP, etc
Pros:
- No account minimums
- Analyzes 401k investment expenses
- Provides employer-sponsored 401k
Cons:
- Limited investment options, mostly target based
- Leans towards aggressive portfolios
Charles Schwab
Charles Schwab is an established player in the finance industry, and was the first discount broker in the investment world. With Schwab Intelligent Portfolios, Schwab offers a middle-ground option for folks who like the personalization of a financial advisor but would like to have some more automated options as well.
There are two offerings: Schwab Intelligent Portfolios, and Intelligent Portfolios Premium. The minimum investment starts at $5,000 for the base model, but is $25,000 for the premium version. Both versions offer 24/7 customer support, but to have access to a Certified Financial Planner™, you have to be a premium member.
Schwab Intelligent Portfolios
- Minimum investment: $5,000
- Cost: No management fee
- Account types: Taxable accounts, IRAs, trust accounts
Schwab Intelligent Portfolios Premium
- Minimum investment: $25,000
- Cost: $300 financial planning fee + $30 monthly fee
- Account types: Taxable accounts, IRAs, trust accounts
Pros:
- Access to real people who can help you design a financial plan
- Wide variety of low-cost ETFs and mutual funds
- Auto-rebalancing & tax-loss harvesting
Cons:
- Relatively large account minimum
- Customer service interruptions as a result of Schwab’s acquisition of TD Ameritrade
Ellevest
Created in 2014, Ellevest is a robo-advisor and financial literacy platform uniquely designed for financial needs of female investors. With women in mind, Ellevest incorporates female-specific financial situation factors, like differences in income and longer lifespans.
There is also a suite of financial planning tools that help women make investment decisions based upon both short and long term investment goals.
Ellevest has no minimums, but provides service offerings in three tiers based upon the client’s financial needs: Essential, Plus, and Executive. Each service offering provides access to Ellevest’s investment and financial literacy platforms, personal coaches, as well as access to an Ellevest FDIC-insured bank account.
However, Plus and Executive offer access to retirement planning. In addition, the Executive offering provides access to Ellevest’s multi-goal portfolio management service. Even though the Executive option is the most expensive, at $97 per year, that’s not much money for access to financial planning services and educational resources.
- Minimum Investment: $0
- Cost: From $1/month to $9/month (or $12 per year to $97 per year)
- Account types: Taxable accounts, IRAs, trust accounts
Pros:
- No account minimum and very low monthly financial planning fees
- Access to financial literacy platform
- Wealth management focused on womens’ needs
Cons:
- Coaching access costs extra
- Geographically limited to the United States
E-Trade Core Portfolio
E-Trade is a long-standing, established player in the finance industry and on our list of robo advisors.
With “Core Portfolio” E-Trade offers a middle-ground option for folks who like the personalization of a financial advisor, but would like to have some more hands-off options as well.However, E-Trade does not promise access to a Certified Financial Planner like some of the other institutions.
- Minimum investment: $500
- Fees: 0.30% annual management fee
- Account Types: Taxable accounts and retirement accounts
Pros:
- In-depth risk tolerance profile
- Access to low-cost ETFs
- Auto-rebalancing
Cons:
- No tax loss harvesting
- Limited access to professional advice
Fidelity Go
As one of the largest players in the advisory services space and one of the largest mutual fund managers, Fidelity brings a lot of scale to its robo-advisor services platform, Fidelity Go.
With Fidelity Go, Fidelity is targeting customers who may not yet be ready for their full financial services but would like to start investing. These investors still have access to the low-cost investment funds Fidelity provides, with low fees and the option to access advisory services when they need to.
- Minimum investment: No minimum investment
- Fees: No advisory fee for accounts under $10,000. For accounts under $50,000, fees are $3 per month. Above $50,000, there is an account management fee of .35% per year.
- Account Types: Taxable accounts, health savings accounts and retirement accounts
Pros:
- Automated rebalancing
- No account minimum to start
- Transparent pricing
Cons:
- No tax loss harvesting offered
- People might outgrow their service offering if their financial planning needs become too complex
- Limited planning tools for do-it-yourselvers
Future Advisor
Provided by BlackRock, the world’s largest ETF provider, Future Advisor is a robo-advisor platform that provides access to very low-cost ETFs and funds. Furthermore, they integrate very well with platforms like Fidelity or TD Ameritrade.
However, it appears they fall short with respect to customer service. Furthermore, their annual investment fee is pretty uncompetitive. Finally, you don’t get access to human financial advisors Where they are a bit unique in that they provide recommendations on your linked portfolio, whether they manage them or not, like those managed by Fidelity or Ameritrade.
- Minimum investment: $5,000
- Fees: 0.50% annual investment fee
- Account Types: taxable, retirement accounts, college savings accounts
Pros:
- Aggregates multiple accounts under one view
- Offers tax-loss harvesting
- Integrates with Fidelity and TD Ameritrade platforms
- Supports 529 plans
Cons:
- High account fees
- High account minimums
- Non-existent customer support
- No portfolio customization to reflect changes in investment strategy
M1 Finance
M1 Finance is a hybrid of a traditional broker and a robo-advisor. What makes them unique is how they do portfolio allocations. They allow investors to participate in fractional investing, also known as dollar cost investing.
One of M1 Finance’s unique features is the concept of investing pies. Pies are are essentially asset allocation models that help you maintain a diversified portfolio based on your risk tolerance.
If you’re looking into socially responsible investing (SRI) options, M1 Finance also offers Community Pies. Community Pies offer the opportunity to dig into SRI options like minority owned businesses or women-owned businesses.
M1 Finance is open to investors for free. M1 Finance also offers a premium service, M1 Plus, for a $125 annual subscription free, which is waived for new members in their first year.
- Minimum Investment: $0
- Fees: $0 ($125 annual fee for Plus members)
- Account Types: Non-retirement and retirement accounts, trusts
Pros:
- No Fees
- No Account Minimums
- Customized Portfolios
Cons:
- Many basic services (like paper documents) cost extra.
- Limited ability to manage investments within pre-formatted pie templates
Stash
Stash is another subscription-based robo-advisor platform that allows beginning investors to put away as little as $5 per transaction.
They don’t automatically manage your portfolio the way robo-advisor. Instead Stash provides a guided experience holding to build a portfolio that closely matches your needs. Instead of automatically rebalancing your portfolio, they promise to rebalance quarterly if your portfolio drifts by 5% or more from your target asset allocation.
Stash seems to have a lot of socially pertinent buzzwords, like ‘investing in crypto.’ And it provides a unique spin on investment explanations. For example, Vanguard’s Tax Free Municipal Bond Fund (VTEB) is described as ‘Don’t Tax on Me.’
This might appeal to beginning investors, as these are all low-cost index ETFs. But for an investor who understands investment basics, this approach might appear a bit condescending.
- Minimum Investment: $0-$5
- Fees: Balance $1 to $9 per month, depending on the plan
- Account Types: Retirement and non-retirement
Pros:
- Designed for people with a willful ignorance of investing
- No account minimum
Cons:
- Not automated
- No real access to ‘next-level’ financial advice
- Might come off as condescending to people who want to learn investments or who feel they have some knowledge of investments.
Vanguard
Vanguard, the inventor of index funds, is an established player in the finance industry. As one of the largest names in investment management, Vanguard continues to find ways to acquire new investors.
There are two offerings here.
With Vanguard Personal Advisor Services, investors have access to human advisors for personalized financial advice. In this, Vanguard is offering a middle-ground option for folks who like the personalization of a financial advisor but would like to have some more hands-off options as well.
With Vanguard Digital Advisor, new investors have direct access to Vanguard’s robo-advisor platform. Both choices allow investors direct access to Vanguard funds, either their mutual funds or Vanguard ETFs (exchange-traded funds).
Learn More
- Minimum investment: $50,000
- Cost: 0.30% management Fees
- Account Types: Taxable, retirement, trust accounts
Pros:
- Lower fund fees
- Access to human financial advisors
- Large selection of low-cost funds
Cons:
- High account minimum
Wealthfront
Wealthfront is one of the original entries into the robo-advisor space. This roboadvisor focuses on offering an easy to use experience for the hands-off investor, while still providing the right mix of tools to engage investors.
- Minimum Investment: $500
- Costs: Free < $5000, OR0.25% management fee>$5000
- Account Types: Retirement, Non-Retirement, and College e.g. 529
Pros:
- Tax Loss Harvesting
- Automatic Rebalancing
- Low-Cost Funds
Cons:
- No Fractional Shares
- $500 Account Minimum
Wealthsimple
Wealthsimple is focused on folks who are looking for portfolio options that include more socially responsible investments like renewable energy, and green technologies.
This is a Canada-based company, so Wealthsimple’s investment options are based on Canadian rules. For example, instead of IRAs and 401k plans, governed by U.S. law, Wealthsimple manages retirement accounts based upon Canadian laws.
- Minimum Investment: $0
- Costs: 0.50% Management Fee
- Account Types: Retirement, Non-Retirement, and Trusts
Pros:
- Tax Loss Harvesting
- Access to Real People
- No Account Minimum
Cons:
- High Management Fee
- Based in Canada. Not really good for U.S. investors, eh?
Next Steps:
Now that you’ve had a chance to explore the list of robo advisors, you may be wondering what to do next. Before you focus on long-term investing, you should already have a plan to:
- Pay down your debt, and
- Build your emergency fund
Why is that important? Successful long-term investing involves being able to leave your money alone for long periods of time.
When I was still in debt and not prepared for emergencies, I would treat my investments as a piggy bank. I’d put money in one month, and take it out two months later. Doing that is a great way to lose money on your investments. Don’t do it.
Once your daily finances are stable, I’d recommend maximizing your 401k (or workplace retirement plan). Then, if you still have money to invest, pick a robo-advisor that appeals to your investment approach.
