What are Robo-Advisors?
Robo-advisors are digital platforms that provide automated, algorithm-driven financial planning services with little to no human supervision. Unlike traditional financial advisors, Robo-advisors operate with significantly lower fees and are more accessible. They offer a number of advantages such as ease of use, round-the-clock service, and the ability to manage your investments from the comfort of your home.
Top Robo-Advisors
Wealth front
Wealth front is a pioneer in the Robo-advisory field. It offers a wide range of features including tax-loss harvesting, automatic portfolio rebalancing, and even financial planning tools.
- Fees: 0.25% of assets under management
- Investment Minimum: $500
- Pros: Low fees, daily tax-loss harvesting, and a variety of account types.
- Cons: No fractional shares and no human advisors.
Betterment
Betterment is another popular choice among Robo-advisors. It stands out for its goal-based tools and features, which can help you save for specific objectives like retirement or a down payment on a house.
- Fees: 0.25% for digital plan, 0.40% for premium plan
- Investment Minimum: $0 for digital plan, $100,000 for premium plan
- Pros: No account minimum for digital plan, automatic rebalancing, and tax-loss harvesting.
- Cons: Higher fees for premium plan and limited investment options.
Vanguard Personal Advisor Services
Vanguard Personal Advisor Services combines the best of both worlds: the convenience of a Robo-advisor with the personal touch of a human advisor.
- Fees: 0.30% of assets under management
- Investment Minimum: $50,000
- Pros: Access to human advisors, low fees, and trusted brand.
- Cons: High minimum investment and less advanced technology compared to competitors.
Schwab Intelligent Portfolios
Schwab Intelligent Portfolios offers a robust Robo-advisor platform with the added benefit of having a large selection of investment options.
- Fees: $0 (but requires a significant cash allocation which can drag down returns)
- Investment Minimum: $5,000
- Pros: No advisory fees, automatic rebalancing, and tax-loss harvesting.
- Cons: High cash allocation and no option to invest in individual stocks.
Fidelity Go
Fidelity Go is a strong contender for those who want a simple, straightforward Robo-advisor with strong customer service.
- Fees: $0 for accounts under $10,000; $3 per month for accounts $10,000-$49,999; 0.35% for accounts $50,000 and over
- Investment Minimum: $0
- Pros: Strong customer service, low fees for small balances, and automatic rebalancing.
- Cons: Limited investment options and no tax-loss harvesting.
Personal Capital
Personal Capital is more than just a Robo-advisor. It’s a comprehensive financial planning tool that offers a wide range of services.
- Fees: 0.49% to 0.89% of assets under management
- Investment Minimum: $100,000
- Pros: Access to human advisors, comprehensive financial tools, and tax optimization strategies.
- Cons: High fees and high minimum investment.
Robinhood
Robinhood is a free-trading app that lets investors trade stocks, options, exchange-traded funds and cryptocurrency without paying commissions or fees.
- Fees: $0
- Investment Minimum: $0
- Pros: No account minimum, no fees, and a user-friendly platform.
- Cons: Limited customer service and no retirement accounts.
Ally Invest
Ally Invest offers automated portfolios as a low-cost and low-effort option to invest in the market.
- Fees: 0% for automated portfolios
- Investment Minimum: $100
- Pros: Low minimum, no advisory fees, and strong customer service.
- Cons: Limited investment options and no tax-loss harvesting.
Acorns
Acorns is a Robo-advisor that rounds up your purchases on linked credit or debit cards, then sweeps the change into a computer-managed investment portfolio.
- Fees: $1/month for Lite, $3/month for Personal, and $5/month for Family
- Investment Minimum: $0
- Pros: Automatic investing, no minimum investment, and cash back at select retailers.
- Cons: Small investment portfolio and high fees on small account balances.
Stash
Stash offers a range of services from banking, to investing, to retirement accounts, making it a comprehensive financial app.
- Fees: $1/month for Beginner, $3/month for Growth, and $9/month for Stash+
- Investment Minimum: $0
- Pros: Offers traditional and Roth IRAs, no add-on trading fees, and educational content.
- Cons: Monthly fees, no tax-loss harvesting, and limited portfolio customization.
Comparison and Conclusion
Choosing the best Robo-advisor ultimately depends on your personal needs and financial goals. For beginners, Robo-advisors like Betterment or Acorns could be a good start due to their low minimums and user-friendly platforms. For those with larger investments, Vanguard Personal Advisor Services or Personal Capital offer the added benefit of access to human advisors.
