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Best Robo Advisor

AI is the next big thing, and it has already made it's way to investing. Robo advisors are consistently helping clients grow their portfolio.

Ally Invest - Automated Managed Portfolios

Ally Invest is a top rated brokerage by Benzinga, and they offer managed portfolios at industry best pricing. With an account management fee of only 0.30% and excellent 24/7 customer service, this is a great choice for a robo advisor. Start investing with only $2500 and be on the path to achieve your investing goals.

The best robo advisor is a mix of finding a price point that works for you, finding the best performance, and the platform that can give you what you need to confidently invest.

What is a Robo Advisor?

Financial advisors can be expensive. Although an average annual fee of 1%-2% doesn’t  sound like much, it adds up. Given that the stock market has generated a return of around 6.5% after inflation, a 1%-2% fee amounts to 15%-30% of the total return. For many who meet their financial advisors just a few hours a year and have considerable financial portfolios, the total costs of having a financial advisor can get pretty outrageous. For many people who see their financial advisors once, the cost can amount to $10,000-$50,000 per hour or more when all is said and done.

Often times financial advisors don’t actually help a client beat the market either. Study after study consistently show that active investing fails to beat passive investing, especially after fees.

When taking in account the lack of performance and the high fees, various fintech companies formed robo advisors, a complex computer-algorithm that does most of the important things that financial advisers do, only for a lot less. At its core, robo advisors help construct, adjust, manage, and optimize a portfolio. For a person 20 years away from retirement, the robo advisor might recommend more risky assets such as stocks in a portfolio, while for a person who is just a few years away from retiring, a robo advisor might suggest more conservative options such as a bond-heavy portfolio.

Why use Robo Advisors?

  • Multitude of services – Robo advisors help their clients determine how much money to invest to realize their financial goals in a way that is in line with their risk appetite. To that end, robo advisors help optimize asset allocation, automate tax loss harvesting, and rebalance portfolio when the market changes. Many also help clients create plans for retirement, and manage 401ks. In addition, robo advisors such as Betterment also automatically rebalance a portfolio automatically without any additional commission cost to the client.
  • Lower minimums – Robo advisors have a big advantage in that they have lower minimums than financial advisors, which often require their clients to invest $100,000 or more before dispensing advice. By having minimums as low as $0, robo advisors dispense previously unaffordable retirement planning and portfolio balancing advice to a broader selection of people.
  • Lower fees – Robo advisors generally cost 0.25%-0.5% of the portfolio, versus a financial adviser that generally charges 1-2%. Over time, the lower fees add up, and give users of robo advisors a greater share of investment gains, which could amount to hundreds of thousands of dollars for many individuals. The robo advisors rates don’t necessarily include ETF, mutual fund fees however.
  • Less conflicts of interest – Often times the interest of financial advisers doesn’t necessarily match the interest of their clients. A financial adviser might make more money, for example, if he steers his client into high fee products that don’t fit the client’s best goals. Given that robo advisors are algorithms that generally look for the lowest cost solution to fit a client’s needs, there is less conflict of interest.
  • Always available – Given that robo advisors are software, robo advisors will always be available as long as a client has access to the internet. Access to a financial adviser is harder to access as meeting a financial adviser will require scheduling and fitting the appointment in the financial adviser’s busy schedule.
  • Tax-loss harvesting – Robo advisors also offer clients an advanced feature, tax loss harvesting, which is the practice of divesting a security at a loss, i.e. harvesting, to offset gains elsewhere in a portfolio. The divested security is then replaced by a similar security, helping a client maintain the optimal asset allocation by keeping a portfolio’s diversification. The realized losses on divestments could also potentially reduce an investor’s ordinary taxable income by as much as $3,000.
  • Hybrid robo advisors – For certain people, robo advisors are just not enough, and they require more of a hands-on human touch. To solve that problem, many financial firms offer hybrid robo-advisors, or robo advisors with the added functionality of talking with regular human financial advisers through the phone. Those financial advisers could potentially help clients with complex things such as estate planning, etc. that robo advisors currently don’t do.

Our process for finding the top robo advisor for you

We ranked robo advisors on multiple criteria. We looked at over 30 different companies, spending over 100 hours crunching the data and talking to experts. Here is the criteria we used to determine the best.

  1. Best overall quality – some simply outpaced others in all categories
  2. Account minimums – the lower the better
  3. Fees charged – we’re a big fan of little to no fees
  4. Assets under management – the more AUM, the more stable the company is and the more you can trust it
  5. Features – the more features such as direct indexing, tax loss harvesting, human advisors alongside etc, the better
  6. Customer service – support is vital when it comes to your investments

Best Overall

For an overall best robo advisor, Betterment and Wealthfront consistently scored well in all categories of our review.

 

Commissions

0.25% annual fee for accounts 0.4% Premium Plan with additional features annual fee for accounts more than $100,000

Best For
  • Intermediate investors
  • Retired investors
  • College students
Commissions

0.25% annual fee

Best For
  • Passive investors
  • Lower fees
  • Beginning investors
  • Investors who don't want to manage money on their own

Betterment and Wealthfront have made some major waves in the financial world. By offering lower commissions, the ease of entry for users to start investing continuously learn better strategies has brought in a whole new demographic of investors.

Best For Stability

These two institutions are majors brands in the finance world, offering an assortment of products, and managing billions of dollars collectively.

Commissions

0%

Best For
  • Diversified Portfolios
  • Automatically Rebalanced
  • Tax Efficient
Commissions

0.30% annual fee

Best For
  • Set-it-and-forget it investors
  • Saving on taxes
  • Complex financial planning for retirement

Rising Stars

Fees are a part of investing. Saving money isn’t always the only reason to choose an advisor, but if you are looking for low fees and a more diverse set of features, these two options are your best bet.

Commissions

Free Some instances you may be required to pay transfer fees of fund fees

Best For
  • Brand-new investors
  • Those who are comfortable managing their finances solely online
  • Great technology
Commissions

0.49% - 0.89% Fees range based on deposit amount and services used

Best For
  • Retirement planning
  • Investment tracking
  • Bill tracking and management

Robo Advisor Growth

Due to their value proposition, robo advisors have grown very quickly:

In 2008, Betterment, the first robo advisor, came to the scene with a portfolio balancing feature. Although other companies had offered portfolio balancing software at the time, those companies marketed only to existing financial advisers, not the general public like Betterment did. In 2015, the global assets under management by robo advisors came in at around $100 billion, and in 2016, the amount approximately doubled.

Due to the increased amount of interest, more brand-name financial companies, such as Vanguard and Schwab, have jumped on the bandwagon recently, and even elites such as Goldman Sachs and Morgan Stanley are working on launching their own robo advisor solutions. In terms of growth, the future looks rosy as many analysts estimate total AUM managed by robo advisors to hit $2 trillion or more by the end of this decade.

Robo Advisors Impact on AI

Robo advisors have stimulated more demand for artificial intelligence in the hopes that AI software will help personalize financial choices better. Robo advisors have also indirectly helped AI by promoting the investment in various companies that do AI such as Facebook, Google, and Microsoft, etc.

Compare Top Robo Advisors

Broker Best For Commissions Account Minimum Choose your platform
M1 Finance
  • Small accounts
  • Beginner investors
  • Passive traders
FREE automated investing $100 for regular accounts $500 for retirement accounts
Get started securely through M1 Finance's website
1 Minute Review

The brokerage allows its clients to trade without fees and commissions and takes an innovative approach to portfolio creation. With M1 Finance, everything is about the Pie, a simple way to build a portfolio. You can create custom Pies by selecting your stocks and assigning them targets or you can choose Expert Pies, which are designed to meet certain goals or to give you an exposure to a certain industry. When you pick your Pie, you can also use automation features to set up recurring investments, automatic rebalancing, tax efficiency and cash control.

Pros
  • No fees and commissions
  • Easy to create a diversified portfolio
  • Good for every experience level
  • Automated rebalancing of the portfolio
  • Allows investing in fractional shares
  • Referral program
Cons
  • New brokerage, accounts SIPC protected up to $500,000
  • You can’t invest in mutual funds
Current Promotion

Free automated investing

Betterment
  • Intermediate investors
  • Retired investors
  • College students
0.25% annual fee for accounts 0.4% Premium Plan with additional features annual fee for accounts more than $100,000 $0
Get started securely through Betterment's website
1 Minute Review

Offering personalized investment strategies, Betterment tailors customer portfolios based on a host of factors such as goal type, risk tolerance, account type, time horizon etc. The firm focuses on tax-efficient investing at all stages, which is its unique selling proposition.

Pros
  • Built in tax-saving strategies
  • Automated rebalancing
  • Personalized service
Cons
  • Lack of customization
  • Other Robos can be free
Current Promotion

None at this time

Wealthfront
  • Passive investors
  • Lower fees
  • Beginning investors
  • Investors who don't want to manage money on their own
0.25% annual fee $500
Get started securely through Wealthfront's website
1 Minute Review

Wealthfront offers automated investment services, customized according to the risk tolerance and investment goals of every investor. For assessing clients basic financial health, Wealthfront has designed a financial planning solution called Path. If you link all your accounts, Path can analyze your financial habits and help you determine where are your habits going to lead you in the future. Investors who wish to invest their savings can use an automatic investing feature called PassivePlus at low cost. It offers the following strategies: Tax-Loss Harvesting, Stock-level Tax-Loss Harvesting, Smart Beta and Risk Parity.

Pros
  • Relatively small fess
  • Goals and risk tolerance based strategies
  • Time-tested and academically proven investment strategies
  • Tax optimization
  • Financial planning and results tracking
  • Referrals program
Cons
  • No partial shares allowed
  • Doesn't invest entire deposit
Current Promotion

None at this time

Personal Capital
  • Retirement planning
  • Investment tracking
  • Bill tracking and management
0.49% - 0.89% Fees range based on deposit amount and services used $25,000
Get started securely through Personal Capital's website
1 Minute Review

Personal Capital differentiates itself from other robo-advisors by not using a traditional broker model, and ensuring that all of their advisors are RIAs (Registered Investment Advisor).

Pros
  • Personal Capital advisors are RIAs
  • Excellent Financial Tools
  • More than investing services
  • Free Financial Dashboard
Cons
  • Higher fees than other robo-advisors
  • Not as focused as other brokers
Current Promotion

None at this time

Vanguard
  • Set-it-and-forget it investors
  • Saving on taxes
  • Complex financial planning for retirement
0.30% annual fee $50,000
Get started securely through Vanguard's website
1 Minute Review

Vanguard Personal Advisor Services combines the best of high-touch, high-tech, and low-cost funds to help you with your real-life investing needs.

Pros
  • Low-cost investing available for Vanguard funds
  • It’s a great company for DIY investors
  • Vanguard still has many options for investors who would like to speak with an advisor
Cons
  • No active trading platform or tools
  • Other funds are more expensive to invest in; your best bet is to invest in Vanguard’s own funds
  • No advanced platform available
Current Promotion

None

Charles Schwab
  • Diversified Portfolios
  • Automatically Rebalanced
  • Tax Efficient
0% $5,000
Get started securely through Charles Schwab's website
1 Minute Review

Schwab Intelligent Portfolios™ - an automated investment advisory service with no advisory fees, no account service fees, and no commissions charged.

Pros
  • 0 Account fees for transfer and close
  • Automatic Rebalancing
  • 24/7 Customer Support
  • Great device support
Cons
  • Must have $5,000 minimum balance
  • Tax strategy is only free for accounts > 50K
Current Promotion

Pay $0 advisory fees, account service fees or commissions—and you can get started with as little as $5,000

WiseBanyan
  • Brand-new investors
  • Those who are comfortable managing their finances solely online
  • Great technology
Free Some instances you may be required to pay transfer fees of fund fees $0
Get started securely through WiseBanyan's website
1 Minute Review

WiseBanyan’s site methodically eases you in using a goal-oriented approach. The company offers a truly relatable, tangible way to save for your future and present goals. For example, you can designate your savings goals as “Vacation to Fiji” or “Retirement” (whatever you’d like!) which cleanly categorizes your goals into manageable chunks. Risk aversion, time horizon, and money you’ve already saved are carefully considered for each individual goal and invested appropriately. It’s a slick way to manage money and is a solid way to end up with a fully-diversified portfolio while mitigating fees and tax consequences.

Pros
  • No account management fees
  • Automatic rebalancing is free on all accounts
  • No account minimums required
Cons
  • Only offers individual taxable accounts, traditional or Roth IRAs or SEP IRAs
  • Tax-loss harvesting is not included for free (which many robo-advisors offer automatically)
Current Promotion

None at this time