Investing with robo advisors is quickly becoming an option for many investors who find this automated approach right up their alley. Here are some of the best robo advisors and the benefits each.
Top Robo Advisors For Your Investments
Robo Advisor Definition: Robo advisors are computer automated investment platforms that put together an optimal portfolio based on an investor’s goals, risk tolerance, age, etc. It automatically manages that portfolio to help it stay on track with time.
1. Schwab Intelligent Portfolios
Schwab Intelligent Portfolios is a product of Charles Schwab, one of the biggest investment companies in the United States. Schwab has $3.36 trillion in assets under management, $23 billion of which are in robo-advising accounts.
What makes it particularly attractive for most investors is its “zero fee structure.” Schwab charges no commissions, account fees, nor advisory fees.
Clients pay the operating expenses on the ETFs inside their portfolios, which is the same amount they’d pay if they invested in ETFs on their own. Schwab instead earns money from other sources such as management fees it gets from Schwab ETFs and other ETFs from third-party sources.
Accounts, however, do have a minimum requirement of $5,000. This is one of the highest among robo-advisor firms.
Similar to other top robo advisor firms, Schwab employs automatic rebalancing and automatic tax loss harvesting for accounts over $50,000. They also offer 401(k), IRA rollovers, IRAs, retirement accounts, and trust accounts.
Betterment is one of the oldest and leading robo advisors in the financial industry. It’s the largest independent robo advisor firm with almost $15 billion in assets under management.
Similar to its primary competitor, Wealthfront, Betterment also takes a passive investing approach as it trades through the Apex Clearing Corporation.
Betterment’s Basic Digital Plan
Betterment’s basic Digital plan has no minimum balance requirement and charges a 0.25% annual fee. This includes access to their automated portfolio management, web tools, customer service, and a one-time consultation with their financial experts.
Betterment’s Premium Plans
Their Premium plans, while slightly pricier, charging a 0.40% annual fee and require a minimum balance of $100,000, offer unlimited consultations with their financial planners. Betterment specifically designed this plan for customers who might need to discuss strategies with a financial planner because of complex financial situations.
Betterment also employs automated tax loss harvesting, allowing their clients’ portfolios to earn even bigger gains. They also offer retirement planning and a variety of account types, such as 401(k), trust accounts, and individual retirement accounts (IRAs).
Wealthfront is one of the top robo advisors for investors looking to take a hands-off approach in their investment strategy. Like Betterment, it’s also another giant in the industry, with over $10 billion in assets under management.
Wealthfront charges the majority of accounts a low 0.25% management fee, with a minimum investment of only $500. Additionally, no management fees will be charged for accounts below $10,000, making it ideal for those looking to test out robo advisors.
The firm relies on Modern Portfolio Theory to build portfolios of low-cost exchange-traded funds (ETFs).
For accounts over $100,000, it also offers direct indexing. This copies ETFs with direct investments in stocks and allows it to capture the biggest benefits of tax loss harvesting.
For these clients, it also offers other benefits, such as their “new portfolio line of credit” program. This lets clients with over $100,000 in investments loan up to 30% of their account balance.
Wealthfront also offers other services for accounts of all sizes such as its financial planning experience called “Path.” This program analyzes one’s spending and savings patterns and gives recommendations based on them.
4. Personal Capital
Personal Capital is a great choice for investors who want to experience automation while still having regular access to a financial advisor. The firm has over $8.5 billion assets under management with around 19,000 clients all over the U.S.
Personal Capital Regular Plans
Investing with Personal Capital gives investors access to their all-in-one online financial platform. This provides investors tools like a retirement planner, a budgeting plan, and an investment checkup.
In comparison, their pricing is slightly higher compared to other robo advisors, ranging from 0.49% to 0.89%. Pricing is on a sliding scale, meaning the higher the investment, the lower the cost.
Personal Capital Premium Plans
All plans give clients access to human advisors. Higher tier plans give clients dedicated financial advisors, additional wealth management features, and other services such as estate and tax planning.
5. SoFi Wealth
SoFi Wealth is a great destination for young professionals, especially those looking to refinance their student loans. The company, however, has already grown to include a wealth of other financial services such as loans and investment management.
Those with existing loans with SoFi won’t be charged for wealth management. Those without get their wealth management services for free up to $10,000 and with a minimum investment of only $100.
Investors of SoFi Wealth also have access to human advisors to help set things up. They guide investors in making sure that they are on the right financial track and give them access to free SoFi events around the country.
Wealthsimple is a top choice among robo advisors, especially for those who look at investments as more than just a money-making endeavor.
The firm has $1.5 billion in assets under management. While not the biggest of the bunch, its socially-responsible investing feature makes it a standout among others.
Investors can choose to emphasize their portfolios in companies that align with advocacies they support. Some of these include companies with low carbon emissions, those that support gender diversity, and ones that promote affordable housing.
Wealthsimple also employs tactics such as tax-loss harvesting, automatic rebalancing, dividend reinstatement, and access to human advisors.
Wealth management services are free for the first $5,000, and those up to $100,000 pay 0.50% per year. The rate decreases as one’s investments grow over this threshold.
They also offer premium account benefits such as access to the VIP airline lounge for frequent flyers.
Ellevest is a robo advisor firm that focuses on women investors. When providing financial planning advice, they take into consideration the gap between men and women’s income trajectories, life cycle events, life expectancy, etc.
Ellevest customers pay 0.25% for accounts up to $50,000. Investments beyond this give the investor access to the company’s premium service, which includes executive coaches and financial planners.
They don’t do tax-loss harvesting, though they offer personalized portfolios at a great rate. Ellevest only invests in ETFs that charge from 0.06% to 0.16% per year in fees.
Regardless of the size of the account, Ellevest customers have unlimited access to their team of financial advisors via text or email. This team includes financial professionals who can help one on a range of financial topics such as managing retirement accounts, customizing account goals, and paying off debt while still managing investments.
WiseBanyan is noteworthy for young investors for its “fee-free” approach. Its core robo advising service is free to use, and it charges only for optional products and services. It also offers a fully-automated platform.
However, it offers quite a limited range of investment options. Its risk profiling and goals also toggle one’s investment choices, but it’s not as flexible as what other robo advisors offer.
SigFig is ideal for those who already have experience in investing. It’s worth exploring, especially if one already uses an online brokerage as it manages existing investments.
SigFig, though relatively new, is one of the best robo advisors in the financial market. It was founded in 2007 and is continuously expanding its partnerships and features.
Its current partners include other brokerages such as Charles Schwab and TD Ameritrade.
It offers a minimum account balance of $2,000 and free management for accounts under $10,000. SigFig charges 0.25% per year for any amount over the $10,000 threshold.
SigFig offers two account types:
- Free portfolio tracker account
- Managed account
For those who manage their accounts themselves, SigFig’s platform can help them streamline tracking their portfolio’s performance with its dashboard tools.
The managed account also provides numerous features such as access to financial advisors via phone, automated rebalancing and reinvesting, tax loss harvesting, and asset allocation models.
Different robo advisor firms offer varying advantages and disadvantages. Before choosing which of these robo advisors to invest with, it’s essential to consider and evaluate important factors such as fees, minimum account requirement, services offered, and in some cases, even the type of advocacies the company invests in. This will go a long way in determining which firm will best suit one’s investments needs and preferences.
Are there other robo advisors on your list that we may have missed? Share them with us in the comments section below!
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