Choosing investments and managing your portfolio can feel like a heavy lift when you’re doing it on your own. That’s where roboadvisors can help. With a roboadvisor, an algorithm handles your portfolio, making sure you’re on track and your asset allocation matches your goals. In many cases, you can get away with a small amount of oversight each year.
Best roboadvisors for June 2024
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0.25% for at least $20,000, or $4 per month, other fee tiers |
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Our top recommendations :
SoFi Automated Investing: Best for low fees
SoFi Invest
Fees
$0 stock & ETF trades.
0/contract options trades.
1.25% crypto fee.
Pros:
- Low minimum to start investing.
- No management fees.
- Access to 30-minute video meetings with fee-free financial planners.
Cons:
- No customization for portfolios.
- No tax-loss harvesting.
- Limited account types.
SoFi Automated Investing doesn’t come with fees and you can start investing with as little as $1. Plus, clients can talk to financial planners without paying a fee, and there are no management fees.
The flipside of low to no fees is a dearth of choices when it comes to your investments. Unlike many of the other roboadvisors on our list, with SoFi, you can’t customize your portfolio, and there are a limited number of account types.
Acorns: Best for savers
Savers
Savers
Acorns
Fees
$0 transaction fee.
$3 per month for Acorns Personal; $5 per month for Acorns Personal Plus; $9 per month for Acorns Premium
0.03% to 0.25% expense ratio on most funds and 0.95% for Bitcoin fund.
Pros:
- Roundups for automatic investing and saving.
- Use a multiplier to boost savings.
- Offers custodial accounts.
Cons:
- A flat fee can mean a higher percentage of the account value for low balances.
- Limited account types.
- Must use additional savings and investing to grow account effectively.
Acorns is designed to help savers get started with investing. You can choose to have purchases “rounded up” for automatic saving and investing. This includes adding a multiplier to supercharge your efforts. Additionally, it’s possible to use a family plan and include custodial accounts for children.
At $3 to $9 dollars a month for the service, it seems like a good deal, though people with smaller accounts should keep in mind that they are paying more for the service than they would pay if Acorns charged a percent of your assets rather than a flat fee.
Wealthfront: Best for goal planning
Pros:
- Financial planning and goal planning tools.
- Access to 529 accounts for college savings.
- Customization options.
Cons:
- No option to speak with human advisors.
- Limited customer service choices.
Wealthfront offers a variety of financial planning tools and calculators that can help you map your path. Robust choices for a variety of accounts — including college savings — are designed to help investors reach different goals. You can get started with as little as $500, and the fees are 0.25% of your assets under management per year.
Betterment: Best for beginners
Pros:
- Easy to start and invest in different goals each month.
- Tax-loss harvesting.
- Unlimited access to financial planners on the Premium plan.
Cons:
- Fees can be high, depending on the account you choose.
- Must have at least $100,000 to access the Premium plan.
Betterment, which is one of the oldest and most well known roboadvisories, makes it easy for beginners to set up an account, answer questions to determine asset allocation and grow their wealth. Access to different goal-based accounts and cash management plus cryptocurrencies allows investors access to a wide variety of assets.
Betterment charges 0.25% for accounts with at least $20,000 or $250 in recurring deposits and $4 per month for those who don’t meet those requirements. It charges an additional 0.15% on those with more than $100,000 and Betterment Premium access and 1% plus trading expenses on cryptocurrency accounts.
Empower: Best for high balances
High balances
High balances
Empower
Fees
No fees for personal finance dashboard or investment account, between 0.49% and 0.89% for wealth management.
Pros:
- Financial planning and goal planning tools.
- Access to financial professionals.
- Customization options.
Cons:
- Must have millions of dollars for the lowest fee tier.
- Free users receive ongoing attempts to upsell to management options.
For those with high balances who want access to personalized financial advice, Empower can be a good choice. While not strictly a roboadvisor, the management offered and customization provided can function as a roboadvisor for those with high enough balances.
While not strictly a roboadvisor, Empower has great tools to help you with your financial planning if you want to take a hands-on approach. For the lowest investment tier, you also get access to a team of human financial advisors to help you plan. As your assets under management grow, you get more personalized human attention — and lower fees.
Ellevest Digital Plan: Best for women
Women
Women
Ellevest Digital Plan
Pros:
- Focuses on challenges specific to women.
- Flat monthly subscription.
- Access to financial professionals.
Cons:
- No tax-loss harvesting.
- Limited portfolio choices.
Women face unique challenges related to the pay gap and longevity. Ellevest is designed to address those issues in its offerings. Because traditionally women have started out with less capital to invest, Ellevest has a $0 account minimum. There is a $12 monthly fee, however. It’s possible to also get more customized help when your portfolio balance reaches $100,000.
Ellevest’s real differentiator is its focus on women and their different lifetime investing profiles from men. Because women still (sadly) earn less than men, get fewer raises over the course of their careers and live longer, Ellevest tailors its investment strategy to right these factors.
Vanguard Digital Advisor: Best for fans of traditional brokerages
Vanguard Financial Advisor
Pros:
- Retirement planning tools.
- Extensive education resources.
- Low fees.
Cons:
- No option to speak with human advisors.
- Relatively high minimum balance.
If you like the idea of putting your money with a traditional broker but want a simplified roboadvisor approach, Vanguard can be a good choice. Its Digital Advisor option keeps fees low while keeping you with a major player in the brokerage space.
Because Vanguard is the OG index fund investment advisor, they have many, many different types of exchange-traded funds to choose from. And Digital Advisor can manage different kinds of accounts from regular taxable brokerage accounts and joint tenants with rights of survivorship (JTWROS) taxable accounts to traditional and Roth IRAs.
How to choose a roboadvisor
When choosing a roboadvisor, it’s important to consider various factors to determine what will work best for you. Some items to consider include:
- Available assets: Review whether the roboadvisor offers access to the asset classes you want, such as stock and bond funds or REITs. Most roboadvisors are built on funds and ETFs, although some might offer limited access to individual stocks.
- Account minimum: Make sure you can meet the account minimum. For beginners, a low minimum of $100 or less might make sense. As you grow your account, you might decide to move your money.
- Fees: Some roboadvisors charge a management fee as a percentage of your account while others charge a flat fee. Make sure you can afford the fee and that you feel like you get good value for what you pay.
- Account types: Not every roboadvisor offers access to retirement accounts or 529 accounts. Some roboadvisors allow you to have cash management accounts and borrow against your portfolio value. Choose a roboadvisor that fits your needs and provides you with the accounts needed to reach your goals.
- Access to human advisors: Not everyone cares whether financial professionals are part of the process. However, some roboadvisors offer financial planning help for a fee or access to free advice.
Roboadvisors vs. financial advisors
roboadvisors generally use algorithms to determine your portfolio asset allocation. To get started you answer a few questions about your age, goals and risk tolerance, and the roboadvisor puts together a portfolio built from funds and ETFs.
On the other hand, financial advisors usually offer more personalized advice. You can ask questions and get specific guidance based on your situation. When you use a financial advisor to help you manage your portfolio, you often get access to a wider variety of investment choices.
When you should use a roboadvisor
Consider using a roboadvisor when you’re just starting with investing or when you have long-term goals that you can “set and forget.”
A roboadvisor can help you start investing with a small amount of money and take some of the guesswork out of building wealth over time. Some of the best choices for roboadvisors might be long-term accounts like IRAs or if you’re hoping to work toward a specific goal that four to seven years out.
Methodology
We reviewed different brokerages that offer roboadvisor services, or services similar to robo-advising. Some of the factors we considered were fees, account minimums, ease of sign-up, ease of use and assets offered. We also looked at various offerings, including education, types of accounts and access to human advisors.
When looking at different roboadvisors, we considered different aspects that might make them attractive to consumers with various investing needs. Ultimately, we tried to identify roboadvisors that could meet different levels of sophistication.
Frequently asked questions (FAQs)
What is a roboadvisor?
A roboadvisor is a brokerage offering that manages a portfolio on your behalf. Often, roboadvisors rely on formulas and algorithms to put together a portfolio, usually built using ETFs.
How do roboadvisors work?
Many roboadvisors start by asking questions about your goals, timeline and risk tolerance. That helps them put together a portfolio based on asset allocation using ETFs. If you invest a set amount regularly, the money is automatically invested in the ETFs chosen by the algorithm.
How much does a roboadvisor cost?
Roboadvisors vary in cost, depending on the advisor. Some roboadvisors charge a flat monthly or yearly rate, and others charge a percentage based on your account balance. It’s common to see monthly charges of between $3 and $36 per month and management fees of up to 1%. Fees and expense ratios charged by funds and ETFs included in your portfolio are separate.
Is a roboadvisor worth it?
Whether a roboadvisor is worth it depends on your goals and your expectations for the account. For those who want a more hands-off approach, a roboadvisor can be worth the cost.
Can you trust roboadvisors?
Check to see that your roboadvisor is SIPC-insured. All investment comes with the risk of loss, even with roboadvisors. But a brokerage that’s insured can protect some of your portfolio in the event the roboadvisor fails.
