Assets under management topped $1 trillion in the global robo-advisory market. Thanks to fintech, lower costs, total automation, and tax-optimized investment strategies are becoming the norm. Simply put, if you’re considering which Robo-Advisor is best for you, read this post.
Who is the best Robo-Advisor? It depends on what you’re looking for. You can find a
Premium services once reserved for the ultra-wealthy, like tax-loss harvesting and tax-coordinated portfolios, are now available for pennies on the dollar.
Lower minimum balance requirements make it even easier for investors without a substantial net worth to gain access to these services.
You can start building your wealth today regardless of your financial situation.
What Is a Robo-Advisor ?
Robo-advisors offer an alternative to human, financial advisors. It’s like a portfolio on steroids. Why?
Because robo-advisors use computer algorithms to monitor your investment portfolio 24/7. It maintains your asset allocation by automatically rebalancing and looks for every possible way to optimize its performance while keeping costs low.
Typically, robo-advisors are fiduciaries. They act by what’s best for you and aren’t motivated by sales commissions. In short, you’re not being sold.
Many consider the low costs of a
How to Pick a Robo-Advisor
Not all robo-advisors are created equal. When choosing yours, consider things like the type of investment account needed, your investment goals (what are you saving for?), and minimum balance requirements.
It’s crucial to weigh the costs. Management fees and fund expense ratios matter. Choosing a portfolio built with low-cost ETFs, index funds, and an inexpensive advisory fee is the standard.
You should also consider the kind of financial planning offered. If the investment strategy isn’t aligned with your investment goals, it doesn’t make sense to fund an account.
Answering these questions before choosing your
Top-Ranked Robo-Advisors
Minimum Investment:
$0
Management Fees:
0.25%
Promotion:
Invest free for up to 1 year
Tax Loss Harvesting:
Yes
Portfolio Rebalancing:
Yes
Assets Under Management:
$21 billion
Minimum Investment:
$100,000
Management Fees:
0.49% - 0.89%
Promotion:
Join for Free
Tax Loss Harvesting:
Yes
Portfolio Rebalancing:
Yes
Assets Under Management:
$12B
Minimum Investment:
$0
Management Fees:
0.5%
Promotion:
Get your first $10,000 managed free
Tax Loss Harvesting:
Yes
Portfolio Rebalancing:
Yes
Assets Under Management:
$13B
Minimum Investment:
$0
Management Fees:
$0
Promotion:
Low cost investing
Tax Loss Harvesting:
No
Portfolio Rebalancing:
Yes
Assets Under Management:
$1 billion
Below are a few favorites that we’ve either used or have deemed worth a look due to their investment options, low fees, and stellar customer service.
Fiscal flexibility that’s funny, free and delivered weekly.
Best Robo-Advisors This Year
Betterment
It’s not about saving for retirement anymore, but rather when you’ll need the money.
You’re also able to purchase financial advice packages for a flat fee.
We’ve had their Chairman of the Board (and former CEO) on our podcast. Have a listen here for the interview with Jon Stein or read our detailed
Best for: Low-cost investing
Management fees: 0.25%-0.40%
M1 Finance
One of the most popular investment platforms is M1 Finance. This platform allows investors to create diversified portfolios and access a wide range of financial tools. M1 Finance is known for being a low-cost option, with a $3 monthly platform fee, making it accessible to individual investors. Additionally, M1 Finance offers a premium tier with extra benefits for those seeking more advanced features.
You can start investing for $100.
You can choose from over 80 expert-curated portfolios, create your own, or combine the two. M1 offers more variety with its portfolio selection.
Unlike other platforms that sell shares in the order they were purchased, M1 Finance uses a tax minimization strategy. When you sell assets, M1 prioritizes selling those with the lowest tax impact first. It starts with assets that have a short-term or long-term capital loss, then moves to those with no gain or loss, and finally sells assets with gains, starting with long-term gains before short-term gains.
This approach helps reduce the amount of taxes you owe when selling investments. Note: For crypto accounts, M1 uses the FIFO method (first in, first out), meaning the earliest purchased currency is sold first.
M1 Finance uses fractional shares, the application can purchase stocks and bonds in the exact proportions that you specified when you initially built your investment pie.
Best for: DIY investing
Management fee: None
Read our full M1 Finance review. Visit M1 Finance here.
Empower
Empower, known for its exemplary suite of free financial tools, also offers a financial advisory service tailored for high-net-worth investors. It combines the automation of a
Empower offers three tiers of wealth management depending on your account balance. Empower requires a $100,000 minimum investment and starts with a 0.89% management fee.
You’ll gain access to a custom portfolio based on your financial goals, curated from six asset classes. Empower provides dynamic rebalancing and smart indexing as part of its tax-optimized strategy.
The U.S. equity portion of its portfolios is a diversified selection ranging between 80-120 individual stocks.
Sign up to use their free tools.
Best for: High net worth investors
Management fees: 0.49% – 0.89%
Tools to help you plan for retirement, monitor investments, and uncover hidden fees. Run simulations on your net worth and determine what it will look like after major life events.
Wealthsimple
Toronto-based Wealthsimple started with a mission to reduce the complexities associated with big banks and make investing more accessible.
It has topped $14 billion in assets under management with 175,000 customers.
Wealthsimple accounts can be opened in just five minutes by answering a few questions about your risk tolerance, time horizon, and financial goals. Based on your responses, Wealthsimple will craft an asset allocation aligned with your risk level.
Wealthsimple’s annual fee starts at 0.5%, with a reduction to 0.4% for account balances over $100,000.
You can choose between three custom portfolio options—conservative, balanced, and growth.
These portfolios are designed using Modern Portfolio Theory, are globally diversified across seven asset classes, and primarily invest in exchange-traded funds (ETFs).
You’ll also benefit from automatic rebalancing, tax-loss harvesting, and dividend reinvesting, all of which help optimize your investment strategy.
Best for: Personalized portfolios
Management fees: 0.4%-0.5%
Read our complete Wealthsimple review.
Acorns
Acorns is a digital micro-investing app known for its round-up feature. This feature rounds up your everyday purchases to the nearest dollar and invests the spare change.
For example, if you make a $17.40 purchase, Acorns will round it up to $18.00, taking the extra $0.60 and depositing it into your investment account once the accumulated round-ups reach $5.00.
Small deposits add up over time, and anyone looking to get started will benefit from this feature. For people looking for a low barrier to investing, Roundups solves the problem.
They feature a multiplier tool, in case the spare change isn’t enough. Choose to round up 2x, 3x, or 10x the amount.
Acorns offers individual investment, retirement, and digital checking accounts, making it a convenient option if you’re looking to manage your banking and investing in one place.
To get started with Acorns, you’ll answer a few questions about your risk tolerance and financial goals. Based on your responses, Acorns will create a personalized portfolio using a diversified mix of asset classes, typically through exchange-traded funds (ETFs).
Read our Acorns review. Or, visit their website.
Best for: Students
Management fee: $3 – $5 monthly subscription, depending on the plan you choose.
Invest spare change automatically from everyday purchases into a diversified portfolio. Choose from three options and Acorns will handle the rest. Fund your personal investment account or retirement account in a few easy steps.
Ellevest
Ellevest is a financial services company founded in 2014, designed specifically to help women meet their financial goals. The platform takes into account the unique financial challenges women face, such as longer life expectancy and earlier income peaks (by as much as 15 years). Using a data-driven approach, Ellevest creates portfolios with proprietary algorithms that consider the gender pay gap.
Investors design their portfolios with a goals-based approach. Ellevest offers six goals to choose from, ranging from Build Wealth to Start My Own Business to Retirement On My Terms.
Ellevest selects an appropriate allocation of ETFs based on your risk assessment and chosen goals. The platform has no minimum investment requirement and features automatic portfolio rebalancing.
As of now, Ellevest manages over $1 billion in assets. The company offers three service tiers: Digital, Premium, and Private Wealth Management Services.
Read the full review here. Or, visit their website.
Best for: Women
Management fees: 0.25%
Ellevest offers online investing for women on a platform using gender-specific salary curves and longevity data with a goal to help close the gender money gaps. Create a custom portfolio, build an emergency fund, or save for retirement.
SoFi Automated Investing
SoFi’s automated investing option builds and manages a portfolio for you without any advisory fees. It features goal planning, automatic rebalancing, and no minimums to create an account.
Currently, SoFi offers five different investment strategies: conservative, moderately conservative, moderate, moderately aggressive, and aggressive, tailored to your risk tolerance.
You’ll also gain access to certified financial planners, personalized coaching, and a portfolio constructed of low-cost exchange-traded funds (ETFs).
You can start investing with SoFi for $1. Visit their website
Best for: Beginners, low costs
Management fee: None
Ally Invest
Ally Invest offers a wide range of investment options, including self-directed brokerage accounts, margin accounts, and managed portfolios.
Its cash-enhanced managed portfolio carries no management fees and requires a $100 minimum investment.
Managed portfolios are available in various account types, including individual or joint accounts, traditional and Roth IRAs, custodial accounts, and rollover IRAs.
If you prefer a hands-on approach, Ally Invest also provides self-directed trading with a variety of commission-free stocks, ETFs, and options.
Read our full review here. Or create an account.
Best for: Portfolio selection
Management fees: 0% – 0.30%
Wealthfront
Wealthfront is a
Their advisory services are fully automated, and the funds they use have low costs, with expense ratios averaging between 0.06% and 0.13%.
Wealthfront offers a broad selection of investment options catering to virtually everyone. Its cash management account features a competitive interest rate and is FDIC-insured up to $250,000.
For high-net-worth investors with balances over $100,000, Wealthfront provides advanced features like Stock-Level Tax-Loss Harvesting and Risk Parity.
Read our Wealthfront review.
Best for: Low-costs, account options
Management fee: 0.25%
Brokerage Firms Featuring a Robo-Advisor
Robo-advisors are increasingly popular, and traditional brokerage firms have taken notice. Many now offer automated investment services as an option for their customers, blending the convenience of robo-advisors with the expertise of traditional financial advice.
Fidelity Go
Fidelity’s robust platform offers a wide range of financial services, from mutual funds and annuities to college savings plans. As a registered investment advisor and fiduciary, Fidelity also provides professionally managed portfolios tailored to your financial goals.
Fidelity Go is Fidelity’s
With Fidelity Go, there are no trading fees, commissions, or transfer fees, allowing you to focus on building wealth, saving for retirement, or achieving other goal-based financial objectives.
Fidelity Go portfolios are composed of low-cost funds designed to keep you on track to meet your financial targets. Additionally, as a large brokerage firm, Fidelity allows you to consolidate and manage all your Fidelity accounts in one convenient place.
Read our complete Fidelity vs. Vanguard comparison here. Or, visit Fidelity’s site to start investing.
Best for: No minimums, customer service
Management fee: Fidelity Go charges no management fee for accounts with balances under $25,000. For accounts with balances of $25,000 or more, the management fee is 0.35% annually.
Charles Schwab Intelligent Portfolios
Schwab Intelligent Portfolios is its robo-investing service. While Schwab doesn’t charge a management fee or commissions, it does require a minimum balance of $5,000 to get started.
The service monitors your portfolio daily and rebalances it as needed to stay aligned with your investment goals. All portfolios are diversified using a curated selection of exchange-traded funds (ETFs) across up to 20 asset classes.
Best for: Customer service, investment options
Management fee: None
Vanguard Personal Advisor Services
Vanguard Personal Advisor Services caters to investors who want the benefits of both automation and human advice. While Vanguard is known for serving DIY investors, its Personal Advisor Services appeal to those seeking a more personalized, automated touch with the ability to consult a human advisor.
Vanguard, established over 40 years ago, continues to be a low-cost industry leader with millions of investors. The service uses proprietary algorithms that consider your time horizon, goals, and tax implications at every step. However, it has a higher minimum balance requirement of $50,000.
For those looking for a fully automated solution with a lower entry point, Vanguard has introduced its Digital Advisor service, which offers features to help you prepare for emergencies, manage debt, and direct your investments with a minimum balance of $3,000.
Read our review of the best Vanguard funds and a breakdown of why Vanguard funds are first-rate among investors. See how Vanguard compares to Betterment.
Best for: Overall
Management fee: 0.30%
Vanguard is owned by their funds so they are uniquely aligned with the interest of their investors. As a result, Vanguard funds usually have the lowest fee rate in their category. Mind you, signing up is more work and requires more decisions than Betterment.
Robo-Advisor Comparison
Our overall picks and round-winners.
Robo-Advisor | DIY or Hands-Off | Fees | Minimum Investment | Best For |
---|---|---|---|---|
Betterment | Hands-Off | 0.25%-0.40% | None | Overall |
M1 Finance | DIY | None | $100 | Management Fees, DIY-Investing |
Empower | Hands-Off | 0.49%-0.89% | $100,000 | High Net Worth Investors |
Acorns | Hands-Off | $1-$3 monthly | None | Students, Beginners |
Ellevest | Hands-Off | 0.25% | None | Women |
Blooom | Hands-Off | $95-$250 annually | None | Retirement Account Management |
Vanguard Personal Advisor Services | Hands-Off | 0.3% | $50,000 | Overall |
Is a Robo-Advisor Right for You?
There are considerations with any investment option, and choosing whether a
What’s to Like
- Automation: Removing the human element varies depending on the
Robo-Advisor you choose, but it’s largely hands-off. Many features including tax-loss harvesting and rebalancing are done for you. - Low Management Fees: Again, removing the human element carries lower costs compared to a financial advisor. Many wealth managers charge a 1% advisory fee or more.
- Custom Portfolios: Complete a risk assessment and your portfolio is constructed for you in minutes depending on your financial goals.
- Low Investment Minimums: Many robo-advisors offer significantly reduced minimums to open an account. Consider an option like SoFi with no minimum balance requirement to Vanguard’s $50,000 Personal Advisor Services minimum.
What’s Not to Like
- No Room for DIY-Investors: Robo-investing is mostly hands-off. If you’d like to build a portfolio yourself, you’ll be unhappy with this option. Less room to hand-pick your investments as they’re pre-selected.
- Less Human Contact: Many robo-advisors have limited human support and physical branches. This can be a deal-breaker for some. You may not like the inability to walk into your local branch and speak with your advisor in person.
Final Thoughts
Robo-advisors make it easier to start investing. They’re a low-cost alternative to human, financial advisors. Hands-off investors will benefit the most.
If the idea of letting someone else do the work for a small fee sounds appealing, this option might be a great fit.
Robo-advisors come in 50 shades of grey. Nearly everyone can find one to meet their financial goals; it depends on your personal preference.
As robo-advisors become more common, I expect costs will decrease, while enhanced features increase.