- SoFi Invest
- M1 Finance
- Ally Invest Managed Portfolios
- Blooom
- SigFig
- Schwab Intelligent Portfolios
- Wealthfront
- Ellevest
- Betterment
- Vanguard Personal Advisor Services
- Personal Capital
Robo-advisors are a digital, low-cost alternative to a traditional financial advisor. As with any investment platform, fees can make all the difference. This post examines robo-advisor costs, including management fees and expense ratios, and how they vary based on your needs.
Deciding which one is best for you depends on several factors. We’re trying to determine what level of tools and guidance justify the
If you don’t need a lot of support, then paying a premium might not be necessary. But, if you do need help, it’s worth paying a little extra.
Your asset allocation, risk tolerance, and even how much human financial advice you’ll want all play a part in deciding which one is best for you.
Some shine with their personal advisor services, and some with their investment strategy. This article will mostly focus on the
Robo-Advisor Fees
As far as
Some seem reasonable because their account management fees are low, but they only offer funds with high expense ratios.
Others have high initial fees but offer funds with low expense ratios. It’s essential to look at both numbers before making a decision.
The following robo-advisors are ordered based on management fees as well as factoring in the average expense ratios.
This article isn’t trying to answer which is the best robo-advisor overall. Instead, it’s attempting to give you an idea of how the costs stack up compared to what you get for your money.
Depending on the size of your portfolio, the order might change. Keep in mind; the best
Budget like a business and focus on your cash flow. In addition to their budgeting software, they have an awesome suite of tools to help you optimize your investments. Did we mention it's free?
11 Robo-Advisor Fees Compared
SoFi not only doesn’t charge account management fees, but they also don’t charge administrative fees. With SoFi, you have free access to certified financial planners as well as a broad range of low-cost investments.
Their financial advisors are fiduciaries, which means they are legally obligated to act in your best interest. They’re not paid on commission, which means they don’t make money from placing trades or recommendations. It’s an incredible service SoFi offers.
Many Robo-advisors don’t charge management fees, but when you factor in the expense ratios of the funds offered, SoFi stands out.
Giving investors free access to financial advisors was the tie-breaker between SoFi and the next few we’ll list.
–Account Management Fees: $0
–ETF Expense Ratio: 0.03%-0.08%
–Account Minimum: $0
–Cons: Tax-loss harvesting unavailable
–Pros: Great for beginners, free access to financial advisors
SoFi is best for those fee-minded investors who want a guiding hand but don’t want to pay for a financial advisor.
You can’t have a serious conversation about the best robo-advisors without having M1 Finance at the top of your list.
No matter which metric you’re using, M1 Finance is hard to beat. They don’t charge fees for trading and have an extensive list of stocks and exchange-traded funds (ETFs).
With M1 Finance, users have access to taxable accounts, IRAs, and even LLC business accounts. They also have pre-made portfolios.
If you’re not sure where to invest, M1 Finance might be your cheaper, more straightforward option.
M1 Finance is best for those who don’t need advice; they just want an inexpensive, easy-to-use platform.
–Account Management Fees: $0
–ETF Expense Ratio: 0.06%-0.20%
–Account Minimum: $100.
–Cons: M1 Finance does not offer financial advice.
–Pros: Low fees, easy to use, automatic portfolio rebalancing.
Read our M1 Finance review here. Or, check out their site.
Ally Invest Managed Portfolios are attractive because they offer no management fees provided that you carry a cash minimum of 30%.
If you’re not into the idea of holding that much cash, they charge a .30% management fee for assets under management.
–Account Management Fees: $0 (with 30% cash allocation)
–ETF Expense Ratio: 0.06%-0.09%
–Account Minimum: $100
–Cons: No investment advice available, must keep a high cash balance
–Pros: Access to Ally Bank services
Read the full review here.
Blooom is unique in that they focus on the retirement portion of your investment portfolio. They’re also unique in terms of
Instead, they charge a $120 annual fee. That price drops to $108 per year if you pay in one installment.
It makes
Since most of us will eventually have relatively high portfolio balances,
Blooom works best for people looking to reduce their hidden fees. They focus on employer-sponsored 401(k) and IRAs from Vanguard, Charles Schwab, and Fidelity.
–Account Management Fee: $120 per year
–Expense Ratios: 0.14%
–Account Minimum: $0.
–Cons: Narrow focus on retirement accounts. Relatively expensive if you don’t have a lot invested.
–Pros: Free 401K retirement analysis and calculator, zero management fees.
If you have a company-sponsored retirement plan, it’s worth checking out Blooom. They’re masters at finding and eliminating hidden fees.
SigFig is an excellent option for those just starting. While their account minimum is $2,000, they offer free account management on portfolios under $10,000; once you cross the $10,000 threshold their 0.25% assets under management fee is quite reasonable.
What makes SigFig stand out is the unlimited access you get to financial advisors. Many robo-advisors give access to financial advisors, but it’s almost always only available with their premium service.
–Account Management Fee: 0.25% (free under $10,000)
–ETF Expense Ratio: 0.15%
–Account Minimum: $2,000
–Cons: No savings account or cash management
–Pros: Unlimited access to financial advisors, lots of tools to help you reach your financial goals
SigFig is best for new investors who want access to financial advisors and enjoy playing with various financial tools and calculators.
Charles Schwab comes in hot with their Schwab Intelligent Portfolios that will build, manage, and rebalance your portfolio based on your risk tolerance.
While there aren’t a ton of additional perks for investors with lower amounts, tax-loss harvesting is available for taxable accounts with a value of more than $50,000.
Schwab Intelligent Portfolios offers a premium version that gives access to a Certified Financial Planner (CFP) for a $30 monthly fee and a one-time $300 onboarding fee.
The account minimum for their premium service is $25,000.
–Account Management Fees: $0
–ETF Expense Ratio: 0.14%.
–Account Minimum: $5,000
–Cons: High account minimum, tax-loss harvesting only available for portfolio balances greater than $50,000
–Pros: No management fees, great ETF selection, automatic rebalancing
Schwab Intelligent Portfolios is best for those who want to keep expenses as low as possible but are a little further down the financial path and need financial planners and tax-loss harvesting.
Wealthfront has a standard account management fee of 0.25% for balances over $5,000. Accounts under $5,000 are managed free.
Wealthfront offers a high-interest savings account that pays a price of 0.35% and some of the best tax-optimization services of any
Wealthfront shines with its financial planning tools. You even have access to 529 college savings plans. Accounts with over $100,000 invested get access to a few more Wealthfront features, including their Risk Parity Fund and stock level tax-loss harvesting.
Taxable accounts with over $500,000 invested have access to their multifactor smart beta tool.
Wealthfront is unique because its fee remains the same despite your portfolio’s balance. You gain additional perks the higher your balance grows, but you’re not charged extra.
–Account Management Fee: 0.25%
–ETF Expense Ratio: 0.08% for standard funds, 0.11% for their Risk Parity Fund
–Account Minimum: $500
–Cons: Charge an AUM fee after $5,000, fractional shares unavailable, no access to financial planners
–Pros: Excellent tax-optimization services, including daily tax-loss harvesting, access to a high-yield savings account
Wealthfront is best for those investors who want access to financial planning tools or those interested in 529 college savings plans.
Ellevest is the first
Their premium service is available for a fee of 0.50% and an account minimum of $50,000. Ellevest Premium pairs clients with a dedicated Certified Financial Planner.
Okay, so what does it mean: geared towards women?
Excellent question. Ellevest builds their portfolios with women in mind, so everything from an increased expected lifespan, lower expected incomes, and career trajectory is taken into consideration.
Investing can feel like a man’s world, but Ellevest fights that stereotype by creating a place where the focus is on women’s needs.
Men are also welcome at Ellevest, but this isn’t a man-cave. There will be throw pillows. Read our detailed Ellevest review here.
Ellevest is the first robo-advisor that caters to women unapologetically. It's not a marketing gimmick; they use science.
Tweet This–Account Management Fee: 0.25%
–ETF Expense Ratio: 0.05%-0.10% for their Core Portfolios, 0.13%-0.19% for their Impact Portfolios
–Account Minimum: $0
–Cons: No tax-loss harvesting, fewer investment options than other robo-advisors
–Pros: Geared towards women investors, low account management fees
Ellevest is best for those who would like investing done with a female touch.
Betterment is one of the original robo-advisors despite charging a management fee of between 0.25%-0.40%. Many investors have found the perks
With
If you opt to go with
For the additional charge, you get unlimited access to certified financial planners. There’s also a 10% discount for accounts with balances over two million dollars.
–Account Management Fee: 0.25%-0.40%
–ETF Expense Ratios: 0.07%-0.17%
–Account Minimum: $0
–Cons: High account minimum for premium services; charge an account management fee
–Pros: Betterment Premium offers unlimited access, including via text, with certified financial planners; tax-loss harvesting available on all accounts; tons of available financial planning tools
Robo-advisor and are willing to pay a little extra.
If you’re a fan of index funds and mutual funds, you’re probably already a Vanguard fan. Vanguard has a
The fee for assets under management is 0.30%, which isn’t bad but isn’t the cheapest option. The minimum investment is $50,000, so save your pennies if you want to invest with this
When comparing Vanguard Personal Advisor Services, it makes sense to look at the premium services other Robo-advisors offer.
With Vanguard, you have access to human advisors as well as automated investing. However, this
The 0.30% management fee reduces to 0.20% on accounts between $5 million to $10 million. It reduces even further to 0.10% on balances between $10 million to $25 million.
The management fee for account balances over $25 million lowers to only 0.05%.
Account balances between $50,000-$500,000 have access to a team of investment advisors. Assets over $500,000 have access to a dedicated investment advisor.
–Account Management Fee: 0.30%-0.05%
–ETF Expense Ratio: 0.09%
–Account Minimum: $50,000
–Cons: High account minimum, relatively higher management fee, tax-loss harvesting isn’t automatic
–Pros: Benefits increase for high dollar accounts
Vanguard Personal Advisor Services is best for investors with high-value portfolios who want lots of human guidance but don’t want to pay for a financial advisor.
Personal Capital’s
This
The Personal Capital shines by combining algorithms with financial advisors. Their wealth management style is more focused on human interaction than the typical
Personal Capital isn’t trying to be all things to all people; they’re focusing on high net worth individuals. For those with lots of money invested, Personal Capital becomes an increasingly alluring option.
As your investment portfolio grows, you gradually unlock some great perks.
For example, those with over $200,000 invested get two dedicated financial advisors.
Personal Capital is best for high dollar portfolios who are willing to pay a little more to have access to the most comprehensive financial planning tools and human guidance.
–Account Management Fee: 0.89%-0.49%
–Expense ratio average: 0.08%.
–Account Minimum: $100,000
–Cons: High management fees; high minimum investment.
–Pros: Free comprehensive investment management tools
Check out Personal Capital’s Fee analyzer to see how your investments stack up. It’s free. If investment fees are currently holding your portfolio back, it will help.
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Is a Robo-Advisor Right for You?
Deciding which robo-advisor is right for you depends a lot on your financial goals and your risk tolerance. Some Robo-advisors unlock additional services once you reach higher thresholds.
Each
If you’re just starting, and don’t need a bunch of bells and whistles, then the first few robo-advisors listed might be best for you.
The further you get into your investing career, the more worthwhile it will be for you to pay higher costs to gain additional perks (e.g., more comprehensive portfolio management).
Once you reach multi-millionaire status, the more expensive robo-advisors such as Vanguard or Personal Capital start to make a lot more sense.
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David Lautaret is a thirty-something writer based in Portland, OR. His passion for financial independence stems from unrelenting, low-grade anxiety that he doesn't know enough which explains why he can't stop educating himself on the subject. He has a degree in Business but prefers to use cartoons and humor to make his points. He's a husband to a beautiful wife and a tremendous father to a super cute baby girl.
