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The universe of robo-advisors is large and growing. It’s easy to get sidelined by the many choices. Narrow your search by homing in on what you really want in an investment manager.
Finally, the benefits of investing with a robo-advisor, including low fees and professional management, will be irrelevant if you don’t get started. So do a robo-advisor comparison and start out with the one that best fits your needs.
The best way to choose a digital investment advisor is to start with your needs and then match up your preferences with the best robo-advisor for you.
For example, you might want a plain-vanilla robo-advisor with low fees that will invest your money in a diversified mix of stock and bond funds, in line with your risk level. In this case, you can’t go wrong with beginner-friendly robo-advisors like Wealthfront or Betterment.
For investors who must have a human financial advisor, a robo-advisor with a human touch is the way to go. This option is like the “have your cake and eat it too” approach to investing. Robo-advisors like Betterment and Schwab Intelligent Portfolio are great choices here.
And for more specialized scenarios like 401(k) investing or SRI investing, you can turn to options like Blooom and Interactive Advisors respectively.
Finally, always consider annual fees and fund fees when choosing a robo-advisor. Remember, robo-advisor fees are only for its services — it doesn’t include the fees on the ETFs it purchases on your behalf. If you’re curious, I’ve researched the popular robo-advisors and broken down each’s true annual costs.
The differences among robo-advisors might seem minor to the casual reader, but in reality, they’re not. You have a choice when it comes to:
The Investor Junkie team has spent a lot of time with the top robo-advisors, evaluating each one to help our readers make informed choices about which service best suits their needs. So how do we judge them?
When rating robo-advisor services, we take a close look at six crucial criteria:
Taking into consideration the criteria above, we have selected a few that consistently score high marks.
Our Score: 8
Minimum Deposit: $100
Annual Fees: 0.08% to 1.5%
Human Advisor Access: Yes
Best For: Interactive Advisors is a robo-advisor service from Interactive Brokers, one of the leading brokers for trading options, stocks, and ETFs.
What makes Interactive Advisors unique is its range of pre-built portfolios you can invest in. Investing themes include healthcare, technology, growth, small cap, and many other investing concepts. And there are also numerous socially responsible investing (SRI) themes, like social justice or creating a better planet.
You’re still investing in fractional shares and ETFs with your portfolio. But the variety of SRI and ESG investing options is what makes this robo-advisor stand out. And if you need help, you can call a investment advisor during weekday business hours with your questions.
Potential Drawbacks: Some portfolios have high annual fees versus other robo-advisor investments. And if you aren’t looking for SIR or ESG investing, there isn’t the right robo-advisor for you.
Fees: Asset-based management fees range from 0.08% to 1.5% annually. It’s important to read portfolio information carefully so you know how much fees are.
Our Score: 8
Minimum Deposit: $5,000 or $25,000 depending on plan
Annual Fees: None
Human Advisor Access: Yes
Best For: Charles Schwab is a popular broker that also offers a robo-advisor Schwab Intelligent Portfolio. With portfolio rebalancing and tax-loss harvesting, it’s a comprehensive robo-advisor that helps optimize your portfolio automatically. Just note tax-loss harvesting is for accounts with $50,000 or more in assets.
Schwab Intelligent Portfolio provides a range of ETF investments to match your goals and risk tolerance. You can also invest in other asset classes like real estate, precious metals, and bank loans.
Furthermore, you don’t pay advisory fees or commissions. But if you want unlimited access to a financial planner, you need Schwab Intelligent Portfolios Premium. This charges a $300 signup fee and $30 per month fee. Premium also requires a minimum balance of $25,000.
Potential Drawbacks: Schwab Intelligent Portfolios has a high minimum account requirement, and this is the main drawback.
Fees: You don’t pay annual fees with Schwab Intelligent Portfolio. However, Schwab Intelligent Portfolio invests in Schwab ETFs, which have fees like other ETFs. Expect to pay 0.05% to 0.25% depending on the ETF.
Our Score: 8
Minimum Deposit: $0
Annual Fees: $45 to $250 per year
Human Advisor Access: Yes
Get Started With Blooom
Best For: If you want to check the health of your 401(k) or IRA plan — and fix it — check out Blooom. This unique robo-advisor can monitor and manage your 401(k), 401(a), 403(b), 457, or TSP plan to ensure your investments line up with your long-term goals.
Blooom’s main strength is that it helps minimize fees. This is important for employer-sponsored investment plans where a lack of options often leads to investments that charge higher fees.
The basic plan costs $45 per year and gives access to a personalized portfolio and fund recommendations to help lower fees. Two other plans are available for $120 and $250 per year. These plans add in more features like portfolio auto-optimization, human advisor access, and priority support.
This isn’t the best robo-advisor for everyone. But if you want to optimize your retirement accounts, Blooom is worth considering.
Potential Drawbacks: Blooom’s flat fee pricing means small portfolios pay a steep annual fee versus percentage-based robo-advisors. And if you want a robo-advisor for a taxable brokerage account, Blooom isn’t for you.
Fees: Blooom’s annual plans cost $45 to $250 per year.
Our Score: 8.5
Minimum Deposit: $3,000
Annual Fees: Approximately 0.20%
Human Advisor Access: No
Get Started With Vanguard
Best For: Many leading robo-advisors invest a portion of client assets in Vanguard ETFs. After all, Vanguard manages some of the world’s largest mutual funds and ETFs and has a reputation for providing excellent low-cost ETFs. And with Vanguard’s robo-advisor service, you can automatically invest in these same ETFs for diversification and low fees.
Vanguard Digital Advisor also lets you tackle multiple financial goals at once. It does this by pooling assets across your taxable accounts to fund goals. And as you get closer to certain goals, Vanguard can shift resources around and even change your portfolio composition to be slightly more conservative to reduce risk.
Plus, you can also include accounts you have at other companies to make sure you have a comprehensive picture, though they won’t be managed. And you can get access to their debt calculator to help you consider a strategy to pay off your loans.
Potential Drawbacks: The $3,000 account minimum for Vanguard Digital Advisor is higher than many robo-advisors. You don’t get tax-loss harvesting either.
Fees: Vanguard waives fees for its robo-advisor service for the first 90 days. Afterwards, it charges approximately 0.20% annually.
Our Score: 8.5
Minimum Deposit: $100
Annual Fees: None
Human Advisor Access: No
Get Started With M1 Finance
Best For: M1 Finance is an excellent robo-advisor if you have investing experience and want more control over your portfolio. This is because M1 lets you choose from over 60 M1 expert portfolios or make your own portfolio of stocks, ETFs, and expert-curated portfolios.
The interface at M1 Finance works with “Pies,” a pie chart showing your portfolio allocation. You can customize your pie to contain any supported investment, and M1 works to maintain your portfolio composition over time.
M1 also supports fractional shares starting at just $1 and works with several account types, including individual, joint, and IRAs. M1 doesn’t charge any management fees for accounts, but some portfolios and less common services require a fee.
Potential Drawbacks: While there are professionally designed portfolios for beginners, newer investors may find picking their investments a little intimidating. It’s still a simple process, but if you don’t know what an investment fund is, it could still be a little more work than most robo-advisors.
Fees: M1 Finance doesn’t charge any commissions or trading fees, and there isn’t a recurring account fee. The only costs you pay are for specific investments, which are disclosed on the investment screen. There’s also an inactivity fee of $20 if you don’t use your account for 90+ days.
Our Score: 8.5
Minimum Deposit: $5
Annual Fees: $0
Human Advisor Access: Yes
Get Started With SoFi
Best For: If you want to avoid steep fees, SoFi is one of the best robo-advisors you can use. In fact, this automated investing account doesn’t charge annual fees. And you only need $5 to begin investing, making it very beginner-friendly.
Like many other robo-advisors, SoFi Automated Investing builds portfolios with a mix of ETFs that match your investing goals and risk tolerance. You can open an individual account as well as tax-advantaged accounts like IRAs
SoFi also provides automatic rebalancing and lets you set and track progress towards multiple financial goals. Human financial planners are also available if you have questions at no extra cost.
Potential Drawbacks: Unlike some more established robo-advisors, SoFi Automated Investing doesn’t offer tax-loss harvesting. And SoFi also tends to invest in some of its own ETFs alongside ones from other companies. This wouldn’t be an issue, but many SoFi ETFs have incredibly high fees in the 0.29% to 0.49% range.
Fees: SoFi Automated Investing doesn’t charge annual fees. However, be careful with how much of your portfolio invests in SoFi ETFs since many of these have steep fees.