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Not all of us are well-versed in the intricacies of the stock market. For one thing, not even the investment experts can time its ups and downs. Trying to play it right is a waste. So why not let someone (or something) handle that for you?
That’s where a robo-advisor comes in. Robo-advisors are online financial investment
platforms that create and manage an investment portfolio based on your individual financial needs and investment goals. You don’t need to have a lot of investing know-how. Rather, all you need is a little bit of cash and to answer a few questions about your investment style.
When signing up a robo-advisor, you’ll answer a few questions about the type of investor you are, like your risk tolerance and when you plan to cash out on your investments. This provides the robot-advisor platform with information needed to build the ideal asset allocation investment portfolio for you, which will continue to evolve as the markets, your finances, risk tolerance and criteria change.
Robo-advisors (which include big names like Betterment and Wealthfront) are ideal investing solutions for first-time investors, people who don’t have a lot of time to manage a portfolio and those who are turned off by other, high-fee options.
Weight loss weightloss weight loss programs weight loss foods weight loss tips How we chose the best robo-advisors
To determine the best robo-advisors, we reviewed them based on:
- Minimum account opening balances and ongoing balances (if any)
- The number of fees and their costs
- Variety of investment accounts available
- Access to humans (financial advice and technical support)
If you’re a hands-on investor, robo-advisors probably aren’t for you. Instead, try using a portfolio manager or selecting your portfolio investments yourself. But, if you want your money managed automatically through technology and financial principles like diversification, robo-advisors financial advisor services are an excellent choice. Here are the best ones:
1. Betterment: Best for beginners.
2. Wealthfront: Best for lowest fees.
3. SoFi: Best for extra perks.
4. Ellevest: Best for women.
5. Acorns: Best for micro-investing.
6. TD Ameritrade: Best for traditional investors.
Many of the best robo-advisors have a lot in common, but the best advisor service for you depends on the type of investor you are. Review our picks to choose the right one for you.
Betterment was one of the first robo-advisors and has stood the test of time to be one of the most popular financial planning robo-advisors among users.
With Betterment, you only pay one fee — 0.25% annually on your balance (or $25 for every $10,000 you have). Betterment also offers a premium tier: a 0.40% annual fee, which includes unlimited access to certified financial planners and advice on all your investments — even those that aren’t with Betterment. Thanks to automatic rebalancing and tax-loss harvesting, you won’t hang onto assets that aren’t working their hardest for you. Tax-loss harvesting is when a security is sold at a loss and a similar one is bought to replace it, offsetting taxable gains and income. Along with that, the $0 minimum balance means you can get started with a few extra dollars right now.
Wealthfront and Betterment are two of the biggest robo-advisors available. I’ve had an investment portfolio account with Wealthfront for years and I’m happy with what its asset allocation platform offers. Notably, the set-it-and-forget-it account. I signed up quickly, easily moved money in and I loved my monthly reports about how my portfolio is doing. I can make asset adjustments as necessary, like if I want to have more conservative investments or riskier ones.
Wealthfront offers stock level tax-loss harvesting where individual stocks that are losing you money get moved around for more favorable ones. This is good news for stock investors because you get the benefit of minimizing your taxable gains with your higher-risk stock investments. This, plus many of the enhanced features are available if your account is over $100,000. For example, Smart Beta (for portfolios $500,000 and up) uses many different risk factors to determine the weight of investments in your portfolio. It analyzes value, dividend yield and volatility, among others. But you don’t need to pay a higher annual fee to access them, just more money in your investment account.
SoFi is best known for handling loans, but it’s recently gotten into financial investments as well.
SoFi doesn’t charge any fees for automated investing and you have access to financial experts anytime through email, phone or chat. Like Betterment and Wealthfront, SoFi is a fiduciary, which means it won’t sell you unnecessary products or give you financial advice that doesn’t work for you. You can start investing with as little as $1 right now. With no advisory, administrative or other account fees, your investment money goes to your investments — not to someone or something managing it. No matter your account portfolio balance, you have free, unlimited access to human certified financial planners in case you need specific financial planning help. With Betterment, it comes with an extra fee.
Ellevest was created by women especially for women (although anyone can sign up). Like Betterment and Wealthfront, it also charges a 0.25% annual fee on your investment portfolio account balance. It also has other features you can take advantage of, including automatic rebalancing and an emergency fund. You also get unlimited access to personal advisor services from financial professionals regardless of your account balance.
The women-centric investment management platform means you get detailed attention when it comes to your investments. For instance, the Ellevest algorithm bases your asset allocation investments on your salary, gender and expected lifespan. Since women historically earn less than men do — and live longer — an Ellevest portfolio reflects that. The premium account charges 0.50% annual fee, which gets you access to certified financial planners and salary and career coaches. You have the option to select impact portfolios, or companies that match your goals. Not every investment management company offers sustainable, responsible and impact investing. It’s a way to invest in women to further their economic growth and sustainability.
Acorns is a micro-investment platform. You don’t need a lot to get started or to keep your investments growing.
If all you have is a little spare change, consider Acorns. This robo-advisor works by rounding up your transactions to the nearest dollar and putting the leftover change into your investment account. There’s no minimum account balance or fees for trading, which some other picks have. But a basic account is $1 a month and you’ll start investing your leftover money through their automatic Round Ups program. When you make a purchase on a linked card, your transaction is rounded up to the nearest dollar and your leftover change goes into your Acorns investment account. It makes investing so hands off you don’t even need to worry about logging in to make minimum investment contributions. It’s great if you don’t have a lot of cash to devote to investing right now but still want to get started.
The Essential Portfolios from TD Ameritrade is the investment company’s robo-advisor option. The $500 minimum balance and 0.30% annual fee are like its competitors (Wealthfront, Betterment and Ellevest all charge 0.25%) and the traditional brokerage gets you a host of investment portfolio asset allocation options. For instance, you get a robo-advisor but still have access to financial experts to help you sort out your investment questions and concerns.
You can also choose socially aware investing, like Ellevest’s impact portfolios. When you go with TD Ameritrade, you have your pick from more than a dozen different types of financial planning investment accounts, including:
- Individual brokerage
- Traditional IRA
- Roth IRA
- Rollover IRA
- Minor IRA
- Minor Roth IRA
- SEP IRA
- SIMPLE IRA
- Beneficiary IRA
- Individual 401(k)
- 529 college savings plan
- Uniform Transfers to Minors Act/Uniform Gifts to Minors Act
Plus a slew of other types of investment accounts, like joint and minor accounts. The wide variety of portfolio options means you can open nearly any account you want with only a few hundred dollars. If you want the comfort of having a longstanding investment company while still taking advantage of a robo-advisor, TD Ameritrade is a solid choice.
Robo-advisors are a great option to get into investing without much money or time. If you know investing is important but don’t want to put in a lot of work (or cash), a robo-advisor might work for you.
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