Best Robo Advisors of 2020
Robo advisors are digital investment platforms that can take the place of human financial planners. To use a robo advisor, you enter information about your financial situation and your goals, much like you would do if you visited a traditional financial planner. Then, the robo advisor uses the information that you provided to offer advice and invest your assets.
Robo advisors are typically inexpensive, making it a great option if you’re interested in dipping your toe into the world of investing. However, like financial planners, there are plenty out there to choose from. It’s important to choose the robo advisor with the opening balance and costs that work for you. You’ll also want to look for a robo advisor that offers the services and strategies that best fits your needs.
- Overview of the best robo advisors
- Robo advisors side-by-side
- The bottom line
Overview of the best robo advisors
|Robo Advisor||Best for...|
|Charles Schwab||Traditional financial planning|
|TD Ameritrade||Educational resources|
|Wealthsimple||Free portfolio review|
Best robo advisors
This robo advisor became popular because of the simple approach it offers to invest. The basic idea is that if you let Acorns round up your purchases to the nearest dollar, you’ll have money set aside to invest without even noticing it. All you need to do is link your credit card or checking account and let Acorns do the work for you. Then you can invest your spare change in amounts as small as $5. An investment account with Acorns — called Acorns Invest — only costs $1 per month.
Acorns also offers other financial products, including a retirement account called Acorns Later. Like the Invest account, you can start by investing as little as $5 in your retirement account. If you’re unsure about which retirement plan to choose, Acorns can select the appropriate option for you. Acorns Later is included in the Personal subscription, along with Acorns Invest and a checking account called Acorns Spend.
The Acorns Spend account offers up to 10% bonus investments when you shop and a built-in Smart Deposit to automatically set some of your money aside. You’ll also receive access to over 55,000 fee-free ATMs nationwide and worldwide. The Acorns Invest, Later, and Spend accounts are all included in the Personal subscription for $3 per month.
Acorns also allows you to begin investing for your children at a low cost. Their Family subscription includes everything that’s in the Personal subscription, as well as an investment account for kids called Acorns Early. The Acorns Early investment account includes automatic recurring investments, free financial advice, and you can add multiple kids at no additional cost. The funds in the Acorns Early accounts can be used for anything that benefits the child, not just for education. The family subscription is $5 per month.
Betterment's goal is to “save you more on taxes than any other service.” They automate advanced tax-savings strategies, such as tax-loss harvesting and asset location. Betterment claims that their strategies could increase your portfolio value by an estimated 0.48% each year, which amounts to 15% over 30 years. They’re a fiduciary, which means that they’ll only act in your best interest.
So what’s the pricing like? You can choose from 2 plans — Digital and Premium. Neither plan has a flat fee, but it does have an annual fee that will depend on your account balance. For the Digital plan, there is $0 account minimum and a 0.25% annual fee. The Premium plan has a $100,000 minimum balance and a 0.40% annual fee.
In addition to investing, Betterment offers cash management products, retirement planning, and access to financial advisors. You can speak with Betterment’s financial advisors about a variety of topics, from marriage planning to retirement planning and more. These advice packages start at $199.
Betterment also offers a satisfaction guarantee. So if you use Betterment and decide that you’re not happy with your experience, you can expect Betterment to try to make it right. According to their website, they’ll even waive the asset-based advisory and brokerage fees on your investment accounts for a period of up to 90 days.
This leading investment firm understood the value of robo advisors and now offers their own — Schwab Intelligent Portfolios. You can count on the robo advisor to keep an eye on your investments and automatically rebalance your portfolio when necessary. Since markets are constantly fluctuating, the automatic rebalancing of your accounts can help reduce your risk over time to keep it in line with what you’re comfortable taking on and market volatility.
So is it right for you? While working with a recognizable brand may be appealing, you should know that to use this robo advisor, you must have a minimum investment starting balance of $5,000. On the bright side, you won’t be charged advisory fees or commissions.
There are several account options to choose from if you decide to use Schwab Intelligent Portfolios. There are both taxable and tax-advantaged accounts, and you can even roll over your 401(k) or IRA if you want to. Schwab Intelligent Portfolios also uses automatic tax-loss harvesting so you can offset the taxes on your investment gains.
Looking to get more from your robo advisor? Then you might be interested in Schwab Intelligent Portfolios Premium. This allows you to combine the benefits of using a robo advisor with the traditional 1-on-1 experience of working with a financial planner. To use this service, you must have a minimum starting balance of $25,000. You’ll also pay a one-time $300 planning fee and then a monthly advisory fee of $30.
According to Ellevest, the financial industry was failing women, so they created an investment algorithm that factors in important things like gender pay gaps, career breaks, and the longer average lifespan of women.
This is another great option if you’re just starting to explore the world of investing. There is no required minimum account balance. However, there are portfolio specific minimums to keep in mind, which can range from $1 to around $240.
Ellevest offers a few membership plans to choose from. The essential membership is just $1/month and includes your personalized investment portfolio and a banking account. You’ll also have unlimited access to workshops and courses offered by Ellevest’s financial planners and career coaches. The Plus account ($5/month) has all of this, in addition to a retirement account and personal finance plan to reflect all of your retirement accounts. This includes access to Ellevest’s concierge team to advise you on your retirement account(s). The top-tier plan is the Executive membership ($9/month), which includes everything in the Plus membership as well as a multi-goal investing service. This gives you access to up to six customized accounts designed to meet each of your financial goals. Each membership comes with a discount to 1-on-1 coaching sessions, which start at $125:
- Essential members receive a 20% discount
- Plus members receive a 30% discount
- Executive members receive a 50% discount
Ellevest also offers their Impact Portfolios. These portfolios are designed to create a positive social impact, including advancing women on boards and senior leadership teams. As a fiduciary, you can expect Ellvest to help you pick the right mix of investments to help reach your goals.
Fidelity is another known name in investment that now offers their own robo advisor, called Fidelity Go. There is no account minimum with Fidelity Go, and your advisory fees will depend on your balance.
- Balance under $10,000: $0
- Balance between $10,000-$49,999: $3 per month
- Balance of $50,000 or above: 0.35% per year
Unlike some of their competitors, Fidelity Go makes it easy to see your investment proposal with no commitment. You can answer a few questions on their website to see what they suggest to help you reach your goal. You’ll also see an overview of your total costs to use the robo advisor if you use this strategy. All of this can be done without supplying any of your contact information, so you can even play around with it if you’re not ready to commit to any robo advisor yet.
You can also enroll in Fidelity Personalized Planning and Advice if you’re some guidance in addition to your investing strategies. It includes personalized investment management tailored for your goals, 1-on-1 financial coaching, and flexible planning so you can change your financial goals in the future if necessary. To enroll, you must have a minimum account balance of $25,000 and pay a .50% advisory fee.
If you’re unsure of which Fidelity option is best for you, you can call Fidelity for a free financial assessment. This can help you determine whether you would benefit from 1-on-1 financial coaching, or even if using a robo advisor is right for you.
SigFig makes it easy to find the portfolio that is recommended for you. To get started, all you need to do is enter your age, financial information, and a few preferences such as whether you’re investing for the short-term or long-term. You do not need to enter your contact information to see which portfolio SigFig recommends based on your answers.
SigFig doesn’t charge commission, trading, or transaction fees. However, you may have fees embedded in your ETFs. There may also be trading fees included in some new holdings if you enable tax loss harvesting.
According to SigFig, $2,000 is the lowest amount required for them to find the right asset allocation and effectively manage your account. You should also know that SigFig charges an annual management fee of 0.25% monthly after your first $10,000.
One of the benefits of SigFig is that they can manage other accounts for you, including TD Ameritrade, Charles Schwab and Fidelity accounts. If you’re not a beginner, this can make things a bit easier for you. SigFig also offers the ability to make an appointment with one of their financial advisors.
As far as websites go, SoFi’s is the easiest among this list to take in. The website is set up to show you some common financial goals that you may want to consider, as well as some recommended investment strategies that you might use to achieve them. It also explains why you should start considering investing now, even if you’re nowhere near considering retirement.
While SoFi offers a few investment products, SoFi Automated Investing is what you’ll want to choose if a robo advisor is what you’re looking for. All you need to get started is $1, and there are no management fees. Sometimes SoFi also offers bonuses for opening a taxable account.
Like most robo advisors, SoFi acts as a fiduciary and none of their advisors earn commissions, so you can trust that they always have your best interests in mind. Speaking of advisors, you can speak with SoFi’s credentialed advisors by phone, chat, or email if you have questions.
Currently, SoFi only offers individual investment accounts for one person and joint accounts that can be held by two people. Their tax-advantaged retirement accounts include traditional IRAs, Roth IRAs, and Simplified Employee Pensions (SEP-IRA). If you have a 401(k) from a previous employer, you can also roll that over into an IRA with SoFi. You should also be aware that unlike many competitors, SoFi does not offer tax-loss harvesting.
TD Ameritrade offers a robo advisor product called Essential Portfolios. TD Ameritrade advertises that you only need a $500 account minimum to get started, However, in the fine print it states that this is only if you set up automatic recurring deposits. If your recurring deposits end before your account reaches a $5,000 balance, you must authorize recurring deposits or directly deposit enough money to bring your account to a $5,000 balance.
TD Ameritrade also changes a 0.30% advisory fee. So while this may a lower fees option than if you used a traditional advisor, it’s certainly not as low-cost as its robo advisor competitors.
Like many other robo advisors, TD Ameritrade offers automatic rebalancing of your Essential Portfolio. They also offer tax-loss harvesting at no additional cost. Essential Portfolios allows you to opt-in to a socially responsible portfolio if you’d like to.
Perhaps one of the greatest benefits of choosing TD Ameritrade is the additional resources that it provides. TD Ameritrade’s educational resources can help you become a smarter investor by giving you access to market news, timely articles, and even fully-immersive curriculums.
Wealthfront makes it simple to review your options and see how much investing with them could cost you. This company focuses on passive investment strategies to keep your costs and taxes low all while managing your risk.
There are no trading commissions, withdrawal fees, transfer fees or minimum fees with Wealthfront. Their advisory fee is only 0.25% and you can use a tool on their website to calculate how much your monthly fee would be depending on the account balance you intend to have. Wealthfront also keeps costs low by selecting low-cost investments when they build your portfolio, with fund fees ranging between an average of 0.06-0.13%.
Like many of their competitors, Wealthfront uses strategic trading to lower your tax obligation, leaving you with more money to invest. Every investment account is eligible for tax-loss harvesting, and after your account grows to $100,000 and more, you’ll be eligible for more enhanced strategies.
Welathfront’s investment account types include retirement accounts, 529 college savings, and trust accounts. If you’re interested in short-term savings, Wealthfront also recommends using their high-interest cash account.
Wealthsimple Invest is Wealthsimple’s investment product that works for you on autopilot. You can start with as little as $0 with a Basic account, which includes a personalized portfolio, expert financial advice, auto-rebalancing, auto-deposits, and dividend reinvestment. There is a 0.5% management fee for a Basic account. If you deposit $100,000 or more, you’ll be eligible for a reduced wealth management fee as well as tax-loss harvesting and other benefits.
Wealthsimple focuses on building a portfolio of low-fee funds that can help you meet your financial goals at your chosen risk tolerance. An interesting feature of their website includes an interactive graph that can show you investment strategies for various amounts of risk.
As a fiduciary, you can trust Wealthsimple to review your portfolio for free. This is a great option if you’re considering alternative strategies for an already existing portfolio. Wealthsmple can help you set meaningful goals and offer suggestions to improve your portfolio during this review.
As a beginner, you can also benefit from Wealthsimple. They can help you choose the right accounts based on your needs, whether you need a retirement account, savings account, joint account, or all of the above. If you want to transfer your accounts to Wealthsimple, they can also cover the administrative transfer fees on accounts with more than $5,000.
Robo advisors side-by-side
|Robo advisor||Minimum balance||Associated costs||Special features|
|Acorns||$5||Starts at $1/month||Automatic rebalancing|
|Betterment||$0||Starts at 0.25% annual fee||Satisfaction guarantee, financial advice packages|
|Charles Schwab||$5,000||Starts at $0||Automatic rebalancing, tax-loss harvesting free with higher balances|
|Ellevest||$0||Starts at $1/month||Automatic rebalancing, educational resources, socially conscious investing|
|Fidelity||$0||Starts at $0||Automatic rebalancing|
|SigFig||$2,000||Starts at $0||Access to financial advisors, tax loss harvesting, automatic rebalancing|
|TD Ameritrade||$500||0.30% advisory fee||Automatic rebalancing, Socially conscious investing|
|Wealthfront||$500||0.25% advisory fee||Automatic rebalancing, tax-loss harvesting|
|Wealthsimple||$0||0.40%-0.50% management fee||Automatic rebalancing, free portfolio review|
Is it safe to use a robo advisor?
Generally speaking, yes it is. Most robo advisors have information on their website about how they keep your money and information safe.
What should my financial goals be?
Most people like to use goal-based investing. Think about what’s important to you. Do you want to save for retirement? Or perhaps buy a house or make another large purpose? These are financial goals to consider when planning or choosing your investment strategy.
Why you should use a robo advisor
Robo advisors are a great option if you’re just getting started in investing. The low costs associated with robo advisors mean that you’ll have more money to spend on your investments, rather than using it to pay for your advisors.
Using a robo advisor can also save you time and stress. Most robo advisor accounts are easy to manage online or even through a mobile app and can help you create a diversified portfolio and give you hands-on portfolio management using the planning tools. They also can conduct portfolio rebalancing if you want to have the full hands-off approach. You can check on your account anytime on-the-go, rather than setting up an appointment with human financial advisors. (Although some also can connect you to a certified financial planner if you are ready to up your game.)
The bottom line
Investing can be a stressful and confusing topic to approach. Personally, I spent quite a few years avoiding it. Fortunately, these days there’s a much more approachable way to begin investing, and that’s robo advisors.
Using a robo advisor can be a great option whether you’re a beginner or a more seasoned investor. You can go the route of Acorns and save your spare change if that’s where your comfort level is, or you can fully invest in individual stocks and mutual funds. You can also seek out top robo advisors that may offer hybrid options so you can speak with a human advisor as well.
At the end of the day, it’s undeniable that robo advisors are much more cost-effective than going the traditional route. If you’re interested in investing, there’s sure to be a robo advisor out there that’s right for you.