Updated October 7, 2019

Best Robo Advisor

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Is robo investing a good idea? You need to compare the app's performance and cost. Find out how the best robo advisors can help retirees and beginners.

Here are the best robo advisors for 2019:

Robo-advisors offer affordable hands-off investing. Now, anyone who wants to invest can.

But there are now over 200 robo-advisors on the market. Each one is different and has their unique features. How do you pick the right one?

We have come up with our top 9 robo-advisors. Whether you're a rookie, have little money, or a lot to invest, there's something that will fit your bill. Read on.

Do you have $100 to invest? Ally allows you to preview your personalized portfolio recommendation before signing up.

What are Robo Advisors?

Robo-advisors provide online automated investing services. They use algorithms to select investments for you and automatically monitor your account with software. Robo-advisors can automate complicated tasks like rebalancing and tax strategizing to give you better returns.

Because robo-advisors use automated management, they can provide the service at a low cost (compared to human advisors). Many have no (or very low) starting minimums, so they're accessible to anyone with internet access.

Robo-advisors are great for:

  • Beginners who don't feel confident investing on their own
  • Beginners without a lot of money to invest
  • Investors who want to be completely hands-off

Robo Advisors vs Financial Advisors: Robo advisors use software to invest for you based on factors like your age, goals, and risk tolerance. This means their approach is more cookie-cutter. On the other hand, human financial advisors can tailor your investment plan to your specific needs and ever-changing financial situation. However, they are more costly than robo advisors.

How Much Do Robo Advisors Cost?

Typically, robo-advisors charge a percentage of your assets under management. This fee would be all-inclusive of management, software, and trading fees. For example, if the annual fee is 0.25% and you have $1,000 in your account, your fee would be $2.50 yearly.

Some robo-advisors charge a flat rate monthly fee. And some even offer the service free of advisory fees. It's important to compare advisory fees and minimum requirements against features you want.

Here are the fees and minimums for our top rated robo-advisors:

Robo AdvisorFeeMinimum
Betterment0.25% for basic service$0
Ally Cash-Enhanced Managed Portfolio0%$100
Vanguard Personal Advisor0.30%$50,000
Charles Schwab Intelligent Portfolio0%$5,000
M1 Finance0%$100
Acorns$1/month (free for college students)$0
Blooom$10/month$0
Personal Capital0.89%$100,000
Wealthfront0.25%$500

Are Robo Advisors Worth It? Robo advisors are great for young, inexperienced, or lower net worth investors. However, if you're a very confident investor, then you may be able to see better returns managing your own investments. Or if you have more complicated wealth management needs, a real human advisor may be able to serve you better.

Best Robo-Advisors

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Here are our favorite robo-advisors for every kind of investor.

Are robo advisors FDIC insured?
Robo advisors are not FDIC insured since that only protects your bank deposits. However, they are SIPC insured, which insures investments held at brokerage firms should it go out of business. You are protected up to $500,000 per account type.

Betterment: Best for New Investors

    Betterment
    Read ReviewVisit Site

    Betterment

    • Minimum Deposit: $0
    • Annual Fee: 0.25% for accounts under $100,000; 0.40% for accounts $100,000+
    Pros:
    • No minimum investment
    • Many customized portfolios
    • Automatically invest extra funds
    Cons:
    • Limited investment options
    • High fees for large investors

    Our Review: (4.1) Betterment offers low fees and good returns. But there are risks you should NOT ignore. Read this review to see if Betterment is better... Read full review

    Get up to 1 Year Managed Free

Why we like Betterment for beginners:

  • No minimum required investment, so beginners can get started with very little money.

  • Only 0.25% annual advisory fee. This means for every $100 in your account, the fee is only 25 cents per year.

  • Supports fractional shares, so you can buy just a small fraction of a stock if you don't have enough for a full share.

  • Set up different portfolios for goals such as emergencies, retirement, major purchase, and general investing. Offers both taxable and retirement accounts.

  • Tax loss harvesting available for everyone. This helps to minimize your tax liability by offsetting capital gains with losses.

  • Automatic account rebalancing.

Betterment vs Wealthfront: Wealthfront and Betterment have similar features and fees. Betterment has more portfolio options, while Wealthfront provides more diversified asset classes. Betterment supports fractional shares whereas Wealthfront only purchases whole shares.

For investors with over $100k, Betterment has a Premium service with access to financial experts, while Wealthfront offers more advanced tax-efficient strategies.

Read our detailed breakdown of differences.

Ally Invest: Best for Small Balances

    Ally Cash-Enhanced Managed Portfolio

    • Minimum Deposit: $100
    • Annual Fee: 0% advisory fee for Cash-Enhanced Managed Portfolio
    Pros:
    • No advisory fees for Cash-Enhanced Managed Portfolio
    • 24/7 customer service
    • Preview your strategy before signing up
    Cons:
    • No tax loss harvesting
    • Large cash buffer

    Our Review: (4.4) Ally Cash-Enhanced Managed Portfolio offers automated investing with no advisory fees. But what's the catch? Read on to find out how it compares to other top robo-advisors... Read full review

    Automated Investing to Help Save Your Time

Why we like Ally Cash-Enhanced Managed Portfolio for small balances:

  • No advisory fees no matter your account size. Small balances won't lose any money to fees.

  • Only $100 minimum to get started.

  • Choose from 4 different portfolios: core, income, tax-optimized, and socially responsible.

  • Automatic account rebalancing.

  • 24/7 customer service by phone and online chat.

No advisory fees sounds too good to be true. However, the catch is that 30% of your portfolio will be in cash. You do earn interest on it, but that's still cash sitting around uninvested.

Another downside is that tax loss harvesting is not offered, but that won't really affect small balances.

Vanguard Personal Advisor: Best for High Net Worth

    Vanguard Personal Advisor

    • Minimum Deposit: $50,000
    • Annual Fee: 0.3%
    Pros:
    • Professionally managed by human advisors
    • Low annual fee
    • Backed by prestigious brand
    Cons:
    • High minimum investment
    • Extra transaction fees
    • No continuous tax loss harvesting

    Our Review: (3.6) Typically, robo-advisors mean strictly online portfolio management with no human interaction. Vanguard Personal Advisor Services set out to be the face of change by combining the two services. Is it all it's cracked up to be?... Read full review

Why we like Vanguard Personal Advisor Services for large balances:

  • Only 0.30% annual advisory fee, which is very low compared to other personal advisory services. Accounts over $5 Million get further discounts.

  • Offers a combination of a robo-advisor and real human advisory and account oversight.

  • Get a plan unique to you. Financial advisors help come up with a customized financial plan, help manage it, and adjust as your personal and financial situations changes.

  • For more complicated needs, advisors can advice on estate planning, creating a succession plan, and charitable giving - at no extra cost.

  • Connect to your advisor by phone, email or video chat.

The minimum investment requirement is $50,000, which is why this is only for high net worth individuals.

Vanguard Personal Advisor Services does not offer daily tax loss harvesting. This can be costly when you are talking about large investments. They are conscious of your tax liabilities and help to allocate your assets appropriately between taxable and non-taxable accounts, but daily tax loss harvesting could be something sorely missed.

Charles Schwab Intelligent Portfolio: Best for IRAs

    Charles Schwab Intelligent Portfolio

    • Minimum Deposit: $5,000
    • Annual Fee: None
    Pros:
    • No account fees
    • More diversified asset allocation
    • Cannot adjust assigned portfolio
    Cons:
    • Higher minimum deposit
    • Large cash allocation
    • Tax loss harvesting only to high balance accounts

    Our Review: (4.3) Charles Schwab Intelligent Portfolios offers similar robo-advisor services to its competitors but without the annual fee. How is this possible? Read this review to see if it's too good to be true... Read full review

Why we like Charles Schwab Intelligent Portfolios for IRAs:

  • No advisory fees. When investing for the long term, this could add up to significant savings. That means more for you in retirement.

  • Offers traditional, Roth, and Rollover IRA accounts, as well as SEP IRAs and SIMPLE IRAs for the self-employed.

  • Invests your assets in as many as 20 asset classes - more than other robo advisors.

  • More diversified investments that may include real estate, precious metals, and bank loans.

  • Goal Tracker feature helps you see your progress toward your retirement goals, and gives advice on how to get back on target, if necessary.

The minimum investment is $5,000, which is a reasonable exchange for no advisory fees if you have that much to start.

No advisory fees doesn't mean that you pay no fees at all. You'll still be responsible for the expense ratios on your investments, which can range from 0.06% to 0.20% of the assets.

M1 Finance: Best for Customized Portfolio

    M1 Finance
    Read ReviewVisit Site

    M1 Finance

    • Minimum Deposit: $100
    • Annual Fee: None
    Pros:
    • Choose your own investments
    • Can invest in individual stocks
    • No account fees
    Cons:
    • Not beginner friendly
    • No human advisors
    • Can only trade once a day

    Our Review: (4.5) M1 Finance provides a hybrid robo-investing service with the ability to choose your own investments. Is it right for you? Read on for the pros and cons... Read full review

Why we like M1 Finance for customized portfolio:

  • No annual fee or trade commission fees.

  • Allows you to pick your own stocks and ETFs for fully customized portfolios (called "Pies"). Create and modify your Pies as often as you want.

  • Automatically buys stocks for you according to your Pies and manages your portfolios.

  • Supports fractional shares, so you can buy just a small fraction of a stock if you don't have enough for a full share.

  • Best of both worlds for semi-experienced investors who want to choose their own investments, but don't want to manage.

Acorns: Best for College Students

    Acorns
    Read ReviewVisit Site

    Acorns

    • Minimum Deposit: $0
    • Annual Fee: Free for college students; $1/mo for Acorns; $2/mo for Acorns + Acorns Later; $3/mo for Acorns + Acorns Later + Acorns Spend
    Pros:
    • No minimum investment
    • Invest with spare change
    • Free for college students
    Cons:
    • Fees are high for small balances
    • No tax benefits
    • Limited investment options

    Our Review: (3.7) Acorns automatically invests your spare change, so you can invest without thinking. It's great for novice investors, but there are downsides. Read on... Read full review

    $10 Sign-Up Bonus

Why we like Acorns for college students:

  • Free for college students for the basic Acorns investing account (otherwise, $1/month)

  • With just your spare change, you can start investing with as little as $5.

  • Invest without thinking. Automatically rounds up the change from your purchases and invests them.

  • Supports fractional shares, so you can buy just a small fraction of a stock if you don't have enough for a full share.

  • User friendly app for young adults.

Blooom: Best for 401k Management

    Blooom
    Read ReviewVisit Site

    Blooom

    • Minimum Deposit: $0
    • Annual Fee: Analysis are free, $10/month and then $7.50/month for each additional account
    Pros:
    • Unique 401k management service
    • No account minimum
    • Low monthly fee
    Cons:
    • No IRA or taxable accounts

    Our Review: (4.5) Blooom is an affordable robo-advisor for your 401k. But is it safe and legit? Read this in-depth review for the pros and cons... Read full review

    Get blooom for a special rate of $99 per year

Why we like Blooom for 401k management:

  • Focuses on managing 401k accounts, which other robo-advisors don't do.

  • Only $10/month. For accounts $50,000+, this fee is less than robo-advisors such as Betterment and Wealthfront.

  • Optimizes your 401k. Gets rid of funds that don't make sense for your goals and/or expensive funds. And then automatically selects more ideal investments for you.

  • Analyzes your 401k for free first. If you don't like the recommendations, you don't have to sign up for the service.

  • Can sign up to use Blooom without your employer knowing about it.

Personal Capital: Best for Retirees

    Personal Capital
    Read ReviewVisit Site

    Personal Capital

    • Minimum Deposit: $100,000
    • Annual Fee: 0.89% for first $1 million, 0.79% for first $3 million, next $2 million 0.69%, next $5 million, 0.59%, and 0.49% over $10 million

    Personal Capital offers free advanced financial tools and paid wealth management services. But is it right for you? Read on for the pros and cons... Read full review

    Get Started with Personal Capital

Why we like Personal Capital for retirees:

  • Hybrid robo-advisor plus human advisor service.

  • Retirees can benefit by speaking with their advisor to effectively manage their withdrawals while staying on track with their personal goals.

  • Financial advisors help design a customized strategy.

  • Portfolio features such as dynamic portfolio allocation, tactical weighing, and automatic rebalancing.

  • Free advanced financial tools, including portfolio tracker, fee analyzer, and retirement planner.

Personal Capital's services do come at a cost, though. They charge 0.89% annual fee, which is much steeper than your standard robo-advisor. But the benefit of having real human financial planners may be worth it for retirees. And the minimum is $100,000.

Wealthfront: Best for Financial Tools

    Wealthfront

    • Minimum Deposit: $500
    • Annual Fee: 0.25%
    Pros:
    • Minimal opening deposit & fees
    • Advanced goal tracker
    • Tax loss harvesting
    Cons:
    • No human advisors
    • No fractional shares

    Our Review: (4.3) Wealthfront simplifies long-term, low-cost investing with a diversified portfolio. But is it safe? Read on to learn if Wealthfront is worth it... Read full review

Why we like Wealthfront for financial tools:

  • Use advanced financial tools for free without signing up for the investing service. Tools include:

    • Analyze how your spending or saving patterns would affect your retirement income
    • See how big financial decisions would impact retirement
    • Calculate much house you can afford and explore homes within your budget
    • Estimate cost of college and likely financial aid
    • Calculate the impact of taking time off work to travel

  • Low 0.25% annual fee for all balances.

  • More diversified portfolio including real estate and natural resources.

  • More advanced tax strategies for accounts $100k+ to help you keep more returns.

How Robo Advisors Work

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  • Your portfolio is based on your age, income, goals, and risk tolerance. These are the basic questions the robo-advisor will ask you. It uses that information to build you a portfolio that aligns with your goals. For example, if you're young, your portfolio may have a heavier stock allocation, as you can afford to take more risks.

  • Your portfolio is made of ETFs. Robo-advisors mainly use ETFs (Exchanged Traded Funds) to build a diversified portfolio. An ETF is a collection of stocks and bonds, so it's less risky than single stocks. They also cost less to trade, which makes the portfolio cheaper to maintain.

  • How fees work. Generally, you pay a percentage of your assets under management. But some robo-advisors also charge a flat monthly rate. While some charge nothing.

  • Automated vs. human oversight. Some robo-advisors are completely automated. The decisions are made by software. Some also have professional human oversight, where real financial advisors will periodically monitor your account and make changes.

What to Look for in a Robo-Advisor

  • Low management fees: Many robo-advisors charge annual fees. Some charge a monthly fee, while others charge nothing.

    You'll want to choose the robo-advisor with the lowest management fee while still providing the features you'll use.

  • Low minimum investment requirement: Each robo-advisor sets their own minimum investment requirements. Know how much you have to invest and choose your robo-advisor accordingly.

  • Automatic investment rebalancing: The key to robo-advisors is their ability to monitor your account daily, automatically rebalancing your account when it gets off track from your intended goals. Not all robo-advisors offer this service, but we feel it's the key to success with this service.

Watch out for hidden fees: Just because a robo-advisor has low management fees doesn't mean that's all you will pay.

Make sure you find out what type of investments they trade. Are they mostly commission-free ETFs? If so, you are in good shape. If they trade mutual funds or stocks, though, you'll pay front-end loads, transaction fees, and commissions. These could all take away from your profits.

Common Questions

  • What are expense ratios?
    In addition to the management fee the robo-advisor charges, you may pay fees for mutual funds, ETFs, and index funds. These costs eat right into your profits, but they are not paid to the robo-advisor. Instead, they are paid directly to the investments.

  • What is the difference between taxable and retirement accounts?
    When you save for retirement, you save your funds with tax advantages. Oftentimes you don't pay the taxes until you withdraw the funds. Taxable accounts, on the other hand, do not have tax benefits. You are not restricted to any contribution limits or distribution guidelines.

  • What are ETFs?
    Most robo-advisors invest in low-cost ETFs. These are investments that track specific indexes based on their industry. They work similar to mutual funds, but ETFs trade like stocks, though, enabling you to purchase as little or as many ETFs shares as you want.

  • What is tax loss harvesting?
    Some robo-advisors use tax loss harvesting techniques to help minimize your tax liability. In other words, they sell investments that have lost value. The loss helps to offset the capital gains you make on profitable investments. In the end, you have a lower tax liability and higher profits.

  • How often do robo advisors rebalance?
    Typically, robo advisors automatically rebalance your portfolio whenever it drifts from the suggested allocation. Because everything is managed by software, they can sense right away when your portfolio drifts and automatically correct it.

  • Why would robo-advisors offer human advice too?
    From the name, robo-advisor, you'd think the computer would do all of the work. Some robo-advisors, though, offer a hybrid service, which can mean interaction with a human advisor. Many brokerages reserve this service for high net worth investors, but not all do.

Bottom Line

The right robo-advisor for you depends on many factors, including how much you have to invest, how much you want to spend, and the type of account(s) you want to open.

Robo-advisors might not be the best option for the hands-on investor, but a hybrid investor that offers both automated and human advisor services could bring you the best of both worlds. Make sure you know everything a specific company offers and requires before making your decision.

Disclaimer: Opinions expressed here are author's alone. Please support CreditDonkey on our mission to help you make savvy decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.

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