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Emma lives in Bogota, Colombia, where she owns the English-language newspaper The Bogota Post. She began her editorial career at a financial website in the U.K. over 20 years ago and has been contributing to Motley Fool Money since the summer of 2019.
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Robo-advisors have revolutionized investing. The best robo-advisors make it extremely easy for new investors to build professional, personalized portfolios that meet their investment goals. Algorithms will help you manage risk, stay diversified, and build wealth automatically.
Read more to find out how to choose the right robo-advisor for you.
Our team of experts assessed 45+ trading platforms
We evaluate all brokerage accounts across the same 4 key criteria: user experience, cost efficiency, product variety, and support and security
Our brokerage ratings are never influenced by our advertising partners
We strictly feature products that offer federal insurance and high customer satisfaction, keeping our recommendations unbiased
Featured Pick From Our Best Robo-Advisors
If you're looking for a place to start, one brokerage our experts highly recommend is SoFi Robo Investing. It's a great fit for hands-off investors seeking a low-cost investment solution. These features, among others, make it one of our favorite brokerages.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Rating image, 4.5 out of 5 stars.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
4.0/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Rating image, 4.0 out of 5 stars.
4.0/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Best For:
Easily customizable portfolios
Commission:
$0 per trade, management fee 0.30%, expense ratio 0.06%-0.12%
4.0/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Rating image, 4.0 out of 5 stars.
4.0/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Rating image, 4.5 out of 5 stars.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Best For:
Automation you control
Commission:
No commission, trading, or management fees for self-directed accounts. Platform fee of $3 monthly.
4.0/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Rating image, 4.0 out of 5 stars.
4.0/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Rating image, 4.5 out of 5 stars.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Rating image, 4.5 out of 5 stars.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Best For:
Feature-rich robo-advisor
Commission:
$0 per trade, management fee of $4 per month or 0.25% per year
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Rating image, 4.5 out of 5 stars.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Rating image, 4.5 out of 5 stars.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Best For:
No account fee
Commission:
$0 per trade, $0 mgmt fee, 0.00% to 0.19% expense ratio
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Rating image, 4.5 out of 5 stars.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Best For:
One-on-one coaching
Commission:
No commission for balances up to $25,000; 0.35% per year for balances over $25,000
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Bottom Line
It's easy to customize your portfolio, including socially responsible options,² with SoFi®'s great value robo-advisor. The ability to talk to a real-life financial planner¹ is a game changer.
Why isSoFi Robo Investing one of our best robo-advisor brokers? SoFi® combines high-quality automated investment plans with the ability to speak to a qualified financial planner at no extra cost.¹ Other brokerages charge a premium for one-on-one advice, if they offer it at all. The human element gives customers the best of both worlds.
SoFi® launched additional robo-advisor services in 2024, including access to alternative investments such as real estate. You can now choose between three portfolio themes: classic, alternative, and sustainable. It is easy to switch themes and update your risk tolerance as your circumstances change.²
Most importantly, this account is extremely accessible and easy to use -- something I value in a robo-advisor. It has a $50 minimum deposit requirement and charges a 0.25% annual advisory fee³.
4.0/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Bottom Line
E*TRADE Core Portfolios makes it extremely easy to create an automated investment portfolio that's right for you.
Why isE*TRADE Core Portfoliosone of our best robo-advisor brokers? E*TRADE works hard to make sure that each person's automated investment strategy is right for them.
Once you've customized your portfolio based on your financial goals and risk tolerance, E*TRADE lets you go a step further. It offers extra personalization such as socially responsible investment options and smart beta ETFs which favor certain characteristics.
At 0.30%, E*TRADE's management fee is slightly higher than other robo-advisors. However, this is offset by the low exchange ratios of its ETF selection. That's the administration fee individual funds charge. All in all, E*TRADE's fees are pretty competitive.
4.0/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Bottom Line
Stash is a personal finance app that's super easy to use. It may feel overly simple for more experienced investors and its subscription fee is on the high side, especially if you have a low balance.
Why is Stash one of our best robo-advisor brokers? Unlike many robo-advisors, Stash also lets you manage an active portfolio alongside your automated investments. You can buy individual stocks or ETFs and/or set goals and let Stash do the work for you.
The app is a super simple way to build investing into your personal finances. You can use its debit card to earn rewards in fractional shares. You can also opt in to stock round-ups, which will round up each purchase you make on the card and invest the difference. However, its banking services aren't extensive enough to replace your checking account.
Its monthly subscription fee of $3 or $9 could work out to be more expensive than the percentage that's typical with other robo-advisors, particularly on lower balances. If that fee feels too high, check out some of our best robo-advisors for beginners.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Bottom Line
M1 Finance isn't actually a robo-advisor -- instead, it lets you build your own automated portfolio. It has a broad mix of financial products and will be best suited to more experienced investors.
M1 is not a robo-advisor and only offers self-directed brokerage services.
Pros
Automated investing in assets of your choice
Use pies to build your portfolio
Brokerage, loans, and money management accounts
Earn interest on uninvested cash
Crypto investing
Cons
Strictly speaking, it's not a robo-advisor
No tax-loss harvesting
Waivable $3 monthly fee
Why is M1 Finance one of our best robo-advisor brokers? M1 Finance's novel pie portfolio concept means you can choose exactly how your funds are allocated. You might adapt one of M1 Finance's model portfolios or build your own from scratch. Once it's set up, your pie keeps getting bigger when you add funds -- it's like building your own investment fund.
This account will suit investors who want the benefits of automation while also controlling the assets they hold. It also offers an impressive mix of financial services and investment accounts. Unlike a robo-advisor, M1 Finance won't trade on your behalf or tell you how to invest.
Be aware of M1 Finance's fees. To waive the $3 monthly account fee, you'll need to have at least $10,000 in M1 Finance assets or an active personal loan. Check out our top brokerage accounts to see how those fees compare.
4.0/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Bottom Line
Check out Acorns if you want to do your banking and investing from one easy-to-use app. Novel features like bonus investment rewards on your shopping make Acorns a great option for new investors.
Why is Acorns one of our best robo-advisor brokers? I love the way it feels like Acorns is in your corner. This robo-advisor won't wait on the sidelines for you to put money into the account. Instead, it has a mix of tools that make it easy to invest a little every day.
Its debit card comes with a round-up feature to invest the small change every time you swipe. Plus, you can earn bonus investments when you shop through the app. Acorns is so dedicated to helping you earn and invest, it will even help you get a side hustle.
Acorns's tiered monthly fees of $3-$12 monthly can work out more costly than other robo-advisors. However, the most expensive gold tier includes a 3% match on IRA contributions, a competitive savings APY, and ways to earn bonus investment rewards.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Bottom Line
Vanguard's customized portfolios are affordable, accessible, and extremely competitive. It helps that the company constantly adapts its offering so it can stay at the forefront of robo-advisor offers. Whatever your investment goals, Vanguard's got your back.
Why is Vanguard Digital Advisor® one of our best robo-advisor brokers? Vanguard built a well-deserved reputation as a low-cost ETF provider and it brings that same ethos to automated investing products.
Vanguard Digital Advisor® makes it easy to work toward various investment goals, including retirement, buying a home, and paying down debt. The account charges a 0.20% to 0.25% fee depending on what type of investment options you choose. You pay slightly more to access some of Vanguard's premium funds.
It's hard to find many negatives. Particularly after Vanguard made some significant improvements to its robo-advisor services in 2024. These included slashing the minimum asset requirement from $3,000 to Vanguard Digital Advisor® and enabling fractional share trading.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Bottom Line
Betterment is a popular robo-advisor that pioneered automated investing. It is easy-to-use and has a wide range of investments and tools.
Fees:
$0 per trade, management fee of $4 per month or 0.25% per year
Why is Bettermentone of our best robo-advisor brokers? Betterment takes the mystery out of investing. The company offers everything you'd expect from a robo-advisor, including tax-loss harvesting, automatic rebalancing, and dividend reinvestment. It offers a wide range of investments, including bonds, socially responsible funds, and crypto ETFs, and it also gives clients banking services, including a high-yield cash account that's on par with top high-yield savings accounts.
Betterment charges a $4 monthly fee, which is pretty steep. You can reduce the fee to 0.25% of your portfolio value if you deposit more than $250 a month or hold investments worth $20,000 or more.
Betterment also offers human financial planning services, which sets it apart from several competitors. However, to access it, you'll need to upgrade to its premium service. This costs 0.65% of your portfolio balance a year and has a $100,000 minimum balance requirement.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Bottom Line
Wealthfront is a great value robo-advisor that consistently goes the extra mile. Not only do you get top-notch automated investing services, but it also offers competitive banking and brokerage products.
Why is Wealthfront one of our best robo-advisor brokers? Wealthfront goes the extra mile in every aspect of its products and services.
To give you a couple of examples:
Some robo-advisors offer a wide range of automated investments… But Wealthfront also offers individual stock trading. It even promises to do the research for you.
Some robo-advisors offer several different account types, such as IRAs and trusts… But Wealthfront also lets you automate your child's college investments.
Some robo-advisors offer competitive cash management APYs… But Wealthfront also reimburses out-of-network fees on two ATM transactions a month and offers free wire transfers.
I'm particularly impressed by the way Wealthfront has such a depth of products and services and still manages to make it intuitive and accessible. Wealthfront charges a competitive 0.25% management fee. However, it says that 97% of clients make that money back through its sophisticated tax-loss harvesting product.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Bottom Line
Schwab Intelligent Portfolios stands out for its lack of account management fee and 24/7 customer support. If you can meet the $5,000 account minimum, it's worth a closer look.
Fees:
$0 per trade, $0 mgmt fee, 0.00% to 0.19% expense ratio
Traditional, retirement, custodial, and trust accounts
80 portfolio variations
Competitive APYs on cash sweep program
Research access
Mix of assets, including stocks, bonds, gold, and real estate
Cons
$5,000 minimum deposit
$50,000 minimum for tax-loss harvesting
Large cash allocation
Upgrade to premium for human advice
Why isSchwab Intelligent Portfolios one of our best robo-advisor brokers? Schwab won't charge you to set goals, rebalance your portfolio, and access tax-loss harvesting. It is extremely rare to get these services without paying some kind of management fee. However, its $5,000 minimum deposit requirement is significantly higher than other brokerages on this list, as is the $50,000 minimum needed to unlock tax-loss harvesting.
Not only that, but Schwab will allocate a solid chunk of your portfolio to cash. In its hypothetical scenarios, cash could make up as much as 15% of your portfolio. You'll earn interest on that cash, but some investors will be uncomfortable with keeping so much on the sidelines.
Schwab's premium robo-advisor service gives you unlimited guidance from a Certified Financial Planner™ professional. To access it, you'll need to pay an initial setup fee of $300, followed by $30 a month. There's a $25,000 minimum deposit requirement.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Bottom Line
Fidelity Go® doesn't charge a monthly fee for its robo-advisor service on lower balances. Once your investments reach $25,000, you unlock one-on-one financial coaching sessions -- though it comes with a small fee.
Fees:
No commission for balances up to $25,000; 0.35% per year for balances over $25,000
One-on-one calls with Fidelity advisor if your balance is over $25,000
Annual review to check in on your needs
Mainly zero expense ratio funds
Cons
No tax-loss harvesting
0.35% fee on balances over $25,000
Why is Fidelity Go® one of our best robo-advisor brokers? Fidelity Go®'s hybrid approach is what got my attention. One of the biggest downsides of using robo-advisors is that you don't get the benefit of human advice. As such, it's a huge positive to have access to one-on-one coaching calls once your balance gets to $25,000.
But when you dig a little deeper, that's not the only thing that makes this account stand out. Unlike many robo-advisors, there's no monthly fee for people with lower balances. This can be a big money saver over time.
Even better? The robo-advisor will mostly invest in Fidelity mutual funds, so clients don't have to pay as much in expense ratios. These are essentially the management costs of individual funds and they can eat another 0.05% to 0.25% of your investments.
Choosing the right robo-advisor means thinking about what services matter most to you:
Check out the fees and minimum balance requirements. Account fees are usually around 0.25% or 0.30% and expense ratios on individual funds can cost another 0.05% to 0.25%.
Look at the types of investments available. Robo-advisors usually invest in a mix of ETFs, mutual funds, and bonds.
Think about what additional features you might need. See if it offers additional features such as tax-loss harvesting, auto-rebalancing, and socially responsible investing.
Find out if it supports the account type you plan to use. If you're using an IRA to save for retirement or managing a custodial account for a child, check if it's available.
Ensure you're comfortable with the level of security and support. Look for a firm that has a reputation for security and can provide in-person support when you need it.
Some brokerages also offer a hybrid service so you can combine automated investing tools with occasional contact with a human advisor. You may not want this at the start. But if it's a service you might need in the future, look for a firm that provides it so you can upgrade.
How to open a robo-advisor account
Opening a robo-advisor account is pretty straightforward and roughly follows these steps:
Double-check check you'll meet the minimum deposit and any other requirements.
Go to the account opening page and fill in your personal information. You will need to give your name, address, Social Security number, and other details.
Fill in the robo-advisor investment questionnaire. This can take anywhere from five to 30 minutes, but don't rush -- this information will be the foundation for your portfolio.
Agree to the terms and conditions and wait for your application to be approved.
Customize your portfolio (if available).
Fund your account. You can usually do this in several ways including a bank or wire transfer, mailing a check, or regular automated deposits.
How do I get the best out of a robo-advisor?
Robo-advisors take a lot of the work out of portfolio management, particularly if you're a hands-off investor. It's a low-cost way to build a diversified portfolio using expert techniques. You don't have to research individual funds or pay for an expensive advisor to do that work for you.
Robo-advisors are especially powerful if you set up regular automatic transfers. They will allocate that cash according to the preferences and goals you set up at the start. Speaking as someone who sometimes does nothing because I'm waiting for the "right" time to invest, that can be a huge help.
The following features are where robo-advising really comes into its own.
Tax-loss harvesting
This is a way to potentially lower your tax bill. The idea behind this is to offset any gains with losses from investments that performed poorly. You can do it alone, but robo-advisors make it a lot easier.
Automatic rebalancing
Let's say you want to keep 70% of your investments in stocks and the other 30% in bonds. That ratio can quickly change if, say, stocks perform particularly well. If your portfolio drifts away from your ideal asset allocation, rebalancing will bring it back into line.
What investments will my robo-advisor choose?
Robo-advisors will usually allocate your money to EFTs, mutual funds, bonds, and cash. Some robo-advisors also give exposure to other investments such as real estate and crypto. Robo-advisors typically do not invest in individual stocks.
ETFs tend to dominate robo-advisor asset allocation. These are baskets of assets that follow particular themes. For example, some ETFs track specific indexes, such as the S&P 500. Others might follow a sector, such as energy or healthcare.
What differentiates different robo-advisors?
Don't assume that every robo-advisor will handle your portfolio in the same way. The performance of individual robo-advisors depends on which asset classes, sectors, and investment strategies it focuses on. Your choices matter too, particularly your risk tolerance.
Each robo-advisor has its own special sauce. Some may allocate more funds to growth stocks or large-cap equities. Others might give more weight to domestic stocks, a specific sector, or particular types of bonds.
Condor Capital Wealth Management publishes regular reports that track the performance of different robo-advisors. This is no guarantee of future performance but can give you an idea of how they handle different scenarios.
How much money do I need to open a robo-advisor account?
Robo-advisor account minimums can vary from as little as $1 to $5,000 or more. That level of accessibility is one of the great things about brokerage automated investment offerings. It's common to find account minimums of $100 to $500 on some of the best robo-advisor accounts.
In contrast, human financial advisors often want you to have minimum assets of $100,000 or more. This -- along with high fees -- can be a serious barrier to entry for some investors.
What are the risks of using a robo-advisor?
The biggest risk of using a robo-advisor is that the software won't have the same holistic view of your situation that you might get with a human. They may not be able to anticipate potential pitfalls ahead of time. A robo-advisor won't stop you from panic selling your assets when there's a market downturn, nor will it help you navigate big life changes.
Investors sometimes need a human touch
Robo-advisors have a bit of a one-track mind and there's a risk they won't be able to think outside the box. This matters if you have more complex tax questions or are trying to plan what might happen to your wealth when you die. A human financial planner will be able to ask the right questions and give you more nuanced advice.
Similarly, if you're facing specific life challenges such as a divorce or job loss, you may benefit from professional advice. I had a whole list of questions to ask when I sat down with an advisor. Robo-advisors aren't designed to explore the consequences of different decisions with you.
Robo-advisors have come a long way since brokerages started to introduce them in 2008. As the technology gets ever more sophisticated, robo-advisors get better at creating tailor-made investment plans to suit each individual. Even so, there are limits.
Algorithms are only as good as the data we feed them
Investing always carries risks. Some of those are magnified when you entrust your financial decisions to a machine.
Here are two reasons to be cautious when using robo-advisors:
Potential for glitches and bias
Robo-advisors will follow the algorithms set by people like investment managers and data scientists. We don't know what unknown biases have been baked into the program. Plus, if there's a glitch that costs you money, it isn't clear what legal action you'd be able to take.
Ill-equipped to deal with the unexpected
Robo-advisors base their decisions on models of historical market behavior. But when something happens out of the blue -- such as the COVID-19 pandemic -- they may not know how to react.
Potential for security breaches
Like all online platforms that store our personal and financial information, robo-advisors could be a target for hackers. They also come with specific risks. For example, a report from Grand View Research points out that the risk of cyber attacks could be higher if algorithms haven't been fully tested.
What is a robo-advisor?
As the name suggests, a robo-advisor is essentially a robot financial advisor. You can use it to set goals and automatically manage your portfolio. Many top brokerages offer automated investment tools to help clients keep on track with their investments.
Robo-advisors can be a great way to get started if you're new to investing. Not only do they cost less than a human advisor, but they are also more accessible. You don't need to have a lot of financial knowledge, meet significant minimum balance requirements, or pay hefty fees to use these tools.
A robo-advisor will suggest suitable asset allocation plans based on the answers you give to a lengthy online questionnaire. It will then build you a diversified portfolio based on your investment goals, risk tolerance, and time horizon. Over time, it will rebalance your investments according to your needs.
At Motley Fool Money, brokerages are rated on a scale of one to five stars. We primarily focus on fees, available assets, and user experience; however, we also take into account features like research, education, tax-loss harvesting, and customer service. Our highest-rated brokerages generally include low fees, a diverse range of assets and account types, and useful platform features.
All investments carry risk, and those made with robo-advisors are no different. As to whether robo-advisors are safer than traditional brokerage accounts, for the most part, they are. There is a risk of glitches, but the technology has proven itself over the past 15 years or so.
Look for a robo-advisor that is covered by SIPC protection. This covers you if the brokerage or platform fails. You can also check to see that the robo-advisor is registered as a fiduciary with the SEC.
Several of the best robo-advisors charge fees of 0.20% to 0.30% of your portfolio's value. Some do not charge any account fees at all. Account fees come in addition to the exchange ratios you'll pay for the management of individual ETFs.
Others, particularly those that provide additional banking and brokerage services, may charge a monthly fixed-dollar subscription fee. This can be anything from $3 to $12, which can prove expensive for investors with low balances.
There is no single "best" robo-advisor, as each offers a mix of services that will suit specific investors. Think about what features and account types you'll need -- including things like automatic rebalancing and tax-loss harvesting. If socially responsible investing is important to you, look for a robo-advisor with specific ESG funds.
Take into account any fees and account minimums. It's also good to research how different accounts compare in terms of performance and customer support.
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Brokerages we evaluated for consideration on this page: Acorns, Ally Invest, Axos Self-Directed Trading, Betterment, Cash App Investing, Charles Schwab, Delphia, Domain Money, Ellevest, Empower, eToro Brokerage, E*TRADE Core Portfolios, E*TRADE, Fidelity, Fidelity Cash Management, Fidelity Go®, Firstrade, FOREX.com, Interactive Brokers, J.P. Morgan Self-Directed Investing, M1 Finance, Magnifi, Marcus Invest, Merrill Edge® Self-Directed, Moomoo, NinjaTrader, Personal Capital, Plynk, Prosperi Academy, Public, Robinhood, Rocket Dollar, Schwab Intelligent Portfolios, SoFi Active Investing, SoFi Robo Investing, Stash, Stockpile, Tastytrade, Titan, Tornado App, TradeStation, Tradier, Vanguard, Vanguard Digital Advisor®, Wealthfront, Webull, Zacks Trade.
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E*TRADE services are available just to U.S. residents.
SoFi Disclosure: INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
Automated investing is offered through SoFi Wealth LLC, an SEC-registered investment adviser.
Advisory services are offered by SoFi Wealth LLC, an SEC-registered investment adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at www.adviserinfo.sec.gov.
Alternative investments, including funds that invest in alternative investments, are risky and may not be suitable for all investors. Alternative investments often employ leveraging and other speculative practices that increase an investor's risk of loss to include complete loss of investment, often charge high fees, and can be highly illiquid and volatile. Alternative investments may lack diversification, involve complex tax structures and have delays in reporting important tax information. Registered and unregistered alternative investments are not subject to the same regulatory requirements as mutual funds.
0.25% fee is based on your account value. The wrap program fee may cost more or less than purchasing brokerage, custodial, and recordkeeping services separately.
Stash disclosure Investment advisory services offered by Stash Investments LLC, an SEC registered investment adviser. Investing involves risk and investments may lose value. Paid client testimonial. Not representative of all clients and not a guarantee. View important disclosures.
Stash has full authority to manage a Smart Portfolio, a discretionary managed account. Diversification and asset allocation do not guarantee a profit, nor do they eliminate the risk of loss of principal. Stash does not guarantee any level of performance or that any client will avoid losses in their account
Ancillary fees charged by Stash and/or its custodian are not included in the subscription fee.
* Stash Banking services provided by Stride Bank, N.A., Member FDIC. The Stash Stock-Back® Debit Mastercard® is issued by Stride Bank pursuant to license from Mastercard International. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated. Any earned stock rewards will be held in your Stash Invest account. Investment products and services provided by Stash Investments LLC and are Not FDIC Insured, Not Bank Guaranteed, and May Lose Value.
** Get fee-free transactions at any Allpoint ATM, see the app for location details, otherwise out-of-network ATM fees may apply. For a complete list of fees please see the Deposit Account Agreement for details.
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**** 1% Stock-Back® rewards available only on Stash+ ($9/mo) and only for client’s first $1,000 of Qualifying Purchases in each calendar month program.
***** Limitations apply; 3% Stock-Back rewards available only for qualified bonus merchants on Stash+.
Ancillary fees charged by Stash and/or its custodian are not included in the subscription fee.
Stash offers access to investment and banking accounts under each subscription plan. Each type of account is subject to different regulations and limitations. Stash Monthly Subscription Wrap Fee starts at $3/month. You’ll also bear the standard fees and expenses reflected in the pricing of ETFs, plus fees for various ancillary services charged by Stash and/or the Custodian. Please see the Advisory Agreement for details. Other fees apply to the bank account. Please see the Deposit Account Agreement.
Betterment disclaimers
†Betterment Cash Reserve ("Cash Reserve") is offered by Betterment LLC. Clients of Betterment LLC participate in Cash Reserve through their brokerage account held at Betterment Securities. Neither Betterment LLC nor any of its affiliates is a bank. Through Cash Reserve, clients' funds are deposited into one or more banks ("Program Banks") where the funds earn a variable interest rate and are eligible for FDIC insurance. Cash Reserve provides Betterment clients with the opportunity to earn interest on cash intended to purchase securities through Betterment LLC and Betterment Securities. Cash Reserve should not be viewed as a long-term investment option.
Funds held in your brokerage accounts are not FDIC‐insured but are protected by SIPC. Funds in transit to or from Program Banks are generally not FDIC‐insured but are protected by SIPC, except when those funds are held in a sweep account following a deposit or prior to a withdrawal, at which time funds are eligible for FDIC insurance but are not protected by SIPC. See Betterment Client Agreements for further details. Funds deposited into Cash Reserve are eligible for up to $1,000,000.00 (or $2,000,000.00 for joint accounts) of FDIC insurance once the funds reach one or more Program Banks (up to $250,000 for each insurable capacity—e.g., individual or joint—at up to four Program Banks). Even if there are more than four Program Banks, clients will not necessarily have deposits allocated in a manner that will provide FDIC insurance above $1,000,000.00 (or $2,000,000.00 for joint accounts). The FDIC calculates the insurance limits based on all accounts held in the same insurable capacity at a bank, not just cash in Cash Reserve. If clients elect to exclude one or more Program Banks from receiving deposits the amount of FDIC insurance available through Cash Reserve may be lower. Clients are responsible for monitoring their total assets at each Program Bank, including existing deposits held at Program Banks outside of Cash Reserve, to ensure FDIC insurance limits are not exceeded, which could result in some funds being uninsured. For more information on FDIC insurance please visit www.FDIC.gov. Deposits held in Program Banks are not protected by SIPC. For more information see the full terms and conditions and Betterment LLC's Form ADV Part II.
**The annual percentage yield ("APY") on the deposit balances in Betterment Cash Reserve ("Cash Reserve") is 4.00% and represents the weighted average of the APY on deposit balances at the banks participating in Cash Reserve (the "Program Banks") and is current as of Feb. 6, 2023. This APY is variable and subject to change daily. Deposit balances are not allocated equally among the participating Program Banks. A minimum deposit of $10 is required, but there is no minimum balance required to be maintained. The APY available to a customer may be lower if that customer designates a bank or banks as ineligible to receive deposits. APY applies only to Cash Reserve and does not apply to checking accounts held through Betterment Checking. Cash Reserve and Betterment Checking are separate offerings and are not linked accounts.
For Cash Reserve (“CR”), Betterment LLC only receives compensation from our program banks; Betterment LLC and Betterment Securities do not charge fees on your CR balance.
M1 is not a robo-advisor and only offers self-directed brokerage services.
Vanguard disclosures
Visit vanguard.com to obtain a prospectus or, if available, a summary prospectus, for Vanguard and non-Vanguard funds offered through Vanguard Brokerage Services. The prospectus contains investment objectives, risks, charges, expenses, and other information; read and consider carefully before investing.
Vanguard Digital Advisor's services are provided by Vanguard Advisers, Inc. ("VAI"), a federally registered investment advisor. VAI is a subsidiary of VGI and an affiliate of VMC. Neither VAI nor its affiliates guarantee profits or protection from losses.
Vanguard Digital Advisor is an all-digital service that targets an annual net advisory fee of 0.15% across your enrolled accounts, although your actual fee will vary depending on the specific holdings in each enrolled account. To reach this target, Vanguard Digital Advisor starts with a 0.20% annual gross advisory fee to manage Vanguard Brokerage Accounts. However, we'll credit you for the revenues that The Vanguard Group, Inc. ("VGI"), or its affiliates receive from the securities in your managed portfolio by Digital Advisor (i.e., at least that portion of the expense ratios of the Vanguard funds held in your portfolio that VGI or its affiliates receive). Your net advisory fee can also vary by enrolled account type. The combined annual cost of Vanguard Digital Advisor's annual net advisory fee plus the expense ratios charged by the Vanguard funds in your managed portfolio will be 0.20% for Vanguard Brokerage Accounts. For more information, please review "https://personal.vanguard.com/pdf/vanguard-digital-advice-brochure.pdf" Form CRS and the Vanguard Digital Advisor brochure.
Vanguard funds not held in a brokerage account are held by The Vanguard Group, Inc., and are not protected by SIPC. Brokerage assets are held by Vanguard Brokerage Services, a division of Vanguard Marketing Corporation, member FINRA and SIPC.
Vanguard Marketing Corporation, Distributor of the Vanguard Funds
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