Best Robo-Advisors

Best Robo-Advisors

Robo-investing and the search for the best robo-advisor has become the focus of investors who want low-cost, automated investing options.

A robo-advisor offer low fees, diverse investment options, automated portfolio investing, automated rebalancing, tax loss harvesting and many other features.

The best robo-advisors provide an alternative to human money managers, and grant access to top robo-advisor performance that traditionally was reserved for high net worth individuals.

Make Lemonade’s robo-advisor comparison can help you navigate which is the best robo investor for you.


Robo-Advisor Comparison: The Best Robo-Advisors 2018

Robo-Advisor
Annual Fee

Overview

Account Minimum:$0

Details

  • Supports personal brokerage accounts, joint brokerage accounts, traditional IRAs, Roth IRAs, SEP IRAs and trusts
  • Portfolio of low-cost, diversified ETFs from 16 asset classes
  • Free automatic portfolio rebalancing
  • Free tax loss harvesting
  • Customer support: M-F 8 a.m. – 8 p.m. EST; email 24/7

Overview

Account Minimum:$0

Details

  • Supports personal brokerage accounts, joint brokerage accounts, traditional IRAs, rollover IRAs, Roth IRAs, SEP IRAs and trusts
  • Portfolio of low-cost, diversified ETFs from 12 asset classes
  • Free automatic portfolio rebalancing
  • Free tax loss harvesting
  • Customer support: 7 days a week
  • Unlimited access to licensed financial advisors

Overview

Account Minimum:$500

Details

  • Supports personal brokerage accounts, joint brokerage accounts, traditional IRAs, rollover IRAs, Roth IRAs, SEP IRAs and trusts
  • Portfolio of low-cost, diversified ETFs from 11 asset classes
  • Free automatic portfolio rebalancing
  • Free tax loss harvesting
  • Unlimited access to licensed financial advisors

Overview

Account Minimum:$0

Details

  • Supports personal brokerage accounts, traditional IRAs, rollover IRAs, Roth IRAs, SEP IRAs and trusts
  • Portfolio of low-cost, diversified ETFs from 9 asset classes
  • Free automatic portfolio rebalancing
  • Customer service: M-F 11 a.m. – 7 p.m. eastern

Overview

Account Minimum:$5,000

Details

  • Supports personal brokerage accounts, joint brokerage accounts, traditional IRAs, rollover IRAs, Roth IRAs, SEP IRAs and trusts
  • Portfolio of low-cost, diversified ETFs from 20 asset classes
  • Free automatic portfolio rebalancing
  • Free tax loss harvesting for accounts with a minimum $50,000 balance
  • Free access to licensed financial advisors
  • 24/7 customer support

Overview

Account Minimum:$50,000

Details

  • Supports personal brokerage accounts, joint brokerage accounts, traditional IRAs, rollover IRAs, Roth IRAs, SEP IRAs and trusts
  • Portfolios are individualized and incorporate Vanguard index funds and ETFs, if needed
  • Free automatic portfolio rebalancing
  • Free tax loss harvesting on client-by-client basis
  • Access to licensed financial advisors
  • 24/7 customer support

Overview

Account Minimum:$100,000

Details

  • Supports personal brokerage accounts, joint brokerage accounts, traditional IRAs, Roth IRAs, SEP IRAs and trusts
  • Portfolio of low-cost, diversified ETFs
  • Free automatic portfolio rebalancing
  • Free tax loss harvesting
  • Access to financial advisors

Advertiser Disclosure


What is a robo-advisor?

A robo-advisor is an online portfolio management service that automates the allocation of your investments through a computer algorithm. Therefore, robo-investing is an alternative to a human money manager or financial advisor. Robo-investing algorithms, or rules, that are based on your personal risk tolerance, target returns and investment time horizon. The best robo investor for you will balance risk, return and time horizon to achieve an optimal investment portfolio based on your personal preferences and goals.

When investors ask “what is a robo-advisor,” they also want to understand how much robo-advisors cost. If you do a robo-advisor comparison, you will find that the best robo-advisor is a lower cost alternative to a human financial advisor. By using computers and technology, top robo-advisors can cut costs and management fees, which result in savings for you.

There are many choices when it comes to choosing a robo financial advisor. You can do a robo-advisor comparison with Make Lemonade to find the right robo investment advisor for you. Many of the traditional brokerage firms have top robo-advisors now. You can find access to a Fidelity robo-advisor, Schwab robo-advisor or Vanguard robo-advisor, for example. You will also find new, technology-driven robo-advisor platforms such as Wealthfront and Betterment as well.

Should I use a robo-advisor?

A robo-advisor is the right choice for you if you prefer a hands-off investment style. With robo-investing, you don’t have to worry about making investment decisions or portfolio allocation. The top robo-advisors offer low cost management fees and they will invest on your behalf based on your risk tolerance and target returns. When you analyze robo-advisor performance, you can find that many top robo-advisors have solid track records and high investment returns. A robo-advisor comparison can also show investment returns compared with traditional investing with traditional financial advisors.

Many top robo-advisors also provide additional services such as automatic portfolio rebalancing and tax-loss harvesting, which saves you time and can yield higher investment returns for you. These additional services through robo-investing would typically be done by the investor (you) or by your financial advisor.

A robo-advisor is also a good fit for you if you prefer not to have to interact with a human financial advisor. Many investors prefer to have their money invested and not interact with a stockbroker who is pitching them investment ideas or selling them investment products. A robo investment adviser may offer financial advisor access in addition to computer algorithm investing, so you can have the best of both worlds if you prefer.

How does robo-investing work?

Robo-investing is a very simple process.

  1. You choose the best robo-advisor for you
  2. You open an account and decide how much you would like to invest
  3. Your select investment goals based on your risk tolerance and target return. With robo-investing, the more risk you take, the higher your potential return
  4. The top robo-advisors use low-cost exchange-traded funds (ETFs) or mutual funds for your investment
  5. A computer algorithm selects the optimal asset allocation based on your personal preferences and investment goals
  6. The robo-advisor automatically rebalances your portfolio over time
  7. You can add more money over time, and it will be incorporated into your portfolio
  8. The robo-advisor charges an annual fee, which is typically as expressed a percentage of your total portfolio. Typically, this fee is a fraction of the cost of most financial advisors.

How do I choose the best robo-advisor for me?

When choosing the best robo-advisor for you, here are some factors to consider:

Management Fees: Most of the top robo-advisors charge an annual management fee, which is a percentage of your total assets. Your robo financial advisor will deduct this fee from your investment returns. Therefore, if you earn 10% return in a given year, and the management fees is 0.50%, then your net investment return is 9.50%.

Expense Ratios: When your robo-advisor invests for you, your robo-advisor is typically investing in mutual funds and ETFs. These investment products have their own expenses, which is expressed as an expense ratio. The higher the expense ratio, the higher the expenses. Typically, mutual funds have higher expense ratios than ETFs, although not always. The expense ratio is not a fee collected by your robo-advisor, but rather the cost for running the mutual fund or ETF. Such expenses also can lower your investment return through robo-investing.

Investments: The top robo-advisors typically invest in two major investments:

  • Mutual Funds.Typically, your robo-advisor will use an index fund to passively track an index such as the Standard & Poor’s 500 index, which seeks to match the performance of the S&P 500. This approach is intended to provide you with a diversified investment strategy with exposure to these 500 stocks.
  • ETFs. An ETF, or exchanged-traded fund, trade like stocks on an exchange. ETFs typically track a sector, group of stocks or an index.

Automated Rebalancing: Many of the best robo-advisors offer automated portfolio rebalancing. With robo-investing, the goal of rebalancing your portfolio is to match your target asset allocation. As the market goes up or down, and your investments fluctuate, your portfolio may have a different investment allocation that your target. Therefore, the top robo-advisors will automatically rebalance your portfolio so it matches your investment goals.

Tax Loss Harvesting: With robo-investing, tax loss harvesting is the process of selling investments that lost money in order to reduce or eliminate capital gains taxes. Tax loss harvesting can be a burdensome process, so it’s very helpful for your robo-advisor to offer tax loss harvesting.

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