Our experts ranked the best robs-advisors for each type of investor.
There are many aspects of a good robo-advisor, and the best ones will offer everything listed below:
- Low fees;
- Comprehensive education;
- Attentive Customer Service;
- Security features;
- Account services;
- Robust goal planning;
- Easy account setup;
- Easy portfolio management.
Robo advisors are platforms or companies who provide financial advice or investments management service based on mathematical rules and algorithms with minimal human intervention. They are slight different from option robots and binary options robots who work fully automatic.
Top 5 Robo-Advisors of 2019
A list of the top 5 robo-advisors:
- M1 Finance
- Personal Capital
- Interactive Advisors
- Minimum Account Balance: $500
- Fees: no trading commission, no withdrawal fee, no trading minimum, no transfer fee. The fee for most accounts is 0.25%. (529 plans are between 0.42% and 0.46%). ETF management fees vary from 0.07%-0.16%.
Our top spot in our robo-advisor contest goes to Wealthfront because of its ease of use, account services, simplicity with building your portfolio, and excellent goal planning tools. One nice perk of their system is that you don’t even need to have a Wealthfront portfolio to use their financial planning tool called Path. Path gives you a high-level view of your financial health and helps you determine the best “path” toward a comfortable retirement. In addition, you can borrow against the value of your portfolio as a line of credit.
Wealthfront offers you a line of credit through borrowing against the value you have in your portfolio. However, you can only do that after your portfolio has at least $25,000 in it. Beyond that, there are several tiers to your account. The more money you put into your account, the more features you can “unlock,” such as their smart beta program and the ability to add individual stocks.
- Line of credit for portfolios over $25,000
- Cash management accounts
- Financial planning tools
- Top-tier goal planning capabilities
- Zero customization of accounts under $100,000
- Zero investment and insurance(other than the minimums required by law)
- No online chat
M1 finance (4.2/5)
- Minimum account balance: $100 ($500 for retirement accounts)
- Fees: 0%
M1 Finance is a registered broker and so not technically a robo-advisor. However, it does offer an exciting combination of automated investing and top tier customization. This integration allows clients to tailor their portfolio to their exact specifications. Your portfolio can contain low-cost ETFs or individual stocks, or both. Generally speaking, M1 Finance focuses on customers who have a long-term focus, experience with traditional brokerages, and an understanding of stocks and ETFs. M1 Finance offers lower fees than most brokerages, along with fractional shares.
Much of the interface, both online and mobile, consists of circular “pie” charts. Each slice is used to identify the individual assets within a particular portfolio. For customers interested in retirement investing, there are target-date portfolios consisting almost entirely of ETFs. Many of the “pies” focus on a specific initiative. For example, there are some socially responsible pies (created with Nuveen) that offer passive investment opportunities. The M1 Borrow feature allows customers to borrow against their portfolio at a relatively low interest-rate. Including stocks and ETF screeners, M1 Borrow is a remarkably useful platform. Recently, M1 Finance launched a premium service for $125 per year. It includes additional trading opportunities and benefits such as lower interest rates on loans through M1 borrow and competitive interest rates on in-account cash.
- The” standard” platform is free
- Build your own portfolio
- Trade using fractional shares (So every penny counts)
- More than 80 tailored portfolios
- Ability to rebalance portfolio at anytime
- No online chat
- No fiduciary advisers on staff
- Fee charged two accounts with less than $20 balance
- No account consolidation
- Minimum account balance: $0
- Fees: Digital plan – 0.25% annual; Premium plan 0.40% annual.
Betterment serves three primary purposes which are:
- Building your own portfolio;
- Investing in a prebuilt portfolio;
- Synchronizing all of your financial accounts so that you can get a high-level view of your financial health.
Tax-loss harvesting comes embedded in taxable accounts, and the rebalancing of portfolios occurs as necessary. There is also a wide variety of advice, videos, articles, and planning tools that can be used at every step of your investment journey. In addition to this, betterment offers a cash management product, which includes interest payments on all cash balances.
It’s easy to track your progress when using the goal monitoring tool. The mobile app and website both have online chat capabilities. Be prepared to pay 0.25% for the standard account and 0.40% for the premium account annually.
- Sync external accounts to individual goals
- Easily switch to a different portfolio type
- Easily change portfolio risk evaluation
- Add new goals at anytime
- Quick and easy
- Easy and quick account setup
- No margin lending
- No secured loans
- No borrowing options
- Users of each tier are constantly “nudged” to upgrade to a more expensive account
Personal Capital (4.1/5)
- Minimum account balance: $100,000
- Fees: 0.89% for accounts less than $1 million; 0.49% for accounts over $1 million
Even though almost anyone can use the free financial planning tool, with an account minimum of $100,000, Personal Capital is out of reach for most new investors. If you can fund the $100,000 minimum, you are assigned a personal financial adviser. One of Personal Capital’s main focuses is the minimization of tax payments, and they employ a wide variety of tools and strategies intended to lower your tax payments. Each of the recommended portfolios has been designed to assist each client in attaining their individual goals. However, you are unable to see the contents of each portfolio until after you have funded your account.
- Powerful financial planning tools;
- Superb tax optimization strategies;
- Clients in the $1 million range;
- Private client services for clients with $1 million+;
- All account holders have personal financial planners.
- High fees (Especially as compared to digital competitors)
- Sign-up process requires a phone call
- Mobile lab missing some key features
- Highest account minimum in this category
Interactive Advisors (4/5)
- Minimum account balance: $1000 for most portfolios; $10,000-$120,000 for specialized portfolios.
- Fees: 0.08%-1.5%. (depends on portfolio chosen)
With a wide range of portfolios to choose from, Interactive Advisors is probably the most well-rounded robo-advisor in the group. A service offered by Interactive Brokers, Interactive Advisors has a total of three portfolio categories to choose from. Those portfolio categories are Smart Beta, Diversified, and Asset Allocation. They also offer actively managed portfolios that are not part of the robo-advisor service and instead employ professional money managers. Customers who currently have an account with Interactive Brokers can use a portion of their current portfolios to invest inside of one of the robo-advisor offerings. Interactive Advisors offers the functionality of borrowing against the value of your portfolio as well as margin lending.
The weakest area of Interactive Advisors is their goal planning, which is almost non-existent. Current Interactive Advisor clients can use the Interactive Brokers Investor’s Marketplace to find financial professionals and fiduciary advisers to help them set up their goals.
- Margin lending
- Portfolio backed loans
- Ability to include individual stocks
- Wide range of portfolios
- Portfolio tools for consolidating and tracking your accounts
- Commission-based trading obscures exact costs
- Variety of account minimums (depending on account type)
- Opening an account is difficult
- Weak goal planning tools
The mission of Business24-7 is to provide comprehensive, unbiased reviews and ratings for robo-advisors and trading accounts. Account opening, online chat availability, fees, account minimums, and the assets available on the platforms are all part of our evaluation of a robo-advisor. The rating scale was based on hundreds of data points that have been weighted into the scoring system.
Which type are you?
Business24-7 maintains high editorial standards and strives to provide the best advice and recommendations for beginning investors. We may receive compensation for the products and companies that we review. Read below to find out more about our methodology and review process.