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Investing is more accessible than ever before, and that’s partly because of the growing popularity of robo-advisors.
Robo-advisors are affordable, efficient, and effective ways for new investors to match the growth of the greater stock market and meet their retirement or other savings goals.
However, just like you need to be careful with which human investor you choose to handle your portfolio, you’ll also need to take care when selecting a robo-advisor.
To that end, we’ve broken down the best robo-advisors for 2022 in detail below. Let’s get started!
Best Robo-Advisors: Quick Summary
- Betterment: Best Overall and Best for Beginners
- M1 Finance: Best for Low Fees
- Stash Invest: Best for Education
- WealthFront: Best for Tax-Loss Harvesting
- Vanguard Digital Advisor: Best for ETFs and Retirement Accounts
- Ellevest: Best for Women
- Ally Invest: Best Overall
- Charles Schwab Intelligent Portfolio: Best Overall
- Blooom: Best for 401(k) Management
- SoFi Automated Investing: Best for Hands-Off Investing
- SIGFIG: Best Overall
The Best Robo-Advisors
#1. Betterment: Best Overall Robo Advisor
- Account Minimum: $10
- Fees: 0.25% to 0.4% for digital or premium plans, respectively
- Very easy to set up a new account
- Can sync your external accounts based on your goals
- You can easily swap between portfolios
- Good mobile platform
- Low account minimum balance
- Very high cost to talk to a financial planner (between $200 and $300)
- No borrowing options against your personal portfolio
Betterment is a fantastic robo-advisor choice for beginners, specifically thanks to its intuitive platform and user-friendliness.
Not only is it incredibly easy to set up an investment account with Betterment, but you can do so on a mobile device, then monitor your investments’ status on your phone any time afterward.
Rather than ask for risk tolerance levels, Betterment gives you several asset allocation suggestions and associated risk levels to choose from at account creation.
You can then tweak your portfolio from five broad portfolio types and let the robo-advisor algorithms do the rest.
>> More: Betterment Review
#2. M1 Finance
- Account Minimum: $0
- Fees: $0
- Can choose from premade portfolios
- Can also customize your own portfolio
- Totally free
- Very simple and intuitive to use
- Good customization choices overall
- Not a lot of in-depth financial advice
M1 Finance offers a very simplified robo-advisor service that goes the extra mile by allowing you to choose your individual stocks.
Alternatively, you can choose from M1’s premade portfolios or decide to use both features combined and start with a premade portfolio, then customize it to your liking.
It’s also an excellent service for its ancillary benefits, such as being completely free and the robust mobile app.
Ultimately, M1 provides a very simplified investment experience, though it necessarily lacks some of the high-performance and extra advisory value that pricier robo-advisors offer.
>> More: M1 Finance Review
#3. Stash Invest
- Account Minimum: $0
- Fees: $1-$9 per month
- Has tons of educational content
- Great customer support
- Lets you invest in fractional shares
- Has values-based investment offerings
- No account minimum
- Relatively high ETF expense ratios
- No tax-loss harvesting for smart portfolios
Stash Invest is perhaps the best choice if you want to learn more about portfolio management while letting a robo-advisor take the reins as you become educated.
Stash provides excellent educational assistance, including portfolio management tools and knowledge bases.
But it’s also a solid investment service overall, offering fractional shares, values-based investment offerings, and more.
This robo-advisor service could be a good choice if you plan to take over your portfolio in the coming years but want to invest now and start enjoying the benefits in the meantime.
>> More: Stash Invest Review
- Account Minimum: $500
- Fees: 0.25% management fee
- Automatically rebalances your account
- Limited-time offer for the first $5000 managed free
- Generally low ETF expense ratios
- Tax-loss harvesting occurs daily
- Can’t invest in fractional shares
- No discount if you have a large account balance
Wealthfront offers an excellent robo-advisor investment account with free management options up to the first $5000 you spend in the account.
It also boasts low ETF expense ratios, fantastic daily tax-loss harvesting, and other quality features that make it well worth your time and money.
However, the above $5000 promotional amount is only available for a limited time, after which point, new investors will need to pay for every dollar invested on their behalf.
Still, this robo-advisor account could be a great choice if you want to practice stable, long-term growth without worrying about fractional shares or similar technical topics.
#5. Vanguard Digital Advisor
- Account Minimum: $0
- Fees: 0.15% per year
- Good quality ETS from Vanguard
- Lots of investing expertise available
- Relatively low fees and costs
- No extra fees and low investment expense ratios
- Not much portfolio customization compared to competitors
- No tax-loss harvesting
Vanguard’s Digital Advisor is a robo-advisor that primarily focuses on investments using several favorite ETFs chosen by Vanguard.
However, despite this apparently limited choice, most users should be able to create a relatively customized portfolio and retirement plan depending on their unique goals, budget constraints, and more.
Perhaps most important, all account owners will gain access to Vanguard’s very extensive investing expertise and access to their investment specialists.
Should you choose to move up from a robo-advisor to a human investor, you’ll be able to easily do so with Vanguard.
>> More: Vanguard Review
- Account Minimum: $0
- Fees: $1-$9 per month
- No account minimum necessary
- Tailored to women by factoring in their unique demographic challenges and lifespans
- Has a goal-focused investing approach
- All members have access to sessions with coaches, plus educational materials
- No tax-loss harvesting
- If you want an IRA, you have to pay extra and be a Plus or Executive member
Ellevest is a unique robo-advisor service marketed explicitly to women and focusing on goal-based outcomes (rather than short-term gains).
More importantly, Ellevest incorporates the lower expected incomes and lifetime earnings of women and their longer average lifespans compared to men.
It features financial advisory coaches, competitive membership fees, and more to make an attractive choice for women who want to enter investing and make sure their hard-earned money works for them as they progress through their careers.
>> More: Ellevest Review
#7. Ally Invest Managed Portfolios
- Account Minimum: $100
- Fees: None
- Great for beginners
- Has an intuitive and easy-to-use mobile app
- Low account minimum and fees
- Good robo-advisor results on average
- Not the best for long-term explosive growth
- Not as customizable as some other services
- Must hold a minimum of 30% of your portfolio as interest-earning cash
Ally Invest’s Managed Portfolios is a great robo-advisor service if you don’t want to break the bank. It has a low minimum account balance and very low fees overall.
More importantly, the app is extremely intuitive and accessible on all mobile devices, allowing you to see the status of your portfolio at any time and make adjustments depending on the greater market.
However, Ally’s robo-advisors are fairly accurate and efficient, and you shouldn’t need to make many changes with your investments over time. This is a great choice for beginner investors who want a hands-off robo-advisor service.
>> Learn More: Ally Invest Review
#8. Charles Schwab Intelligent Portfolio
- Account Minimum: $5000
- Fees: Vary
- Very hands-off and easy to see great long-term returns
- No trade commission fees
- Can create a customized financial roadmap or investment plan
- No extra fees aside from those below
- Has a high minimum account balance
- Some expense ratio fees
Charles Schwab’s Intelligent Portfolio is an aptly named online advisory service. This service will allow you to create a customized financial roadmap for your goals, such as retirement or saving up to buy a house.
You have to fill out a complete questionnaire at the beginning, but after this, the robo-advisors take over and make everything easy for you.
There’s a high $5000 minimum account balance on the downside, but there are no other management or account fees.
Note that expense ratio fees depend on your exact investments, but these are relatively small.
>> More: Charles Schwab Review
- Account Minimum: $0
- Fees: $45-$250 per year
- Great tool for 401(k) management and growth
- No required account minimum
- Free financial analysis for everyone
- Good financial advice is available
- Typically allocates assets aggressively, so keep this in mind
- Has high costs for small account balances
Blooom’s unique name disguises the fact that this is one of the best robo-advisor services for 401(k) management. It offers investment management for any employer-sponsored retirement plans, including 401(k)s.
However, you can also use this financial service for general robo-advisory investments and similar services.
Regardless, all account holders gain access to a free analysis tool, excellent financial advisement, and more.
It’s generally affordable, as well, making this a great choice for working-class individuals who want to maximize their 401(k)s without breaking the bank or compromising their short-term expenses and bills.
>> More: Blooom Review
#10. SoFi Automated Investing
- Account Minimum: $0
- Fees: 0% management fee
- Free account management
- Excellent variety in low-cost investments
- Top tier customer support
- Automatic rebalancing
- All users have access to certified financial planners
- Only a few account types to choose from
- Doesn’t practice tax-loss harvesting
SoFi’s Automated Investing service is a hands-off, accessible choice for cost-conscious investors.
It offers a wide range of low-cost investments, along with extra features, including automatic rebalancing, free account management, and excellent customer support.
As a result, SoFi may be the best overall choice for beginners who want to start investing on a very limited budget (at least at first).
But SoFi also offers reasonable avenues for investment growth and education as you become more comfortable with your portfolio and complex financial topics.
- Account Minimum: $0 or $2000 depending on your tier
- Fees: 0.25% trade commission fee after $10,000
- Comes with a portfolio tracker
- Multiple levels of investment services putting on your budget
- No initial account minimum
- Has both human and robo-advisors available
- Can be a bit pricy for higher tiers of service
SigFig’s robo investment platform combines traditional financial advisors with new money management technologies.
The resulting service is robust and valuable through and through, and you can sign up for different tiers of service depending on your budget.
Regardless, all account holders get a free portfolio tracker, and no minimum investment is required. However, you can sign up for a directly managed account.
This account type requires a $2000 minimum investment and comes with tax-loss harvesting, human advisor chats, and portfolio rebalancing services.
What Is a Robo-Advisor?
In a nutshell, a robo-advisor is simply an automated and simplistic advisor program. Think of it like an investment algorithm that can automatically select appropriate investments for you based on things like your portfolio history, your preferences, and more.
Many new investors or individuals who don’t have a lot of time to devote to creating a personal portfolio appreciate robo-advisors due to their simplicity.
Furthermore, robo-advisors can quickly be set up online. Lastly, robo-advisors are advantageous because they are usually cheaper compared to in-person financial advisors.
However, this also means that their advice or constructed portfolios will be less flexible or unique. Most robo-advisor portfolios rely on tried-and-true investment theories or algorithms.
How Does a Robo-Advisor Work?
Robo-advisors take certain decisions or risk tolerance levels into account before choosing investments for you.
They will also consider what kinds of returns you want to pursue and when you need the money.
As a result, you’ll need to answer several questions upon making your robo-advisor account before they invest anything on your behalf.
After considering all necessary factors, your robo-advisor will choose a portfolio of ETFs or exchange-traded funds using investment theories.
For instance, the majority of robo-advisors will create diversified portfolios that invest your money in multiple funds or assets rather than doubling down on a single instrument. This reduces risk and may lead to increased returns down the road.
Different robo-advisors have different features, focuses, or benefits depending on their creators and the sophistication of their algorithms.
Of course, all robo-advisors must register with the US Securities and Exchange Commission, just like human, financial advisors.
How Do I Open a Robo-Advisor Account?
Opening a robo-advisor account is usually quick and easy. Simply visit a robo-advisor or investment firm’s website and provide some personal information to create your account profile.
You’ll then be able to link a bank account or deposit funds into the investment firm’s account so they can make investments on your behalf.
To use a robo-advisor, you’ll have to provide some personal information to the bot so it knows how to invest for you.
How to Compare the Best Robo-Advisors
Not sure how to choose the right robo-advisor for your investment goals? Before signing up for their services, let’s break down the major things you should look for in a robo-advisor.
Naturally, one of the big things you’ll want to consider when choosing a robo-advisor is its cost or fees. The cost of using a robo-advisor can vary dramatically and may incorporate several independent fees, such as:
- Management fees, which usually cost between 0.25% and 0.5% of your total assets annually
- Funds’ expense ratios are fees levied against your account based on individual assets or funds your robo-advisor invests your money in. These fees usually range from 0.5% to 0.65%
- Other annual fees, such as fees just for keeping your account with your investment institution
- And more
Naturally, the cheaper a robo-advisor is, the more accessible it will be. But keep in mind that some pricier robo-advisors are well worth the cost due to their increased sophistication and higher average returns.
#2. Industry Reputation
You’ll next want to consider the reputation that a robo-advisor has within the broader investment industry.
If you hear that a particular advisor or investment firm doesn’t produce good results for its clients, stay away.
The reverse is true if you hear only good things about a robo-advisor from your friends, colleagues, and so on.
#3. Services Offered
Some robo-advisors offer more services than others, including career services, goal-based planning, discounts on products from the same investment institution, banking features, and more.
If you want a more well-rounded financial institution, those robo-advisors with extra features will be right up your alley.
#4. Customer Support
Lastly, don’t forget to consider customer support. Some robo-advisors have excellent customer support and multiple customer support channels you can pursue, such as phone calls, email, and chat.
Others don’t provide very good customer support, making it frustrating if you need to get in touch with your advisor or change your portfolio quickly to avoid big losses.
How Do I Choose a Good Robo-Advisor?
Ultimately, you should choose the right robo-advisor by considering these major factors:
- Fees and costs for the service
- The minimum balance is required
- Ease of use
- Customer support options
- Advisor performance
The last factor is especially important. See how well a robo-advisor has worked out for other clients before signing up for their services.
That way, you’ll be able to tell whether the robo-advisor’s algorithms or core strategies are aligned with your greater investment goals.
Do Robo-Advisors Beat the Market?
Sometimes, but not usually. The majority of robo-advisors follow tried-and-true, stable index fund investing strategies.
As a result, most of their portfolios’ performances match that of the overall market. If the greater stock market goes up, your investments made by your robo-advisor will also go up, and vice versa if the stock market goes down.
Thus, robo-advisors are usually a good idea if you want to match market performance rather than try to dramatically outperform it
Are Robo-Advisors Safe to Use?
Generally, yes. Most robo-advisors offer safe, stable investments without a lot of opportunities for major shakeups. However, some robo-advisors do eventually go out of business.
If this occurs, your assets will be insured through the SIPC, including up to $500,000 in protection for each account type you have. In this way, it’s still safe to use a robo-advisor even in uncertain market times.
Who Should Use a Robo-Advisor?
Robo-advisors are particularly good choices for beginners to investing or individuals who don’t have a lot of time on their hands to choose their investment instruments personally.
However, if you have more money and want more aggressive growth, a human investment advisor may be a better choice as they will be able to make riskier but potentially more profitable investment decisions on your behalf.
Robo-advisors may also be good for individuals who want to invest in the stock market but don’t have the cash to pay for a professional investor.
Alternatively, robo-advisors are not typically the best choice if you want a high level of control over your portfolio.
Many robo-advisors require you to choose from premade portfolios or significantly limit the types of assets or ETFs you can invest in.
Again, this is great for beginners who don’t know where to start with that sort of stuff anyway. But more experienced investors probably don’t need robo-advisors, either.
Bottom Line: Best Robo-Advisors
At the end of the day, any of the above robo-advisor services could be worth your while. It all depends on what you’re looking for in an investment service, the kind of budget you have, and what your long-term financial goals are.
Many of the above services are particularly suited for certain demographics, such as women, certain retirement or savings goals, such as 401(k) accounts, and more.
Our advice? Pick the service that’s best aligned with your demographics and/or financial goals, then make sure you’ll be able to afford the service.
If all looks good, sign up and give the robo-advisor a try!