Best Robo-Advisors: How to Find The Right Option For You

Woman using a computer, illustrating the use of robo-advisors

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Amanda Cardoso
Amanda Cardoso
June 13, 2024 at 12:7AM UTC

Investing is notably one of the best ways to build wealth. But making smart investments requires financial literacy, which can take time to develop. That's where robo-advisors come in: These automated investment platforms create and manage portfolios for you.

Where traditional brokerage accounts rely on human financial advisors, robo-advisors manage investment portfolios using advanced algorithms. As a result, they often have lower fees, and can potentially lead to higher returns in the long run.

Like any account type or investment tool, robo-advisors must be chosen carefully—after all, they'll handle your money for you. Portfolio options, account types, fees, and access to human customer support are key factors to think about when making your choice. 

Since there are dozens of automated investment tools out there, we've created a list of eight of the best robo-advisors recommended by experts, to help you make an informed decision.

What is a robo-advisor?

A robo-advisor is an online automated application that provides investment management using algorithms or mathematical rules. With little to no human involvement, robo-advisors typically charge lower annual management fees and have minimum account balance requirements compared to traditional brokerage accounts—except for premium robo-advisor services.

How robo advisors work?

Think of robo-advisors as super advanced artificial intelligence tools. These applications use sophisticated software technology to handle multiple investment tasks, from automatic asset allocation to tax optimization. 

Robo-advisors make decisions based on information provided by clients during account setup, including risk tolerance, time horizon, income, age, and investment goals. For instance, an investor saving for retirement will get a different asset allocation than someone saving for a down payment.

Even though it's a hands-off approach to investing, investors can access visualization dashboards to track progress, earnings, add contributions, and set new goals. That's why robo-advisors are highly recommended for beginner investors, people who lack time to manage investments themselves, or those looking for a tool with lower advisory fees. 

What are the best robo-advisors? 8 options to consider

To pick the best robo-advisors, we talked to two finance experts and analyzed features, fees, investing options, and user-friendliness. We arrived at this list of eight of the best robo-advisors in 2024:

  1. Wealthfront

  2. Betterment

  3. SoFi Automated Investing

  4. Acorns

  5. Ellevest

  6. Vanguard Digital Advisor

  7. Vanguard Personal Advisor Services

  8. Charles Schwab Intelligent Portfolios

“These platforms offer a blend of competitive fees, robust technology, and user-friendly interfaces,” says David Blain, CFA, Chief Executive Officer of BlueSky Wealth Advisors. Let's break down each one. 

1. Wealthfront

Wealthfront stands out as one of the most comprehensive robo-advisors out there. It offers a wide range of services, from long-term investment featuring globally diversified portfolios to high-yield savings accounts integrated with an automated bond portfolio. 

“It's strong in automated financial planning and tax optimization,” says Jason B. Ball, Certified Financial Planner (CFP), founder of Jason's Fin Tips. “Ideal for those seeking advanced features.”

Wealthfront clients have access to the Path financial planner, a tool programmed to address up to 10,000 questions and equipped with calculators to help develop your investment goals. However, there's no human interaction, and the extensive amount of features and investment options available can be overwhelming.

Pros

  • Variety of investment portfolios and customization options

  • One of the few robo-advisor that offers 529 plans for college savings

  • Low advisory fee (0,25%/annual)

Cons

  • No human financial advisors

  • Overwhelming amount of features

2. Betterment

Betterment carries the title of the largest independent robo-advisor on the market. The platform is fully dedicated to automated investing, offering goal-based tools that manage investments according to your goals, risk tolerance, and time horizon. 

“It provides goal-based planning, tax-loss harvesting, and access to human advisors, balancing automation with personal touch,” Ball says. (Tax-loss harvesting is a strategy where you sell non profitable investments at a loss to offset or reduce taxes owed on profit from other investments.) However, unlike other automated investing platforms, Betterment has management fees that vary depending on your balance.

Pros

  • Multiple portfolio options

  • $0 account minimum to start, $10 to start investing

  • Tax management features 

Cons

  • 0,25% fee with a balance over $20,000, otherwise for $4/month

  • No direct indexing

  • $100,000 required for a premium plan

3. SoFi Automated Investing

SoFi Invest is an all-in-one investment platform offering both active and automated investing services. Among the most popular investment apps, SoFi is considered one of the best robo-advisors for beginners. Why? It provides access to 30-minute video meetings with human financial advisors for free and allows new investors to start with minimum amounts.

Pros

  • You can start investing with  $1

  • Free management

  • Customer support

  • Access to 30-minute free video meetings with financial planners

Cons  

  • No tax-loss harvesting

  • Limited account types with robo-advisors

4. Acorns

Acorns could be the best robo-advisor for those who struggle with saving money. It helps you invest spare change through low-amount automated investment options. If you're a young professional who doesn't have plenty of money to invest yet, Acorns might work well for you. 

“It's perfect for beginners due to its micro-investing approach, allowing you to invest spare change,” Blain says. However, it's worth noting that the fees can be a push-back for some.

Pros

  • Automated spare change investments

  • Diversified investment options

  • Offers educational content

  • No account minimum

Cons

  • High fees for small account balances ($3 to $9/month)

  • Account types are limited

5. Ellevest

Women looking for personalized investment tools, meet Ellevest. This investment app is designed for you, by considering factors like the gender pay gap and women's longer lifespans to provide tailored financial advice. Ellevest services include discounted 1:1 professional financial planning and access to educational resources.

Pros

  • Portfolio options that factors women's specific needs

  • Discounted access to advisory service with human financial advisors

  • No account minimum

Cons

  • No tax-loss harvesting

6. Vanguard Digital Advisor

Vanguard also stands out as one of the best robo investment advisors for beginners and established professionals aiming to start saving for retirement. It offers an affordable and straightforward service with a simple tool. Although its investment options are limited, Vanguard's competitive edge lies in its low-cost management fees in the robo-advisor market.

Pros

  • Lower management fees than its competitors (approx. 0.15% annually)

  • No additional account fees

  • Robust retirement planning tools

  • Simple and straightforward investment approach

Cons

  • Limited portfolio options 

  • $3,000 account minimum to get started 

  • No access to financial advisors

7. Vanguard Personal Advisor Services 

Vanguard Personal Services might be the better robo-advisor for high net worth individuals. It requires a minimum account balance of $50,000 and offers premium services, including unlimited advice from Vanguard's certified financial planners. “It leverages its extensive fund options, providing a blend of human oversight and automated advice,” says Blain.

Pros

  • Lower advisory fee (0.30% annually) compared to other premium robo-advisors 

  • Easy and unlimited access to human financial advisors

  • Access to inexpensive ETs

Cons

  • High minimum balance requirements

8. Charles Schwab Intelligent Portfolios

Highly recommended by investment experts, Charles Schwab Intelligent Portfolios is another competitive option for investors with median-to-high net worth. “The platform is known for its diversified portfolios and integration with other Schwab services, offering seamless management for existing Schwab clients,” Blain says.

To open an automated investment account, a minimum balance of $5,000 is required. In return, clients have access to on-demand advice from a professional advisor and 24/7 customer support. “Their robust platform and customer support make it a strong contender,” Balls says. 

Pros

  • Vast range of investment options

  • Full time customer support by phone or chat

  • Access to on demand advice services

  • No advisory fee

  • Tax-loss harvesting

Cons

  • Relatively high minimum balance requirements

  • Some transactions are attached to commission fees 

Should you use a robo-advisor?

Robo-advisors are handy investment tools with plenty of benefits. But are they a good match for you? If you're comfortable with technology and want a low-cost, hands-off investment platform, the answer might be yes.

“A robo-advisor can be an excellent starting point for those who are just beginning and want to benefit from automated, diversified portfolio management without high fees, and with a hands-off approach,” Blain says.

Busy professionals could also benefit from a robo-advisor, as well as cost-conscious and goal-oriented investors, according to Ball. “Robo-advisors typically have lower fees compared to traditional financial advisors, which makes them a cost-effective choice to achieve specific financial goals,” he says.

What's the best robo-advisor for you? Here's how to choose

As you've probably noticed, different robo-advisors offer different services. Some charge an advisory fee and have a minimum account balance, while others do not. So, how do you choose a robo-advisor? According to the finance experts we consulted, to pick the right one for you, consider these key elements:

  • Financial goals: What are you looking to achieve with your investments? Is it retirement or a down payment for a house? Are you saving for your child's college education?

  • Risk tolerance: What's your risk tolerance? Are you a conservative investor, or do you have enough financial security and willingness to take risks?

  • Account options: If you'd like taxable accounts or tax-advantaged accounts, you'll have more options, since most robo-advisors offer these account types. However, if you prefer a niche account, such as a 529 plan, your options are more limited.

  • Features: Besides automated investment, evaluate the features each robo-advisor offers and determine which are more appealing to you and your investment goals.

  • Advisory and management fees: For high-net-worth investors, fees can sometimes be an afterthought. However, if you're a low-net-worth individual, you might consider how much the annual fees will eat into your earnings.

  • Minimum investment requirements: Your chosen robo-advisor should be one that you can meet the minimum account balance and/or investment requirements.

  • Ratings: Both Google Play and the Apple Store allow users to rate and review apps—and you should take a look at these robo-advisors' ratings and reviews to gain better insight into other users' experiences with the platforms.

A bonus tip: Take advantage of demos and risk-free trials offered by some platforms. “Use these to get a feel for their interface and services,” Blain suggests. “Ensure the platform provides a diversified portfolio, rebalancing, and tax-efficient strategies—especially if you're investing for the long term.”

Robo-advisors FAQs

Are robo-advisors safe?

Yes, robo-advisors are as safe as traditional investment services. If you worry about losing money, remember that all investing methods carry some level of risk. That's why robo-advisors consider your risk tolerance to allocate your assets and encourage diversification to mitigate risks. 

If you're concerned about cybersecurity, it's important to understand that this is a risk with any form of online investing, not only with robo-advisors. However, most reputable online investment companies, like those mentioned above, employ sophisticated cybersecurity measures to protect their clients' accounts.

How to open a robo-advisor account

First, download the robo-advisor app of your choice or access its website. Then, create an account. Each platform has its own registration process, but generally, you'll need to provide personal information such as:

  • Name

  • Date of birth

  • Mailing address

  • Social Security number

  • Annual income and net worth

Some platforms may also ask you to specify your investment goals, preferred account type, and risk tolerance. You can update this information later as your investment journey progresses.

What's the best robo-advisor for retirees?

Vanguard Digital Advisor offers robust retirement planning tools. Retirees may also find Charles Schwab Intelligent Portfolios appealing due to its large range of investment options. 

Whether you go for one of these options or not, take time to assess your financial situation, risk tolerance, and what features and services are looking for in a robo-advisor. This will help you make the best decision.

Which robo-advisor has the best returns?

Investment returns vary depending on the amount invested, the type of investment account, and your asset allocation. Riskier investments typically offer higher returns, but they also come with higher losses. Another factor to consider is the annual management fees, which eat into your investments returns.

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