Automated portfolio management lets investors manage their investments without constant oversight. Using algorithms, these platforms build and adjust portfolios based on the user’s goals, risk tolerance and time frame. Options include robo-advisors and hybrid solutions that combine automated and human guidance. Many investors appreciate these platforms for their diversification, low costs and accessibility.
If you prefer a hands-on approach, a financial advisor can help you manage your portfolio.
Key Features of Automated Portfolio Management
When evaluating robo-advisors and other automated platforms, investors can compare them on the basis of some important features. These include automatic rebalancing, tax-loss harvesting, management fees and investment minimums, as well as customization and human support. Here’s a closer look at these common features:
- Automatic rebalancing and tax-loss harvesting. Most robo-advisors automatically rebalance portfolios to maintain your desired asset allocation, keeping your portfolio aligned with your risk tolerance and goals. Many platforms also offer tax-loss harvesting to help minimize taxes, which can be a key benefit for taxable accounts.
- Management fees and minimum investments. Robo-advisors generally have lower fees when compared with traditional financial advisors. Some have no management fees, while others charge fees as low as 0.25% per year. Minimum investments vary, with some platforms requiring no minimum and others requiring a few thousand dollars.
- Customization and human support. Some robo-advisors allow for more customization, letting users choose their own investment options while still benefiting from automated management. For those who prefer some human assistance, platforms may provide access to human financial advisors for an additional cost.
Robo-Advisors to Consider
Robo-advisors are among the most accessible ways to automate portfolio management, offering a range of features at competitive costs. Here are some popular options, along with their investment minimums and fees.
Minimum investment: None (Digital plan), $100,000 (Premium plan)
Fees: 0.25% for Digital, 0.65% for Premium
Betterment is a well-known robo-advisor offering features for both beginners and seasoned investors. The platform charges an annual fee of 0.25% for its Digital plan, which includes automatic rebalancing and tax-loss harvesting. For investors who prefer more personalized advice, Betterment offers a Premium plan at 0.40% per year, which includes access to human financial planners. Betterment has no minimum investment requirement for the Digital plan, but the Premium plan requires a $100,000 minimum.
Minimum investment: $500
Fees: 0.25% per year
Wealthfront provides automated portfolio management with a focus on tax efficiency. The platform offers services such as daily tax-loss harvesting, automatic rebalancing and access to socially responsible investment portfolios. Wealthfront charges a flat annual fee of 0.25% and requires a minimum investment of $500 to open an account.
Minimum investment: $3,000
Fees: 0.20% to 0.25% per year
Vanguard Digital Advisor is a low-cost robo-advisor that combines automation with Vanguard’s trusted brand. The platform charges a management fee ranging from 0.20% to 0.25%, depending on your portfolio’s balance. Vanguard Digital Advisor offers personalized portfolio management but requires a minimum investment of $3,000 to get started. While it doesn’t provide tax-loss harvesting, it does offer automatic rebalancing and a variety of Vanguard funds.
Minimum investment: $5,000
Fees: None (basic plan); $30 per month for premium
Charles Schwab’s robo-advisor, Schwab Intelligent Portfolios, doesn’t charge any advisory fees. Instead, the platform makes money from the underlying funds in your portfolio. There is a minimum account balance requirement of $5,000. Schwab Intelligent Portfolios automatically rebalances portfolios, but it does not include tax-loss harvesting unless you have $50,000 in your account. A premium version giving access to a CFP financial advisor costs $30 per month plus a one-time $300 planning fee.
Minimum investment: None
Fees: None
SoFi Automated Investing is another option for investors looking for automated portfolio management without paying management fees. The platform offers automated rebalancing, goal planning, and diversified portfolios, with no minimum account balance to get started. SoFi’s user-friendly app and zero-fee structure make it an appealing choice for younger or beginner investors. Additionally, SoFi provides access to human financial planners at no extra cost. One limitation is that it does not do tax-loss harvesting.
Minimum investment: $2,000
Fees: 0.25% per year
SigFig offers a combination of AI-driven portfolio management and access to human advisors for more personalized advice. SigFig charges an annual fee of 0.25% and requires a minimum investment of $2,000. It also provides free portfolio tracking tools, making it a useful option even if you don’t use the platform for direct investment. SigFig includes automatic rebalancing but not tax-loss harvesting.
DIY Automated Investing Options
For investors who want more control over their portfolios, there are platforms that offer automated tools while allowing for manual oversight. These options may not provide full robo-advisory services but still offer significant automation features.
Minimum investment: $10
Fees: None for balances under $25,000; 0.35% per year for higher balances
Fidelity Go offers automated portfolio management with no advisory fees for accounts under $25,000. The platform automatically rebalances portfolios but doesn’t provide tax-loss harvesting. For accounts over $25,000, Fidelity Go charges a flat annual fee of 0.35% for a hybrid service including access to human advisors. With a minimum investment of $10 to get started, Fidelity Go may be a good option for Fidelity customers looking for basic automation.
Minimum investment: $100 (taxable accounts), $500 (retirement accounts)
Fees: None
M1 Finance offers a blend of customization and automation, allowing users to create personalized portfolios called “pies” while automating rebalancing and trading. M1 Finance charges no management fees and has no commissions on trades, but it requires a minimum investment of $100 to open a taxable account or $500 for retirement accounts. It can be an excellent option for investors who want more control over their portfolios while benefiting from rebalancing that is done automatically at the investor’s request.
Minimum investment: $500
Fees: 0.30% per year
E*TRADE Core Portfolios offers a mix of automation and investor involvement, allowing users to set up diversified portfolios with a minimum investment of $500. The platform charges a 0.30% annual fee and automatically rebalances your portfolio to maintain your desired asset allocation. It’s a solid choice for investors looking for a simple, affordable automated investment option.
Bottom Line
Automating your portfolio management can offer a range of options to suit different investment styles and preferences. Whether you prefer the simplicity of robo-advisors or a more hands-on approach with customizable platforms, there are solutions available to help streamline your investment process. From fee-free platforms to those offering personalized advice, each option provides specific features that can include automatic rebalancing, tax-loss harvesting or access to human advisors.
Tips for Investment Planning
- A financial advisor can help you create an investment plan for your portfolio. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- If you want to know how much your investment portfolio could be worth over time, SmartAsset’s free investment calculator could help you get an estimate.
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