Robo-advisors are quite popular due to their low fees and simple, hands-off investment approach. But as more robo-advisors come about, the harder it becomes to figure out which one you should go with. To help you decide, SmartAsset created this list of the top robo-advisors for 2021. Look through each company’s fees, minimum initial investments and other services to help you decide which is best suited to your needs.
Would you prefer more hands-on help with your investments? Talk to a local financial advisor today.
The Best Robo-Advisors
Like any financial service, robo-advisors use a plethora of different fee arrangements and investment philosophies, along with offering a variation of features like automatic rebalancing and tax-loss harvesting. As a result, some robo-advisors are better suited for certain types of investors than others. Below are SmartAsset’s choices for the best robo-advisors of 2021.
Best Overall: Betterment
|Annual Fees||0.25% or 0.40% for Premium plan|
|Minimum Investment||$0 or $100,000 for Premium plan|
|Best For||Low maintenance, goal-based investors|
Betterment has gained hundreds of thousands of customers since bursting onto the robo-advisor scene in 2008. You’ll find yourself drawn to the site’s clean, user-friendly design. You’ll also enjoy low fees and features like tax-loss harvesting. Once you sign up, you can track your progress toward retirement and other financial goals.
Annual management fees start at just 0.25% and there is no minimum balance for opening an account. Should you upgrade to Betterment’s premium plan with a minimum of $100,000, your fee will jump to 0.40%, though you’ll gain access to a number of other services. These include unlimited phone calls with a certified financial planner (CFP), advice on your 401(k) and other outside investment accounts and more. Betterment also offers trust accounts.
Full Review: Betterment
Best for DIY Investors: Wealthfront
|Best For||DIY investors looking for low fees and expense ratios|
Wealthfront offers robo-advising for many account types, including IRAs, 529 college savings plans, personal and joint investment accounts and trust accounts. The minimum balance requirement is $500, while clients with $100,000 or more get access to the company’s tax-optimized direct indexing service. The management fee is a flat 0.25%, which is one of the lowest fees around.
The investment scope of Wealthfront is another reason why DIYers are attracted to it. In fact, the company has a socially responsible portfolio that allows you to invest according to your personal views.
Full Review: Wealthfront
Best for a Low Minimum: Vanguard Digital Advisor
|Best For||Investors with little to start with|
Vanguard is a staple in the robo-advisor space. It’s especially known for low fees and popular index funds. In fact, many other robo-advisors and traditional financial advisors invest client assets in Vanguard funds.
Vanguard offers a couple of robo-advisors: Vanguard Digital Advisor and Vanguard Personal Advisor Services. Vanguard Digital Advisor is the more accessible option of the two, as it only requires investors to deposit $3,000 to open an account. Annual fees are also quite low at 0.15%, creating a fantastic option for those who have yet to really build up their savings pool. Vanguard even allows new users to try the program for 90 days without fees.
Best Free Option With Expert Access: SoFi Invest
|Best For||Those with little to invest, but still want human guidance|
At one point in time, SoFi was almost explicitly known for its student and personal loan services. However, since its early days, the company has come quite far, especially in the advisory and robo-advisor markets.
SoFi’s aptly named Automated Investing program allows investors to sign up for as little as $5. The company also doesn’t charge any maintenance or asset fees, which makes it all the more impressive. Surprisingly, despite this setup, SoFi gives Automated Investing clients access to its team of advisors. Each of these advisors is a certified financial planner (CFP), which is a huge benefit to clients.
Full Review: SoFi
Best for Women: Ellevest
|Annual Fees||$1 – $9 per month|
|Best For||Investors looking for a holistic set of accounts|
According to its website, Ellevest “was built by women, for women.” Although the company works with all types of its clients, its services and accounts are clearly angled towards the female investor market.
Ellevest doesn’t charge trading fees or require a minimum investment. However, to gain access to Ellevest, you’ll need to become a member for a monthly fee of $1 (Ellevest Essential), $5 (Ellevest Plus) or $9 (Ellevest Executive). Here’s a brief breakdown of each:
- Ellevest Essential: You’ll receive an investment account, the ability to attend group workshops on various financial topics, an FDIC-insured bank account and an Ellevest debit card that can earn cash back. You also get a 20% discount on sessions with a financial professional.
- Ellevest Plus: This includes all of the above, in addition to an Ellevest IRA and a 30% discount on sessions with a financial professional.
- Ellevest Executive: Beyond the features above, you get five different investment accounts to use for various purposes and a 50% discount on sessions with a financial professional.
Full Review: Ellevest
Best for Round-Up Investing: Acorns
|Monthly Fees||$3 – $5 per month|
|Best For||Those new to investing who can’t set much money aside|
Acorns takes the spare change from your everyday purchases and invests it according to your risk tolerance. It rounds up all your transactions to the nearest dollar and takes the difference, moving the money to a range of ETFs. You can connect a debit card, credit card or checking account to your Acorns account.
The service is not ideal for big retirement savings balances, but it is a pain-free way for people to start saving and investing. Opening an account is free, but management fees vary by account type. Acorns Personal comes with a $3 monthly fee, whereas the Acorns Family package has a $5 monthly fee.
With the Personal package, you’ll receive an investment account, as well as a retirement account and a checking account. This will allow you to cover most of your financial needs at a single financial institution. Should you also need access to an investment account for your children’s college savings, the Family package can provide that for a slightly higher fee.
Full Review: Acorns
Best for Financial Goal Planning: SigFig
|Annual Fees||Free, then 0.25% annual fee on balances over $10,000|
|Best For||Those who want to invest for specific financial goals|
SigFig charges a 0.25% annual fee on balances over $10,000. However, all balances under $10,000 do not come with a management fee, though there is a $2,000 minimum investment. Other fees are embedded in the exchange-traded funds (ETFs) that form the cornerstone of the SigFig investing strategy. This is standard for a robo-advisor, though.
SigFig uses a variety of funds from Fidelity, Charles Schwab and more. The company complements its algorithms with the services of financial consultants who can chat with you about rebalancing and improving your existing investment portfolio.
Full Review: SigFig
Best at a Major Financial Institution: Schwab Intelligent Portfolios
|Best For||Low-cost investors interested in ETFs|
Schwab Intelligent Portfolios is the robo-advisor arm of Charles Schwab. This robo-advisor doesn’t charge advisory fees, commissions or account service fees. You will have to pay fees for individual funds, but that is true for any robo-advisor.
As long as you have $5,000 to invest, you can become a Schwab client and take advantage of automatic rebalancing and tax-loss harvesting. So if you’re on the prowl for a combination of low portfolio management fees and individual funds, then you should absolutely consider Schwab.
Full Review: Schwab Intelligent Portfolios
How Robo-Advisors Work
Traditionally, having a financial advisor meant turning up to an office for a sit-down conversation about your money and investments. However, some investors balk at the fees charged by financial advisors. And some advisors have minimum investment requirements that exclude people with a lower net worth.
Now, though, the financial advice landscape is shifting. Online-only advisory companies called robo-advisors are offering lower fees for advice based on sophisticated algorithms. Although these offerings are automatic, some also have financially savvy human advisors on staff as well. The difference is that these companies use fewer working hours on each account, allowing them to pass the resultant savings on to their customers.
The core of any portfolio that a robo-advisor builds is the client’s risk tolerance. A robo typically determines your risk tolerance level through a series of questions. These delve into what your goals are for the future, how much money you want to have saved by retirement and more. Based on your answers, the firm will create a portfolio that includes investments that line up with your profile.
Robo-advisors are competing to offer lower fees than their peers, and all that competition can be good for the consumer. The trend toward offering robo-advising services is a response to the preferences of younger Americans who would prefer easy, online advisory services with mobile apps to match.
Keep in mind that robo-advisors rely on your answers to questions that give them a sense of your goals, investment preferences and risk tolerance. Make sure you answer these questions honestly, or you could end up with an investment strategy that’s more or less aggressive than what you really want. Additionally, look for the best deal you can get, while still meeting your personal needs.
- While there are certainly financial and practical benefits to a robo-advisor, they don’t fully replace a human financial advisor. This is especially true when it comes to the personalized financial planning services that many advisors offer. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- As you age and get closer to retirement, your tolerance for investment risk will likely drop. It’s important to do this so you can protect your money as your transition into retirement. To get an idea of what your portfolio’s composition should look like, stop by SmartAsset’s asset allocation calculator.
Photo credit: iStock/sompong_tom, Betterment, Wealthfront, Vanguard, SoFi, Ellevest, Acorns, SigFig, Schwab, iStock/miniseries