10 Best Robo-Advisors of May 2024

Investing has become much easier over the years thanks to the popularity of robo-advisors. Rather than working with a human financial advisor, a robo-investing uses algorithms to make a wealth management plan for each investor.

There are many advantages to using these services. Robo-advisors are typically less expensive than hiring a financial advisor. They allow you to start investing in the stock market even if you don’t have much money to start with.

So if you’re looking for an easy, inexpensive way to get started with investing, a robo-advisor could be a great option for you.

10 Best Robo-Advisors: Uncovering the Standout Performers

Here is an overview of our top picks for the best robo-advisors, as well as a brief explanation about what we like about each one:

1. Personal Capital

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Key Features:

  • Hybrid robo-advisor with access to human financial advisors
  • Advanced investment strategies including tax optimization
  • Comprehensive financial planning tools
  • Retirement and savings goal tracking
  • High minimum balance requirement

Who it’s best for:

Personal Capital is ideal for more advanced investors with higher account balances, as well as those who seek a combination of automated investing with human financial advisor support.

Its comprehensive planning and retirement tracking features make it a powerful platform for long-term wealth management.

2. Wealthfront

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Key Features:

  • Diversified portfolios with 11 different asset classes
  • Tax-loss harvesting for all investment accounts
  • High-interest cash account
  • Automatic rebalancing and portfolio optimization
  • College savings plan (529) support

Who it’s best for:

Wealthfront is a strong option for investors seeking a fully automated robo-advisor with a focus on tax efficiency and diversified investments.

Its high-interest cash account and college savings plan support make it an attractive choice for those looking to cover various financial goals.

3. Betterment

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Key Features:

  • Goal-based investing tailored to personal milestones
  • Automatic rebalancing and tax-efficient strategies
  • Socially responsible investing options
  • Access to human financial advisors (with premium plan)
  • No minimum account balance

Who it’s best for:

Betterment is a great choice for beginners and experienced investors alike, who want a goal-oriented approach to investing.

With its socially responsible investing options and access to a licensed advisor (with the premium plan), it provides a well-rounded platform for a variety of investors.

4. Ally Invest

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Key Features:

  • Low account minimum and no trading commissions
  • User-friendly online platform
  • Various research-based tools
  • No advisory fees for managed portfolios
  • Integration with Ally Bank for seamless banking and investing

Who it’s best for:

Ally Invest is an excellent option for new investors looking for a low-cost, user-friendly platform with no trading commissions.

Its integration with Ally Bank makes it a convenient choice for those who want to manage their banking and investing under one roof.

5. Vanguard

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Key Features:

  • Hybrid robo-advisor with access to Vanguard personal advisor services
  • Low-cost, diversified investment options
  • Retirement and college savings plans
  • Strong reputation and established history
  • Higher minimum investment compared to other robo-advisors

Who it’s best for:

Vanguard Digital Advisor is ideal for investors seeking a trusted, established provider with a focus on low-cost, diversified investments.

Its hybrid model offers the benefits of automated investing along with access to a human advisor, making it a strong option for those with larger account balances.

6. M1

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Key Features:

  • Fractional share investing
  • Customizable portfolios or pre-built expert portfolios
  • No management fees or commissions
  • M1 Borrow feature allows borrowing against your portfolio
  • M1 Spend feature integrates banking and investing

Who it’s best for:

M1 Finance is well-suited for investors who want a high level of customization with their portfolios, allowing them to create their own investment “pies” or choose from pre-built expert portfolios.

As a cost-effective solution, it appeals to budget-minded investors who appreciate the opportunity to leverage their portfolio through borrowing or take advantage of integrated banking services.

7. Ellevest

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Key Features:

  • Focus on socially responsible investing
  • Gender-specific investment advice
  • Goal-based investing approach
  • Access to career coaching and financial planners
  • Low fees

Who it’s best for:

Ellevest is an excellent choice for investors who prioritize socially responsible investing and seek a platform tailored to the unique financial challenges faced by women.

Its goal-driven approach, coupled with access to career coaching and financial planners, makes it a comprehensive platform for value-oriented investors.

8. Facet

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Key Features:

  • Comprehensive financial planning services
  • Access to dedicated Certified Financial Planner (CFP)
  • Flat-fee pricing model
  • No account minimums
  • Not fully automated

Who it’s best for:

Facet Wealth is ideal for individuals who want personalized investment management services but can’t afford the fees associated with traditional financial advisors.

Its flat-fee pricing model and access to a dedicated CFP provide a high level of personalization and support, making it a valuable option for those seeking a more hands-on approach to wealth management.

9. SoFi Automated Investing

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Key Features:

  • No management fees
  • Low minimum balance requirement
  • Automatic rebalancing
  • Access to certified financial planners
  • Robust customer service

Who it’s best for:

SoFi Automated Investing is an excellent option for investors seeking a low-cost, accessible platform with strong customer support.

With no account fees and a low balance requirement, it’s a great choice for those just starting their investment journey or those who want access to financial planning resources without paying high fees.

10. Blooom

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Key Features:

  • Focus on retirement savings (401(k)s and IRAs)
  • No minimum account balance requirement
  • Flat yearly management fee
  • 401(k) analysis and optimization
  • Auto rebalancing and investment recommendations

Who it’s best for:

Blooom is a standout option for investors looking to optimize their retirement savings, specifically in 401(k)s and IRAs.

With its flat yearly management fee and no minimum account balance requirement, it’s an accessible platform for those who want to improve their retirement investment approach and maximize their long-term returns.

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A Side-By-Side Comparison of the Best Robo-Advisors

Listed below is a side-by-side overview of what each robo-advisor has to offer.

BROKERFEESPROMOTIONACCOUNT MINIMUM
Ally Invest0.0%No promotions offered$100
Personal Capital0.49%-0.89%No promotions offered$100,000
Wealthfront0.25%$5,000 in assets managed for free$500
Betterment0.25%A year of free management$0
FutureAdvisor0.50%Three months of free management$10,000
Vanguard0.30%No promotions offered$50,000
Bloom$10 per month$10 off first year$0
M1 Finance0.0%No promotions offered$0
Ellevest0.25%Possible $750 cash bonus$0
Facet Wealth$480 per year or moreNo promotions offered$0
SoFi Automated Investing0.0%Free career counseling and loan discounts$100
Wealthsimple0.40%-0.50%$10,000 in assets managed for free$0

How do robo-advisors work?

A robo-advisor is a specialized software that provides automated investment portfolios based on your goals and risk tolerance. Your risk tolerance is based on your answers to the questions provided.

Robo-advisors use algorithms to choose the right asset allocation based on your risk tolerance, investment goals, and time horizon, providing a customized and efficient approach to portfolio management. Some services give you access to human advisors as well.

Robo-advisors are a viable option for anyone who wants to start investing but can’t afford a portfolio management firm. Or if you just want a hands-off approach to investing, robo-investing is a great choice for diversifying your investments. These services typically have low management fees and require low account minimum balances.

So if you don’t have tens of thousands of dollars at your disposal but still want to start building an investment portfolio, using a robo-advisor has a much lower barrier to entry. There are many online services available on the market, but the ones listed above stand out from the pack.

How to Choose the Right Robo-Advisor for Your Needs

Selecting the right robo-advisor requires considering your investment goals, risk tolerance, and personal preferences. Here are some factors to help guide your decision-making process:

1. Determine your investment goals

Before choosing a robo-advisor, it’s essential to outline your financial goals. Are you saving for retirement, building an emergency fund, or working towards another specific milestone? Understanding your objectives will help you find a robo-advisor that aligns with your needs and offers relevant services.

2. Assess your risk tolerance

Risk tolerance refers to your comfort level with the potential fluctuations in the value of your investments. Some investors prefer a conservative approach, while others may be willing to take on more risk for potentially higher returns. Choose a robo-advisor that offers investment options aligned with your risk tolerance and provides suitable recommendations based on your preferences.

3. Compare fees and account minimums

Fees and account minimums are key factors to consider when selecting a robo-advisor. Some platforms charge a percentage of your assets under management, while others may have a flat fee.

Additionally, account minimums can vary widely, ranging from no minimum to tens of thousands of dollars. Choose a robo-advisor with a fee structure and minimum investment requirement that suits your financial situation.

4. Review available investment options

Different robo-advisors offer varying investment options, including individual stocks, bonds, ETFs, and mutual funds. Some platforms may also provide access to socially responsible investments or other specialized options. Ensure the robo-advisor you choose offers options that align with your goals and values.

5. Consider additional features and services

Many robo-advisors offer added features and services, such as automatic rebalancing, tax-loss harvesting, and access to human advisors. Some platforms may also provide banking services or wealth management tools. Assess which additional features are important to you and select a robo-advisor that meets your requirements.

6. Evaluate the user experience

The user experience, including the platform’s ease of use, customer support, and educational resources, is an essential aspect of choosing a robo-advisor. Look for platforms with intuitive interfaces, responsive customer service, and helpful resources to guide you through the investment process.

7. Read reviews and testimonials

Researching reviews and testimonials from current users can provide valuable insight into a robo-advisor’s performance, customer satisfaction, and any potential issues you may encounter. Look for reviews from reputable sources and users with similar objectives and investment preferences to ensure the robo-advisor is the right fit for your needs.

What should you look for in a robo-advisor?

When researching robo-advisors, you need to know what features and qualities are essential for a successful investment experience. Here are five things you should keep in mind when you’re considering different services.

  • Management fees: Most robo-advisors will charge an annual fee. This is usually calculated as a percentage of your total assets. You should make sure you understand the management fee structure because this will cut into your earnings.
  • Types of accounts offered: You should make sure you have a general understanding of the different accounts offered. For instance, retirement accounts like Roth IRAs and 401(k)s will have limits on how much you can contribute each year. Make sure you understand the difference between a taxable investment account and tax-deferred or tax-free accounts offered and how they benefit your financial goals.
  • Investments: It’s a good idea to familiarize yourself with the types of investments offered. For instance, many robo-advisors offer low-cost index funds, mutual funds, and ETFs. You should make sure that you like the accounts being offered and that they are fairly low cost.
  • Rebalancing: Since your investment portfolio will fluctuate, over time, it’s easy for it to become out-of-sync with your overall investing goals. You should look for a company that offers automatic portfolio rebalancing.
  • Access to financial advisors: And finally, one of the benefits of using a robo-advisor is that it’s a hands-off approach to investing. But some robo-advisors offer access to financial planners, and this offers many benefits. Having a financial planner involved brings a human element to your portfolio and makes it more personalized.

An Explanation of the Different Investment Options Available through Robo-Advisors

Robo-advisors provide investors with a variety of investment options to create a well-diversified portfolio tailored to their risk tolerance and financial objectives. Understanding the different options available can help you make informed decisions about your portfolio. Here are some of the most common options offered by robo-advisors:

1. Exchange-Traded Funds (ETFs)

ETFs are a popular investment option among robo-advisors due to their low costs and broad diversification. An ETF is a collection of securities, such as stocks, bonds, or commodities, that tracks a specific index or sector. ETFs trade on stock exchanges, just like individual stocks, and offer investors exposure to a wide range of asset classes, industries, and regions.

2. Index Funds

Index funds are mutual funds that track the performance of a specific market index, such as the S&P 500 or Nasdaq Composite. Like ETFs, they provide broad diversification and have low management fees. By investing in an index fund, you’re essentially buying a small piece of every company within that index, reducing the overall risk in your portfolio.

3. Mutual Funds

Mutual funds pool the investments of multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities. They are less common in robo-advisor portfolios due to their higher fees compared to ETFs and index funds, some robo-advisors still include them as an investment option, particularly for specific sectors or strategies.

4. Bonds

Bonds are debt securities issued by governments, corporations, or other entities to raise capital. When you invest in a bond, you’re essentially lending money to the issuer in exchange for periodic interest payments and the return of the principal amount at the bond’s maturity. Bonds are typically considered less risky than stocks and can provide a steady income stream, making them a popular choice for conservative investors or those nearing retirement.

5. Real Estate Investment Trusts (REITs)

REITs are companies that own, operate, or finance income-producing real estate properties. They allow investors to gain exposure to real estate investments without the need to buy or manage properties directly. REITs can provide diversification and income potential to a portfolio, as they typically pay regular dividends from the rental income generated by their properties.

6. Socially Responsible Investing (SRI) and Environmental, Social, and Governance (ESG) Funds

SRI and ESG funds focus on investments in companies that meet specific ethical, environmental, social, or governance criteria. These funds allow investors to align their investment portfolios with their values and support businesses that have a positive impact on society and the environment. Some robo-advisors offer SRI and ESG options to cater to the growing demand for responsible investing.

7. Target-Date Funds

Target-date funds are designed to simplify long-term investing, particularly for retirement planning. These funds automatically adjust their asset allocation over time, gradually shifting from higher-risk investments like stocks to more conservative investments like bonds as the target retirement date approaches. This helps investors maintain an age-appropriate risk level in their portfolios without needing to make manual adjustments.

Tips for Monitoring and Adjusting Your Investment Strategy with a Robo-Advisor

While robo-advisors are designed to automate much of the investment process, it’s essential to periodically review your investment plan and make adjustments as needed. Here are some tips for monitoring and adjusting your strategy when using a robo-advisor:

1. Regularly review your risk tolerance and investment goals

Your risk tolerance and investment goals may change over time due to personal circumstances or market conditions. Ensure you update your robo-advisor profile to reflect any changes, as this will help the platform adjust your portfolio to align with your current objectives and risk appetite.

2. Monitor your portfolio performance

Keep an eye on your portfolio’s performance and compare it to relevant benchmarks or other investment options. This will give you an idea of whether your robo-advisor is effectively managing your investments and meeting your expectations. If your portfolio consistently underperforms, it may be time to consider other investment strategies or try a different robo-advisor.

3. Rebalance your portfolio as needed

While many robo-advisors automatically rebalance your portfolio, it’s still a good idea to review your investments periodically. If you notice significant deviations from your target allocation or if your investment goals change, you may need to adjust your portfolio accordingly.

4. Stay informed about market trends and developments

Even though robo-advisors handle most of the investment decisions for you, it’s essential to stay informed about market trends and developments. This will help you better understand your portfolio’s performance and make more informed decisions about any adjustments you may need to make.

5. Evaluate the robo-advisor’s features and offerings

Periodically review the features and offerings of your robo-advisor to ensure they still align with your needs and preferences. Some robo-advisors may introduce new investment options, tools, or services that could benefit your investment strategy. If you find a different robo-advisor that better suits your needs, don’t hesitate to switch.

6. Consider seeking professional advice

If you have concerns about your investment approach or need help understanding complex financial situations, consider consulting a certified financial planner or other financial professional. While a robo-advisor can be an excellent option for many investors, there may be times when personalized advice from a human advisor is necessary.

Bottom Line

Robo-advisors are an excellent solution for investors seeking a low-cost, user-friendly approach to growing their wealth. They provide the advantages of professional portfolio management and access to diverse investment options without the hefty fees typically associated with traditional financial advisors.

As you embark on your investment journey, remember to consider your long-term goals, risk tolerance, and personal values when selecting a robo-advisor. Make sure to evaluate management fees, account types, and available investment options to ensure your chosen platform aligns with your investment strategy.

Keep an eye on your portfolio and leverage the tools and features offered by your robo-advisor to maximize returns, optimize asset allocation, and stay on track to achieve your financial goals.

By understanding the full potential of robo-advisors and making informed decisions about your investments, you can confidently take charge of your financial future and reap the rewards of a well-managed, diversified portfolio.

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