The Best Robo-Advisors for Automated Investments of 2019

Robo-Advisors Apps
Robo-Advisors Investment Apps

Robo-advisors help people build and manage an investment portfolio with little effort.

As a result:

They've made investing easy for people who may not have the time, knowledge, or inclination to manage a portfolio.

While robo-advisors all have the same goal, making investing easier and more automatic, the way that they accomplish that goal can differ.

Some are focused on doing everything for you, while others let you customize your experience and investments a little more.

We analyzed ten of the most popular robo-advisory services to settle on the three best robo-advisors of the year.

Compare the Best Robo-Advisors

Details Betterment Wealthfront Schwab Intelligent Portfolios
Annual fee 0.25% (0.40% for Premium) 0.25% None
Accounts available IRAs, SEP IRA, brokerage, and trusts IRAs, SEP IRA, 401(k) rollover, 529 college savings, brokerage, and trusts IRAs, SIMPLE IRA, SEP-IRA, brokerage, and trusts
Minimum investment $0 ($100,000 for Premium) $500 $5,000
Investment options ETFs ETFs Schwab ETFs
Auto rebalancing Yes Yes Yes
Tax-loss harvesting Yes Yes Yes
Access to live advisor Premium accounts only No Yes

Betterment

Betterment is one of the major robo-advisor companies that sprung up when robo-advisors were first gaining traction.

Betterment's goal is to offer a complete solution to your investment needs, including brokerage and IRA accounts.

Signing up is easy.

All you have to do is answer some simple questions about your finances and your goals and Betterment will determine the correct portfolio allocation for you.

Then, Betterment automatically invests your money in a range of low-fee Exchange Traded Funds (ETFs), giving you exposure to a wide swath of the stock and bond markets.

Betterment also offers benefits for hands-on investors, letting you design your own portfolio while still taking advantage of the robo-advisor software’s ability to optimize tax strategies and provide a clear picture of your investments.

Mobile apps are available on iOS and Android devices.

Wealthfront

Wealthfront is a robo-advisor designed to deliver a mobile-centric experience for beginner investors.

You can do your investing from anywhere just by using the Wealthfront app.

Wealthfront’s robo-advisor leverages Modern Portfolio Theory to invest your money in stocks, bonds, real estate, and Exchange Traded Funds to help you reach your financial goals.

To provide further assistance to people who are just beginning to invest, Wealthfront launched a product called Path.

Path is a mobile financial planning tool that can help you visualize all of your financial accounts, your spending habits, and how the decisions that you make impact your financial present and future.

You can explore what-if scenarios, or simply check Path to see if you’re on the right path.

Mobile apps are available on iOS and Android devices.

Schwab Intelligent Portfolios

Schwab Intelligent Portfolios is the robo-advisory arm of the major financial company.

The program comes with all the benefits of working with Schwab, including incredibly low fees. Most robo-advisors charge a fee for their services.

Schwab charges no advisory fees, account service fees, or commissions, making it great for people looking to keep costs low.

You also get full access to Schwab’s other tools. You can use Schwab’s research tools help you take a more hands-on approach to your investing.

If you want help visualizing your goals, Schwab’s Goal Tracker can help you view your portfolio, its performance, and how it might perform in the future.

Mobile apps are available on iOS and Android devices.

How We Picked

We chose these three companies from a list of 10 most popular robo-advisors on the market.

When comparing the different companies, here are the factors that we considered.

Robo-Advisors That We Analyzed

Robo-Advisor Best Feature
Betterment $0 minimum investment.
Wealthfront Can integrate with your banks accounts.
Schwab Intelligent Portfolios Low overall fee policy.
Wealthsimple Socially-responsible investing.
SigFig Ability to manage accounts at other brokerage firms.
FutureAdvisor Access to a human advisor if needed.
M1 Finance No account or trading fees.
Vanguard Personal Advisor Low-cost option at a popular fund company.
Fidelity Go Begin investing with just $10.

Annual fees

One of the top things that we looked at when comparing robo-advisors is their fee structures.

When it comes to investing, fees are incredibly important. Investing is a marathon based on long-term compounding of your money.

Fees also compound over time, so what seems like a small fee can take a huge bite out of your account’s balance over long periods of time.

To see the impact of investment fees, consider this example:

You invest $10,000 today, with plans to withdraw the money 25 years from now when you retire. Your investment earns 8% each year, and you have $68,484.75 after 25 years.

If your robo-advisor charged a 0.25% fee, you would instead have $64,629.67 after 25 years, which is nearly $4,000 less.

Most robo-advisors charge account management fees or annual fees of some kind.

How these fees are charged differs.

Some charge a flat amount for accounts of a certain size, and others charge a percentage of the invested assets. Others will change the percentage as your account’s balance grows.

Generally, you’ll pay less on a percentage basis as your balance grows but keeping note of how much you pay is important.

The robo-advisors that fared best in our reviews were the ones that charged the lowest average fees.

Account types offered

Investing can be complicated for a number of reasons.

Finding money in your budget is difficult and taking the time to decide what to invest just adds to the difficulty.

Further complicating matters is the fact that you can open many different types of investment accounts.

You might want a taxable brokerage account, an IRA, a SEP IRA, a Roth IRA, or even a 401(k).

Each type of account has its own rules, benefits, and restrictions.

That means that any company offering that type of account has to be equipped to manage them, so not all robo-advisors offer all types of accounts.

The majority of robo-advisors offer taxable brokerage accounts and basic retirement accounts such as traditional IRAs and Roth IRAs.

More unusual accounts, like self-employment retirement accounts, trusts, or employer 401(k) accounts are offered by far fewer robo-advisors.

When you use a robo-advisor, the software has to be able to view and access all of your investments to work optimally.

If you have investments with another company, the robo-advisor won’t be able to view and manage those funds, so it won’t perform to the best of its ability.

For that reason, we looked for robo-advisors that let you open a wide variety of account types, which makes it easy to keep your money in one place.

Fund selection

Most robo-advisors work by investing your money in a variety of Exchange Traded Funds (ETFs).

ETFs are like mutual funds in that they provide a way to diversify your investment while having the convenience of purchasing shares in one entity.

The ETFs that a robo-advisor invests in is a very important part of its service.

For one, not all ETFs that aim to track the same portion of the market perform the same.

Some ETFs may miss their benchmark, so you want a robo-advisor that invests in tested ETFs that have shown that they can track their benchmark indices accurately.

ETFs also charge management fees of their own. Robo-advisors that invest in low-fee ETFs have the advantage as they keep your money working for you.

Portfolio design and customization

The method that a robo-advisor uses to design its portfolio is another important part of the experience.

Some robo-advisors will design your portfolio for you based on your answer to questions it asks. These questions help the software determine your goals, needs, and risk tolerance.

Other robo-advisors simply give you a choice of portfolios and let you pick the one that you like.

These robo-advisors give you some flexibility when it comes to choosing your investments, but still handy the menial processes of purchasing the investments for you.

Finally, some robo-advisors let you design your portfolio down to the individual securities you hold.

Which is best for you depends on what you’re looking for. Some people want a set-it-and-forget-it solution while others want to be more hands-on.

Companies that can hold your hand but give you the freedom to customize when you see fit do the best in our reviews.

Rebalancing

Rebalancing is an essential part of any investment strategy.

It is the process of selling some of your better performing investments to purchase more shares of your worse performing investments to ensure that your asset allocation remains in the range that you want it to.

Robo-advisors handling rebalancing differently. You want to find the robo-advisor that handles it automatically without incurring significant trading fees or taxes.

Tax-loss harvesting

One feature that many robo-advisors offer is their ability to automatically tax-loss harvest.

Tax-loss harvesting is the process of selling investments that have dropped in value to take advantage of tax deductions for investment losses, and then reinvesting that money.

Robo-advisory companies regularly claim that their tax loss harvesting systems will earn you more money than you pay in management fees.

It is true that efficient tax loss harvesting can improve your portfolio’s performance, so look for robo-advisors that provide this service.

Access to experts

Even with a robo-advisor handling your investments, sometimes you want the chance to talk to a real person to get an expert opinion about your financial situation.

You may be planning to buy a house or putting together a retirement plan. Whatever it is, a robo-advisor can’t answer questions about your unique situation.

All it can do is invest your money for you.

Many robo-advisory companies offer a team of financial experts that can help you talk about your financial goals so that you can determine your priorities.

Having an expert who can help you learn more about investing and designing goals can help you take full advantage of a robo-advisor.

That gives companies that offer the chance to work with these experts a leg up.

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