Robo-Advisors
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What is a robo-advisor?
"Robo-advisors are digital platforms that provide automated, algorithm-driven financial planning services with little to no human supervision. A typical robo-advisor asks questions about your financial situation and future goals through an online survey; it then uses the data to offer advice and automatically invest for you.
The best robo-advisors offer easy account setup, robust goal planning, account services, and portfolio management. Additionally, they offer security features, attentive customer service, comprehensive education, and low fees." - Investopedia
Here is a selection of robo-advisors that we either use ourselves or would consider using. Note that because robo-advisors occasionally change their fees, we are not listing fee amounts to avoid constant updating.
The freemium M1 Finance platform utilizes technology more than the other robo-advisors. Investors can choose from different expert portfolio "pies" or create their own portfolio. M1 Finance is unique in that you can automate investment buys/sells based on your portfolio's asset allocation and automatically sweep money in/out of a linked bank account to service those automated buy/sell transactions. Unlike most robo-advisors, M1 does not offer investment advice. The platform is likely better suited for more experienced investors.
Vanguard is owned by its clients, unlike the other financial institutions referenced on this page, so in theory Vanguard should have the lowest explicit (e.g. stated fees) and lowest implicit (e.g. low money market rates, etc.) total costs in comparison.
Vanguard's Digital Advisor ("DA") is a simple, pure robo-advisor and is one the lowest cost robo-advisors available.
Vanguard's Personal Advisor Services ("PAS") is a hybrid robo-advisor that combines human and technology management. Given the human touch, PAS is more expensive than their Digital Advisor. This option might be better suited for people with complex financial lives.
Fidelity Go is similar to Vanguard Digital Advisor, though has historically charged a rate closer to Vanguard PAS.
Fidelity also has an hybrid financial advisor similar to Vanguard PAS which has historically charged more in fees than Vanguard PAS.
Betterment was one of the first robo-advisors to come into existence (2008). Their platform has a clean interface and historically has had mid-range robo-advisor fees.
Like Betterment, Wealthfront has also been around for a number of years now. Unlike Betterment, Wealthfront's fund recommendation algorithm has historically overweighted emerging markets for younger investors (for better or worse). Wealthfront also released a hedge fund-like investment option available called the Risk Parity Fund.
“Automation is cost cutting by tightening the corners and not cutting them.”
– Haresh Sippy
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