Best Robo-Advisors | February 2020

DollarGeek Presents:

Best Robo-Advisors of 2020

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A robo-advisor is an online, automated portfolio management service. These companies rely heavily on computer algorithms, which are a set of rules to choose appropriate investments based on your risk tolerance and time horizon. Many people choose to use robo advisors because they can offer these types of services for a fraction of the cost of a human financial advisor.

Robo Advisors lower-cost management fee, combined with important features like automatic portfolio rebalancing and tax-loss harvesting, can translate into higher net returns for investors. Learn more about the leading technology platforms that incorporate robo-style advising in their portfolios below.

Showing 1-9 of 9 accounts

Compare Account

DollarGeek Rating:

Open Account

on SigFig's website

Minimum

$2,000

to open account

Fee

0.25%

management fee

Promotion

First $10K

managed for free

Minimum

$2,000

Fee

0.25%

management fee

View Details

Geeky Insight

SigFig will let you get started for a minimum deposit of $2,000.
The first $10,000 you have invested with SigFig will have no management fees, but once you pass $10,000 you will pay 0.25% per year on your total amount.
Get free access to financial advisors.

Pros

Free access to financial advisors
Automatic rebalancing
No annual, transfer or closing fees
Free tax-loss harvesting on all accounts

Cons

Higher minimums vs competitors, must have $2K to start
Limited brokers where you can house your investments
No savings account

View Details

Geeky Insight

SigFig will let you get started for a minimum deposit of $2,000.
The first $10,000 you have invested with SigFig will have no management fees, but once you pass $10,000 you will pay 0.25% per year on your total amount.
Get free access to financial advisors.

Pros

Free access to financial advisors
Automatic rebalancing
No annual, transfer or closing fees
Free tax-loss harvesting on all accounts

Cons

Higher minimums vs competitors, must have $2K to start
Limited brokers where you can house your investments
No savings account

Compare Account

DollarGeek Rating:

Open Account

on Wealthsimple's website

Minimum

$0

to open account

Fee

0.4% - 0.5%

management

Promotion

$1,000

cash bonus with a qualifying deposit

Minimum

$0

Fee

0.4% - 0.5%

management

View Details

Geeky Insight

Wealthsimple offers investors of all levels a chance to start investing with no minimum.
Depending on your account size your fee will vary.
Open up a taxable individual or joint account, IRAs, trust and custodial accounts as well
Automatic rebalancing
Wealthsimple Smart Savings has a return above 1% net of management fee

Pros

No account minimum
Access to human financial advisors
Socially responsible investment options

Cons

Higher account management fees
Limited tools

View Details

Geeky Insight

Wealthsimple offers investors of all levels a chance to start investing with no minimum.
Depending on your account size your fee will vary.
Open up a taxable individual or joint account, IRAs, trust and custodial accounts as well
Automatic rebalancing
Wealthsimple Smart Savings has a return above 1% net of management fee

Pros

No account minimum
Access to human financial advisors
Socially responsible investment options

Cons

Higher account management fees
Limited tools

Compare Account

DollarGeek Rating:

Open Account

on Betterment's website

Minimum

$0

to open account

Fee

0.25%

management fee

Promotion

Waived

management fee for 1 year with qualifying deposit

Minimum

$0

Fee

0.25%

management fee

View Details

Geeky Insight

Betterment will let you get started with no account minimums.
There are two services models: Betterment Digital which has no account minimum and charges 0.25% of assets under management annually. Betterment Premium provides unlimited phone access to certified financial planners for a 0.40% fee and $100,000 minimum.
ETF expense ratios as low was 0.07%.
Standard portfolio uses ETFs from about 12 different asset classes for diversification.
Daily tax-loss harvesting on all taxable accounts.
Free automatic rebalancing.

Pros

No account minimum
Fractional shares limit your uninvested cash
Free automatic rebalancing

Cons

No direct indexing
Higher fee for speaking with a human financial planner

View Details

Geeky Insight

Betterment will let you get started with no account minimums.
There are two services models: Betterment Digital which has no account minimum and charges 0.25% of assets under management annually. Betterment Premium provides unlimited phone access to certified financial planners for a 0.40% fee and $100,000 minimum.
ETF expense ratios as low was 0.07%.
Standard portfolio uses ETFs from about 12 different asset classes for diversification.
Daily tax-loss harvesting on all taxable accounts.
Free automatic rebalancing.

Pros

No account minimum
Fractional shares limit your uninvested cash
Free automatic rebalancing

Cons

No direct indexing
Higher fee for speaking with a human financial planner

Compare Account

DollarGeek Rating:

Open Account

on M1 Finance's website

Minimum

$100

to open account

Fee

0.00%

management fee

Promotion

None

no promotions at this time

Minimum

$100

Fee

0.00%

management fee

View Details

Compare Account

DollarGeek Rating:

Open Account

on Wealthfront's website

Minimum

$500

to open account

Fee

0.25%

management fee

Promotion

5,000

managed for free when signing up

Minimum

$500

Fee

0.25%

management fee

View Details

Geeky Insight

Wealthfront provides investors a simple way to start investing.
For a minimum deposit of $500 and a low management fee of 0.25% Wealthfront is hard to beat.
Invest in individual and joint non-retirement accounts, Roth IRAs, Traditional IRAs, SEP IRAs, trusts, 529 college savings plans and cash accounts.
Daily tax-loss harvesting on all taxable accounts.

Pros

Low ETF expense ratios
Daily tax-loss harvesting
Automatic rebalancing

Cons

No large balance discounts
Cannot invest in fractional shares

View Details

Geeky Insight

Wealthfront provides investors a simple way to start investing.
For a minimum deposit of $500 and a low management fee of 0.25% Wealthfront is hard to beat.
Invest in individual and joint non-retirement accounts, Roth IRAs, Traditional IRAs, SEP IRAs, trusts, 529 college savings plans and cash accounts.
Daily tax-loss harvesting on all taxable accounts.

Pros

Low ETF expense ratios
Daily tax-loss harvesting
Automatic rebalancing

Cons

No large balance discounts
Cannot invest in fractional shares

Compare Account

DollarGeek Rating:

Open Account

on Ellevest's website

Minimum

$0

to open account

Fee

0.25%

management fee

Promotion

$750

max cash bonus with qualifying deposit

Minimum

$0

Fee

0.25%

management fee

View Details

Compare Account

DollarGeek Rating:

Open Account

on SoFi's website

Minimum

$500

to open account

Fee

0.25%

management fee

Promotion

Discounts

on loans if your'e a member

Minimum

$500

Fee

0.25%

management fee

View Details

Compare Account

DollarGeek Rating:

Open Account

on Acorns' website

Minimum

$0

to open account

Fee

$1 - $2

per month

Promotion

Free

for up to 4 years while in college

Minimum

$0

Fee

$1 - $2

per month

View Details

Compare Account

DollarGeek Rating:

Open Account

on Blooom's website

Minimum

$0

to open account

Fee

$10

per month

Promotion

1 month

of free management

Minimum

$0

Fee

$10

per month

View Details

Review: Best Robo-Advisors of 2020

For the hands-off investor, choosing a robo-advisor can be a wise decision. The best robo-advisor will give you a robust platform, low cost management fees, and a large selection of investment strategies to pick from.

Robo-Advisor Provider

Account Minimum

Management Fee

Favorite Perk

Visit

SigFig

$2,000

0.25%

Compatibility

Wealthsimple

$0

0.4% - 0.5%

Free tax loss harvesting

Betterment

$0

0.25%

Cash management

M1 Finance

$100

0%

Borrowing power

Wealthfront

$500

0.25%

Interest on cash

Ellevest

$0

0.25%

Socially responsible investing

SoFi

$500

0.25%

No management fee

Acorns

$0

$1 - $2/month

Automate savings

Blooom

$0

$10/month

401K efficiency

Learn About Robo-Advisors

Gain some clarity with our geeky insight.

What is a robo advisor?

A robo-advisor is an online, automated portfolio management service. These companies rely heavily on computer algorithms, which are a set of rules to choose appropriate investments based on your risk tolerance and time horizon. Many people choose to use robo advisors because they can offer these types of services for a fraction of the cost of a human financial advisor.

Geek Insight: Let's make it simple and talk casual - a robo advisor simply invests your money in the stock market and manages it for you. What differentiates a robo-advisor from a human financial advisor is that robo-advisors use algorithms and technology to automate investing. It is often less expensive than investing with a human advisor. Some robo-advisor companies will also provide investors with access to speak to a human advisor. Investors can now get started with some robo advisors offering no minimum balance to open an account.

How do I sign up with a robo advisor?

1. Find the best robo-advisor that fits your investing needs. Be sure to review the management fees and investment selections.

2. Decide which type of account you'd like to open and figure out how much you'd like to start investing.

3. You will then selected your investment goals based on your risk tolerance and target return. For example, if want to be on the conservative side you would have a higher allocation toward bonds. On the other hand if you wanted to take on more risk you might have a higher allocation in stocks.

4. The best robo-advisors will use low-cost exchange-traded funds (ETFs) or mutual funds for your investment.

5. A computer algorithm selects the optimal asset allocation based on your personal preferences and investment goals.

6. The robo-advisor will automatically rebalance your portfolio over time as it grows.

7. The robo-advisor charges an annual management fee which is typically as expressed a percentage of your total portfolio. Typically, this fee is a fraction of the cost of most financial advisors.

How much does it cost to use a robo-advisor?

When you choose to invest with a robo-advisor, there are two kinds of costs:

1. Management Fees

Robo-advisors will typically charge you a management fee. This is what you’ll pay annually to have an account at a robo-advisor. The fee is often assessed as a percentage of your assets with the advisor. It is typically deducted from your account balance.

Geek Insight: Any fee, including a management fee, reduces your return. If you’re earning a 6% annual return on your portfolio, and you’re paying a 0.25% annual management fee, your return is effectively 5.75%. Even small fees add up over time.

1. Expense Ratios

An expense ratio is an annual fee that most mutual funds, index funds and exchange-traded funds charge to cover the costs of running the fund.

Geek Insight: Like we mentioned: All fees will eat into your investment return. But, it’s important to note that you can’t avoid expense ratios as a fund investor. Whether you invest through a robo-advisor or on your own -- you’ll be paying an expense ratio. To keep costs at a minimum, you can try and make sure you’re paying the average expense ratio when choosing a fund. Knowing average mutual fund expense ratios can help you gauge whether you’re paying too much.

What type of accounts can I have with a robo-advisor?

You'll typically have two options when it comes to picking an investment account:

1. Retirement Accounts

You can have retirement accounts such as IRAs and 401(k)s. These offer tax advantages for contributions and often have rules about how much you can contribute and when. It also has rules for when you can take distributions from the account.

2. Non Retirement Accounts

Non retirement accounts are also referred to as taxable accounts. There are no specific tax advantages for contributions to these, but they’re also not subject to contribution limits or distribution rules. Think of a non retirement account as an individual brokerage account (an investment account separate from your retirement where you can purchase stocks, bonds, etc).

What can I invest in with a robo-advisor?

Most Robo-advisors use low-cost ETFs or Mutual Funds when picking their investments.

1. ETF

Unlike a stock, an ETF holds many individual investments and tracks an index or benchmark (think of the S&P 500, NASDAQ, etc.). An ETF trades on an exchange, just like an individual stock. ETFs can typically be purchased for a lower investment than a typical mutual fund.

2. Mutual Fund

A mutual fund is an open-ended investment fund that gathers capital from a number of investors to create a pool of money that is then re-invested into stocks, bonds and other assets. Mutual funds are typically overseen by a portfolio manager. The portfolio manager will buy and sell the securities in the fund based on the funds investment goals.

Geek Insight: Make sure the robo-advisor you choose matches your investment objectives and stye of investing. Robo-advisors differ on which type of investments they utilize (some can invest in ETFs while others might only purchase individual stocks).

What other perks do robo-advisors offer?

A robo-advisor can help you invest more efficiently in the following ways:

1. Tax-Loss Harvesting

Tax-loss harvesting involves selling losing investments and using the loss to reduce or eliminate the taxes you’ll owe on capital gains.

Tax-loss harvesting can be harder with the fund portfolios that most robo-advisors use — because index funds and ETFs hold a number of different investments, you can’t dial down to specific losers as easily. An index might be up overall but still hold investments that are down. Some robo-advisors buy individual stocks to replicate an index, allowing them to sell specific losers. Wealthfront calls this service direct indexing.

Geek Insight: Tax-loss harvesting only applies to taxable accounts, not retirement accounts like your IRA, Roth IRA, etc. In retirement accounts, taxes are deferred and capital gains taxes don’t come into play, but in taxable accounts, tax-loss harvesting might save you a significant amount of money.

2. Rebalancing

Market fluctuations can cause the mix of investments you hold in your portfolio to get out of sync with your goals. Rebalancing brings your asset allocation back to its original mix. Many robo-advisors check for rebalancing opportunities daily and make changes as needed.

Geek Insight: When a particular asset class that you're invested in is doing well — for example, let’s say you have exposure to international stocks, and the international market are roaring — you could end up with more of your money in that class than you intended, due to outsize growth. If your original allocation was 60% stocks and 40% bonds, a portfolio that has shifted toward 80% stocks is probably too risky. Automatic rebalancing can keep you on track.