Have you heard of robo advisors? Basically, they're a low cost alternative to a traditional advisor. The idea is that with the amount of actively managed portfolios failing to outperform the market, why not pay less by automating your investing choices.
We put together a chart to help you compare the various robo advisors on the market. As you can see, they're not free. You're still going to pay a fee--somewhere around the cost of a passively managed fund, but are they worth it?
For investors with simple financial situations, they might be. But keep this in mind: You have to pay the management fees listed below PLUS any fees attached to the funds they choose so you're still paying an advisor. You could probably do just as well investing your money on your own by committing funds to a low cost S&P 500 index fund. But if you're looking for a bit more oversight, these platforms might be the perfect choice for you.
If you are a higher net worth individual, these platforms probably aren't best for you. The more money you have, the more complicated your tax situation and if you're older, retirement and estate implications probably require the help of professionals.
With all of that in mind, here's the break down of the robo advisors as of the beginning of 2016.
|Advisor||Features||Research Fees||Business Model|
|Vanguard Personal Advisor Services||Rebalance your portfolio as necessary and partner with you to revise your plan when important changes in your life occur. Build your portfolio with low cost funds. Serve as your investing coach. Minimize your taxes.||.30% annually, a $50,000 minimum is required. The advisory services offered herein are provided by VAI, a federally registered investment advisor.||At the center of our new advice service is a partnership with a Vanguard advisor. A Vanguard advisor will work closely with you to develop a customized, goals-based financial plan according to your unique situation—and then manage your portfolio to help you reach your goals. Whether you're saving for retirement, a college education, a home, or you're about to retire or already retired, an advisor can help. Our research shows that an advisor can help the average investor earn more over time in net portfolio returns.*|
|Betterment||Goal-oriented investing framework. Safety Net Goal. Tax Loss Strategy. Personalized strategy for each of your life goals. We customize our advice and build a personalized investment plan and portfolio for each one. Creating goals is the smarter way to invest. We’re constantly monitoring your account to ensure that you’re achieving your goals — the faster, smarter way. Our dedicated support specialists are available 7 days a week, 365 days a year.||.15 - .35% annually||Betterment’s investing strategy involves low-cost investing via a globally-diversified passive portfolio of approximately 12 asset classes which are tailored to each client’s risk appetite and time horizon.|
|Wealthfront||Estimates each asset class’s standard deviation (volatility). Wealthfront enforces minimum and maximum allocation constraints for each asset group. Wealthfront allows you to open and maintain as many accounts as you want. The only stipulation is that each account must have a minimum of $500. Wealthfront also offers a free tax loss harvesting service which works by taking advantage of investments that have declined in value||.25% annually for accounts over $10,000||The firm’s investing approach starts with a portfolio of diversified and uncorrelated asset classes that are compiled based on your risk appetite and investing horizon. The selected asset classes involve low-cost and passive ETFs. Wealthfront’s robo engine continuously monitors your investments and will periodically rebalance your portfolio to maximize your rate of return and long-term investment success.|
|Personal Capital||Educated financial advisors available to discuss your financial planning objectives, goals, risk appetite, and a wide range of financial advisory topics. Cash Flow Analyzer which provides you with a detailed breakdown of your weekly, monthly, and yearly income and spending habits.||Begins at %.89||Personal Capital’s free financial investing and financial planning tools allow you to easily see and manage your entire financial life in one secure place. Personal Capital’s investing methodology is built upon sector and style weighing, risk minimization, and tax optimization. At the onset of your relationship, the Personal Capital team will work with you to create a globally diversified investment portfolio which is customized to your specific needs.|
|Asset Builder||Dimensional Mutual Funds (DMF). Rebalance Portfolio. “buy and hold” strategy. large Knowledge Center on our website.||%.20-%.50 annually. $50,000 minimum. Custodial cost for transactions. There are no set-up fees. Equity trades that create the portfolio are based on a per trade cost of $20.00 to $49.95 maximum, depending on the amount traded. Therefore, most of our portfolios require us to buy 12 (some require 14) mutual funds with the cost between $240 to $600 at account opening.||As DFA Fund Advisors, we build strong, low-cost portfolios based on disciplined, reality-tested principles, not Wall Street gimmicks. we combine low-cost index fund investing with meticulous diversification and allocation for maximum returns.|
|Future Advisor, Now Black Rock||Financial advisors are available via phone, chat or email to help out if you have questions. Design customized portfolios plans that optimize your investments and minimize your taxes. software analyzes your current portfolio wherever your assets are held. Using Nobel Prize-winning ideas from Modern Portfolio Theory, we give you a precise plan to help you invest smarter and minimize your taxes. Free portfolio analysis and recommendations. directly manage your assets in a Fidelity or TD Ameritrade account in your name, or transfer them tax efficiently if they are not already there. Our financial advisors offer their professional expertise and insight to guide your financial decisions. We love talking with clients and we’re available via phone, chat, or email.||Free to 0.50% annually ($10,000 minimum)||They create a customized college financial plan that is based on your household’s income, debt, assets, and what you might do with the funds if your child doesn’t use it all for college. They’ll help you open the needed accounts and will also manage these accounts on your behalf. All of this will be done free of charge.|
|Rebalance IRA||Modern portfolio theory (MPT). MPT counsels you to buy the index itself. Portfolio recommendations. passive “index” fund. uses the largest ETFs, averaging $6 billion in net assets. index construction. When it comes to rebalancing, our software is designed around a proprietary algorithm that guides portfolios back to target allocations as specific conditions are met.||0.50% annually (Minimum fee of $500 per year; minimum $75,000 opening account balance) The typical weighted portfolio of ETFs we use features an average fee of less than 0.2%.||We review your current assets and allocations, and identify areas for improvement. And then recommend a portfolio and a long-term plan. Select the platform best suited for you. Transform your existing assets into your new Rebalance IRA portfolio. We Monitor Your Investments Every Step of the Way. We Rebalance Your Portfolio to Keep it Optimized.|
|SigFig||Concierge service guides user through product. Managed Accounts. Portfolio Analysis. We'll sync your 401(k), IRA, brokerage and advisor accounts from over 80 brokerages, then automatically pull all your investments into a single dashboard. See how well you've spread your investments across domestic, foreign, and emerging markets. Cash Drag - See how much excess cash you could be putting to work in the market.Diversified Income - As the market moves, we optimize your portfolio to earn income and protect against downside risk.||0.25% annual fee for accounts over $10,000. “The first $10,000 managed by SigFig is free.”||To maximize your returns and minimize fees, SigFig helps you create an investment plan, optimize your portfolio, and stay on track through changing market conditions. SigFig helps you build a well-diversified, tax-efficient portfolio. Powered by an algorithm that's tailored to your risk appetite and backed by an investment research team, our product never stops working for you.|
|Schwab Intelligent Portfolios||Builds a portfolio with up to 20 asset classes. Schwab investment professionals available 24/7. You'll stay on track with automatic rebalancing. We can automatically harvest losses to help offset taxes on gains. Portfolios include up to 20 asset classes across stocks, fixed income, real estate and commodities, as well as an FDIC-insured cash component – so they’re truly diversified. After the ETFs are chosen, the experts at CSIA monitor their performance on an ongoing basis to make sure the ETFs continue to provide consistency and diversity.||No advisory fees, account service fees, or commissions charged. Invest with as little as $5,000||Schwab Intelligent Portfolios is an online investment advisory service that builds, monitors, and rebalances your portfolio—so you don't have to. To build and manage your portfolio, Schwab Intelligent Portfolios uses an advanced algorithm and the professional insight of the Charles Schwab Investment Advisory, Inc. (CSIA) team. You will get a diversified portfolio composed of low-cost exchange-traded funds (ETFs)—all handpicked by the CSIA team.|