Best Robo Advisors
Robo Fund Advisors are slowly taking over the financial markets. These machines can increasingly do just as good a job with managing our money as traditional financial advisors. Or so they say, at any rate. Robo Advisors are automatic algorithms used to allocate and manage investments, and they are a big deal in the finance world right now. They look set to become more and more popular as young people get more equity to invest. Fees are low, stocks are managed intensively. It’s no surprise that the best robo advisors are getting more and more custom. But what ARE the best robo advisors? If you’re thinking of putting your money into this part of the market, where is the best place to start?
Vanguard currently manages $3 trillion in global assets under management, as of December 31, 2014.
It charges an annual fee of 0.3% and has a $100,000 minimum.
Vanguard is a company that has long been well respected in the finance world. Appropriately, it has been in the vanguard of the robo advisor revolution too! Vanguard is widely regarded as one of the best robo advisors available. In 2013, it had $700 million in assets, which had increased hugely to $4.2 billion by the end of 2014. Vanguard uses Vanguard mutual funds and ETFs, which means it isn’t as diverse as some of the other portfolios available. However, these funds do tend to be very reliable.
Vanguard does place some emphasis on “partner advisors,” so maybe this isn’t as automated as some of the other options. Still, for some people that continues to be a plus.
Betterment currently manages $3 billion, with annual fees of 0.15 – 0.35%, depending on how much you have invested.
Betterment is one of the biggest names in the robo advisor market. It’s well reviewed on financial forums and thought to be one of the best robo advisors around. Set up in New York in 2010, it has raised $105 million in venture capital. If you have less than $10,000 to invest there is an extra fee of $3 a month, but you can avoid this by automatically depositing at least $10 a month. There are about a dozen portfolios available to investors. These are made up of Vanguard and iShares ETFs.
Betterment users also benefit from automated rebalancing, a mobile app that’s easy to use, and tax-loss harvesting. With more than 100,000 customers, Betterment is growing all the time.
Wealthfront manages $2 billion. It charges 0.25% in fees for accounts over $10,000.
Wealthfront was one of the first robo advisors, long considered one of the best. It was started in Palo Alto in 2011 and has raised $130 million from venture capitalists. It has also the benefit of some big names on board. Yahoo’s CEO Marissa Mayer, Tim Ferris and Google Ventures partner Kevin Rose are all in Wealthfront’s corner. Again, Wealthfront mainly uses ETFs to hold investments. It offers a mobile app, tax loss harvesting and rebalancing. It does not however offer any advice about 401ks or any outside accounts.
Personal capital manages $1.9 billion in assets and allows use of its software for free. Fees start at 0.89% for accounts from $100,000 to $1 million.
This service is based in California. It lets you connect your investments from other firms so you can see how your investments are allocated overall. It offers recommendations which you can then implement yourself, so this is an attractive option for those who want to feel more in control. The service also offers you an investment consultation for free. If you have a balance of at least $100,000, you can also get portfolio management services, for a fee of 0.89%. Personal capital is considered one of the best robo advisors for those with larger investments who like to control their money.
Asset builder is a little different to the other best robo advisors. It manages $686 million in assets and charges 0.2% – 0.5% fees. Minimum portfolio is a little lower, at $50,000.
Asset Builder uses funds from Dimensional Fund Advisors, who are a mutual fund family. It offers account rebalancing every year based on 8 possible portfolio options. It does charge commission on trades, though. This can be from $20 to $49.95 dependent on the account balance. If you have to buy 12 mutual funds to start your portfolio, this may cost you several hundred dollars. So there can be a bit of a start up cost for Asset Builder, but it has fairly low fees and can work with smaller portfolios than some of the other best robo advisors.
Future Advisor has $600 million in managed assets. Interestingly in some cases it is actually free, but fees go up to 0.5%. There is a $10,000 minimum investment, so this is one of the best robo advisors to look at for smaller investments.
Future Advisor claims that 200,000 households rely on its investment advice. So far, only 1,700 users are actually signed up and paying, but this suggests even the free service is worth looking into. Free portfolio analysis offers asset allocation recommendations and reminders about rebalancing. If you pay the fee, you get automated tax loss harvesting and can see a financial advisor.
This is an interesting one. Rebalance IRA currently manages over $250 million in assets, for a fee of 0.5% annually. There is a minimum opening balance of $75,000.
As the name suggests, this service is based on your IRA. Basically you are moving your 401k account into an IRA. This service is one of the best robo advisors to look at if you’re thinking of managing a retirement fund. It looks at your retirement accounts holistically and rebalances investments in ETFs about twice a year.
Liftoff is one of the most recently launched best robo advisors. It manages $150 million already and charges an annual fee of 0.40%.
This is a service run by Ritholtz Wealth Management based in New York. The leaders of the company, Barry Ritholtz and Josh Brown, are social media gurus who often appear on TV to explain their approach. Their automated platform puts users into a mixture of ETFs, mostly vanguard, so arguably you could use vanguard to do this yourself, but this service can save you fees.
According to SF Gate, SigFig tracks around $350 billion in assets for its users. The company declined to comment on its total amount of assets under management.
It will manage your first $10,000 for free. Above this, it charges 0.25% annual fee. So this is an interesting robo advisor for those with smaller amounts to invest and who want to save on fees.
The service uses ETFs in its portfolios like other robo advisors. It gives you a lot of freedom to manage many of your assets on your own and have SigFig advise on only some of them. You can request a rebalance via email, phone, chat, or a mobile app. This is one to watch.
WiseBanyan has been marketed as the first robo advisor without any fees at all. It has $13.9 million under management. It is SIPC insured, charges no annual fee, and requires you to have only a $10 minimum. This makes WiseBanyan quite different in the Robo Advisor world. It is swiftly becoming a huge player, and the appeal is obvious.
WiseBanyan offers Tax loss harvesting, for which there is a small fee, an iOS app, and no trading fees. It has a fully automated platform and invests all deposited money.
The Robo Advisor world is confusing, but it’s growing all the time. As well as the advisors listed above, there’s a “no fee” robo service under construction by Schwab, which will require only a $5000 opening balance. Other robo services include Motif Investing, Market Riders, Acorns and Hedgeable. The financial services business is changing, and it’s getting more diverse and automated all the time.