Digital financial management can be tricky. Occasionally, it is difficult to plan, monitor, and modify the portfolio due to the abundance of options.
Imagine now that all of these duties are automated. It may be more valuable: a relatively hands-off method of investing.
With over 100 alternatives currently accessible, robo-advisors have improved since their first over ten years ago and are today the best online financial advisors. Since they don't need in-depth market expertise and have minimal initial deposits, they have grown popular among new investors. Robo-advisors can automate difficult, time-consuming tasks like rebalancing and tax-loss harvesting for experienced investors.
According to projections, the market for robo-advisors will have $1 trillion in assets under management by 2023. In addition to this, by 2027, it is projected that assets under management would expand at a 14.63% annual rate (CAGR 2023–2027), reaching a total value of $2 trillion.
The list of robo-advisors now readily available is vast. It is crucial to first comprehend what a robo adviser is before we start our quest to explore the list.
What is a Robo Advisor?
The best wealth management platform is a robo-advisor, which offers algorithm-driven, automated financial planning and investing services with little to no human oversight.
A typical robo-advisor will conduct an online survey to inquire about your financial condition and future objectives. Following that, it employs the information to automatically provide advice for your digital financial planning.
The best robo advisors include straightforward account setup, thorough goal setting, account services, and portfolio management. They also provide reasonable prices, thorough instruction, and security measures.
How do Robo Advisors Work?
More than 200 robo-advisory services are accessible. Despite their differences, they function in a similar manner.
You must answer a quick questionnaire that includes demographic and cognitive questions when you sign up for robo-advisor services. Your age, gender, income, investment objectives, obligations, present assets, and level of risk tolerance are typical inquiries. These data points are utilized to allocate assets in a portfolio and forecast a person's reaction to ups and downs in the stock market.
Robo-advisors analyze these replies using an algorithm and complex software to build a diversified portfolio of exchange-traded funds or index funds. Usually, a financial or investment specialist chooses the investment possibilities.
The program automatically rebalances the portfolio once the money has been invested to make sure of robo investing returns.
Some robo-advisors include live consultations or access to a human financial planner who is a licensed professional and who can help you prioritize your goals and give strategies for reaching them. Users may log in to their investing accounts to track progress, make adjustments, or keep working towards their goals.
What are the Benefits of Robo Advisors?
In a world where automation has permeated every industry, robo-advisors are rising as the best wealth management platforms.
Enhances your Portfolio
Robo-advisors use mathematical algorithms to select the optimal investment portfolio option for you based on your objectives and current financial situation. This creates a portfolio option that is secure or more strategic.
It may be the case that face-to-face communication is preferable when discussing investment opportunities. But AI does the preparatory work for you by laying out all the relevant facts and considerations before you make a final choice.
Easy Access and Lower Costs
Access to a robo-advisor requires only an internet connection. The majority of robots are straightforward and simple to operate. But their reduced fees make them easier to access than the average human wealth management advisor. These characteristics give robo-advisors the potential to democratize wealth management by making it more accessible to a broad population.
Before robo-advisors, you had to call or meet with a financial advisor, explain your requirements, and then wait for them to execute your transactions. Now, you can do all of that from the comfort of your own home by clicking a few buttons.
A mathematical algorithm is used by an AI-based robo-advisor to evaluate the investor. This renders it objective and unbiased. Keep in mind, however, that free of cost advisors who receive compensation from product manufacturers may not be completely impartial.
What is the List of the Best Robo Advisors in 2023?
We have compiled a list of robo advisors in 2023 based on in-depth and independent research.
|$0, 10$ minimum investment
|0.08% - 0.75%
|$100 - $50,000
|Ally Invest Robo Portfolios
|$54 - $97 annually
|$1 - $240
|Varying between 0.89% for accounts under $1 million and 0.49% for accounts exceeding $10 million
$500 for minimum retirement accounts
- Betterment is one of the first robo-advisors to compete with traditional investment managers, having launched in 2008 and grown into one of the best wealth management platforms with $36 billion in assets.
- Betterment Premium, which includes access to live financial advisors, is available to savers with larger balances in search of more sophisticated services.
- Betterment positions you in a risk-appropriate portfolio of exchange-traded funds (ETFs) upon account creation, objective selection, and entry of a few personal details. Your portfolio will consist of approximately a dozen ETFs, some of which may charge large fees. This is a suboptimal strategy, in our opinion, as you can achieve sufficient diversification with three or four ultra-low-cost ETFs.
- Those who choose the emergency fund option may wind up with an overly hazardous portfolio (15% equities, 85% bonds). If you need money following a termination caused by an economic downturn, you will likely sell at a discount.
- Betterment also offers alternative portfolios, including one that emphasizes environmental, social, and governance (ESG) considerations. The platform offers automatic tax-loss harvesting and a tax-coordinated portfolio option that optimizes your stock and bond allocation for tax efficiency.
- Long-term investors should also investigate Betterment's retirement accounts, which include a traditional individual retirement account (IRA), a Roth IRA, and a SEP IRA for small business owners.
- Once your account balance reaches $100,000, you will be eligible for the Betterment Premium service tier, which includes unlimited consultations with Betterment financial planning professionals and a higher annual fee of 0.40%.
- If you prefer the lower 0.25 percent charge, you can remain on the Betterment Digital service tier with balances over $100,000 if you wish to pay the lesser fee.
- Betterment Premium, which includes access to live financial advisors, is available to savers with larger balances in search of more sophisticated services.
- Simple enrollment and financing procedure
- Capability to select distinct portfolios for distinct objectives
- The consolidation of external accounts
- No account maintenance minimum, $10 to open an account
- Programme banks offer FDIC-insured checking and capital reserve accounts.
- Features of tax management, including tax-loss harvesting
- Complete disclosure of investment strategy before funding
- Access to competent advice carries a relatively high cost
- Portfolio of emergency fund could contain too many equities
- ETFs and crypto are the only available investment options
- Wealthfront was the first fully-automated and best online financial planning advisor. Launching in 2008 and becoming a leader in the industry by delivering an exceptional digital portfolio management experience.
- Wealthfront's greatest strength is its entirely digital experience, which includes a variety of portfolio customization tools and daily tax-loss harvesting.
- The account aggregator is one of the most impactful features of Wealthfront's platform. Using this feature, you can view your entire financial picture in a single spot and take advantage of Wealthfront's potent financial planning, goal-setting, and progress-tracking tools.
- This includes mobile deposits, direct deposits, automated transfers, and payments.
- A borrow feature is also available via a line of credit for users who have invested at least $25,000 to complete the platform.
- Wealthfront is strongly promoting itself as a comprehensive financial solution for its users, as opposed to merely an automated portfolio manager.
- Exceptional goal formulation and financial planning instruments
- Provides 529 college savings accounts, which is unusual for a robo-advisor
- Supports tax-effective trading strategies, including tax-loss harvesting
- Not supported is fractional share transactions
- There are no advisors available
- Limited support alternatives
- SoFi Automated Investing is the best robo advisor if you are primarily concerned with minimizing fees while still receiving a standard level of service.
- There is no annual advisory fee, your portfolio is composed of ETFs with generally low expense ratios, and you have access to real-life advisors if you need to discuss your financial situation. With an account minimum of only $1, there are no restrictions.
- The remainder of SoFi Automated Investing operates as one would expect from a robo-advisor. The platform creates a diversified portfolio of approximately 10 ETFs based on your personal information and financial objectives.
- No annual consulting fee
- You require only $1 to begin
- Numerous low-cost investments are available
- Access to financial advisors at no extra charge
- SoFi's track record as an investment firm is very limited.
- Your portfolio may include SoFi ETFs with higher expenses.
- There is no tax loss harvesting.
4. Interactive Advisors
- Interactive Brokers is an industry leader in servicing active traders and investors. It was launched in 2007 to serve investors who desire access to a variety of investment options and portfolio strategies while automating the portfolio management portion of their finances.
- It offers a unique combination of portfolio options, ranging from self-selection from an extensive investment vehicle catalog to portfolios that replicate professionally managed portfolios.
- Mutual funds, stocks, ETFs, fixed income, REITs, ESG, non-proprietary funds, and managed portfolios are examples of available investments.
- On two fronts, Interactive Advisors stands out as the best online financial advisor: One, portfolios frequently include fractional shares of equities, as opposed to relying solely on ETFs to create stock exposure. Two, you have the option to mirror actively managed portfolios, a feature offered by very few robo-advisors.
- Interactive Advisors is unquestionably one of the most customizable robo-advisors in the industry, given the ability to screen out unwanted equities and see the impact the exclusion would have using historical returns.
- More than 50 Investment Approaches
- Superior for Socially Responsible Investment
- Powerful resources for investment analysis and sorting
- Minimum investments and annual fees for certain portfolios might be rather substantial.
- The robo-advisor's website, account registration, and first deposit processes are not as user-friendly as those of competitors.
5. Ally Invest Robo Portfolios
- Ally Invest Robo Portfolios is an Ally Financial-affiliated automated account that provides US residents with free of charge investment opportunities.
- The brokerage invests 70% of your capital in a diversified cash-enhanced investment portfolio based on your investment objectives and risk appetite. The remaining 30% of your funds are reserved as cash to earn interest.
- Existing Ally customers can easily integrate their accounts with banking products and robo investing returns accounts.
- Additionally, you may only invest in ETFs. Robo Portfolios from Ally Invest do not include individual equities, bonds, mutual funds, or options.
- The Ally Invest Robo Portfolio includes features such as auto-portfolio rebalancing. However, there are no proficient charting tools, so experienced traders may be best served by a different online brokerage.
- Low account minimum and no service costs.
- Alternative investment strategies, such as an ESG option
- Cash flow growth and tax efficiency are the primary goals of the accounts.
- Lacks tax-loss harvesting functionality
- Provides only ETFs; no equities, bonds, mutual funds, or options are available for robo investing returns.
- When it comes to investing based on your priorities, Ellevest is one of the top robo-advisors. If you're interested in setting up automatic investment and retirement accounts, this could be a suitable option.
- Ellevest is accessible to everybody, but its primary goal is empowering women financially.
- It is a good option for people who want to combine automatic investing and retirement accounts with personal assistance.
- Doesn't require a minimum investment
- Platform for affordable digital financial planning
- Additional assistance with goal-setting
- Access to professional financial advisers is available at a reduced rate for monthly plans
- Available automated 401(k)/403(b) rollovers and IRA accounts
- No alternatives for claiming a tax loss
- Cash management accounts have a 0% APY
7. Personal Capital
- Personal Capital's technology provided investors with smart portfolio automation and human advisers to blend a digital financial planning experience with a conventional financial advisor paradigm.
- It's important to remember that Personal Capital caters to high net worth investors, with a minimum account balance of $100,000 and top-tier service available for accounts above $1 million.
- The core competency of Personal Capital is its approach to portfolio management, notably its tax planning techniques. While tax-loss harvesting is a fundamental feature of the platform, it also offers tax-optimized retirement withdrawals and takes into consideration various account tax situations when allocating assets.
- Retirement is a major emphasis of Personal Capital's goal planning, which is shown by the fact that its Smart Withdrawal tool is one of the main tools for goal-setting.
- To examine how a market correction would affect a larger range of investing objectives, consider other financial tools like the Recession Simulator.
- By incorporating a range of assets, including equities, bonds, ETFs, alternative investments, cash, and private equity, Personal Capital executes your portfolio strategy.
- An extensive selection of free investment management tools
- Tax optimization features
- A wide range of investment tools and portfolio methods
- Very high $100,000 account requirement
- Desktop capabilities are missing from the mobile experience
8. M1 Finance
- M1 Finance joined the robo-advisor market in 2015 and, by 2021, had managed $5 billion in assets, demonstrating consistent user and asset growth since launch.
- A special credit card product was added to M1's premium Plus tier in 2021 to go along with other choices for borrowing and spending money.
- M1 Finance gives self-directed investors a wonderful alternative to human guidance by automating parts of the digital financial planning procedures without compromising portfolio flexibility and control.
- Other account management components like a spend option, a credit card, and a smart transfer tool that aids in allocating extra income are added to the broad portfolio customization tools made accessible by M1.
- The robo-advisor's dedication to cost conservation and reduction is especially crucial for this area since it prevents costs from reducing your returns.
- No charges for trading or maintaining an account
- Options for extensive portfolio customisation
- Flexibility for borrowing and spending enhance portfolio management
- extreme portfolio control
- Many screening tools to help you improve your portfolio
- Fewer calculators and financial tools
- No capturing of tax losses
- Absence of external account aggregation
- For passive, or hands-off, investors who prefer automatic, professional assistance on their investment accounts or individual retirement accounts (IRAs), Marcus Invest, owned by Goldman Sachs, is the best option.
- Through a variety of portfolio alternatives, including an environmental, social, and governance (ESG) option with Smart Beta, Marcus Invest enables you to monitor your progress towards desired robo investing returns.
- Additionally, you won't be slammed with the additional account fees that certain wealth management platforms impose.
- Also included are tools for portfolio management and rebalancing that are user-friendly for beginners.
- Investment portfolios that take into account an investor's time horizon and risk tolerance
- Options for smart beta and socially conscious investing
- The account also monitors the portfolio and allocates assets strategically.
- There are more than 50 accessible stock and bond ETF portfolios.
- Access to financial advisors is missing from the app.
- Holders of IRA accounts are not eligible for Goldman Sachs Smart Beta portfolios.
10. Axos Invest
- Axos Financial owns the website Axos Invest, which provides the best online financial advisor, commission-free trading, and other services. In 2019, it purchased Wisebanyan, a robot advisor.
- Users will be able to benefit from margin and options trading via the company's sophisticated trading option, Axos Elite, for more knowledgeable investors.
- For current Axos Bank customers as well as potential investors who want access to low-cost self-directed trading and automated investment, the platform is a terrific option.
- Low advisory fees
- Able to invest in order to achieve a variety of financial objectives
- Loss harvesting is possible
- No shared or joint accounts
To sum it up…
If you want personal advice or affirmation before making an investment, a human wealth advisor may be your best option. On the other hand, robo-advisors use developments in electronic markets and algorithmic trading to automate investing recommendations for regular investors.
Robo-advisors may be a suitable option for the majority of long-term investors because of their affordability and low starting minimum balance requirements.
With the help of this list of robo advisors, you can choose the best one for you.