What is Robo-Advisor?
A robo-advisor is an online management service that takes care of your investment portfolio. Robo-advisor services work just like the human financial advisors, however, they charge smaller amounts. If you want to leave your investment decisions to someone who knows more about it, a robo-advisor is for you. They will build and optimize your portfolio for you. Robo-advisors are good tools for people who are learning how to trade.
Wealthfront is one robo-advisor that gives its clients value for money. It has accumulated over $7.5 billion in assets and has gained the trust of clients through their rewarding promotions. It offers free management on first $5000. They offer portfolio management services. This robo-advisor charges 0.25% as fees and the account minimum is $500. Wealthfront offers a wide range of management services and accounts including trust accounts, individual accounts, 529 College savings plans, and IRAs. Wealthfront retirement savings plan allows you to diversify your investment or focus on one portfolio. If your employer already offers you a retirement plan, you can opt for a non-retirement package. There is also taxable savings option. This includes individual and joint accounts. Joint account allows you and your partner to build your savings for the future. The trust account also helps you to manage your assets for your children.
The college savings is also good option if your children are still young. It helps you to save for their education. Since college education is expensive you can do this to take the future stress off your shoulders. This account is a tax advantage account that helps to accumulate more funds without paying taxes. You will not pay tax when you withdraw the to pay for your child’s education in an eligible college. Wealthfront provides a special feature that makes it one of the best robo-advisors. This special feature is the automatic rebalancing which sets three thresholds for each asset category. Your funds will be automatically redistributed to its track when your funds move away from its target location. There is also direct indexing on accounts that is more than $100,000 and automatic rebalancing. Unfortunately, they do not offer fraction shares.
The daily tax-loss harvesting feature is also worth mentioning. This entails the selling of securities that are experiencing losses and replacing them with a similar one. Wealthfront has made top notch strategies available to everyone. These strategies were previously available to investors who were willing to pay millions to access these strategies. Wealthfront is striving to make their platform more accessible and more efficient. They recently launched Path, a financial planning app that offers investment and financial planning services.
Betterment is ranked the largest independent robo-advisor in the brokerage market. This advisor has no account minimum, and the management fees are also affordable. Another advantage with this robo-advisor is that fractional shares limit uninvested cash. Robo-advisor helps you to reach your goal by using their advice algorithm. The advice algorithm considers diversification and time in the process. You are not given a general portfolio when you open an account with Betterment.
Irrespective of the account type you opt for, your goal, age and even timeline will be considered in creating a personalized portfolio for you. Betterment charges a flat fee new accounts if your initial account balance is less than $100,000. This fee allows you to enjoy an unlimited account management, customer support, and tax-efficient. There is also an advanced service module called the Plus Plan. You can access the Plus Plan by paying a 0.40% fee. At this rate, you will be treated to an annual call with CFP professionals and a team of licensed financial experts. You can further upgrade the service you receive by paying 0.50%. You can be eligible for this plan by keeping an account minimum balance of $250,000. With this upgrade, you will enjoy a comprehensive account monitoring service. you will receive unlimited calls from their team of advisors. Betterment also scores some point with its automatic rebalancing that keeps funds on track. There is also the tax-loss harvesting just like what is provided by Charles Schwab. Betterment, however, provides one unique service that makes it score high on this list. Their goal based investing makes robo-investing efficient. With this feature, investors are made to answer a series of questions that will reflect your long term and short term goals. They will then send you suggestions on how to make your investments in order to meet your target. Betterment offers several account options just like Wealthfront. Unfortunately, there is no direct indexing.
- Charles Schwab
Ever heard of the Schwab Intelligent Advisory? This advisory is popular among investors due to the additional advantage and convenience it brings to investors. The Schwab Intelligent Advisory is a service that integrates online broker’s financial consultants and Schwab Intelligent Portfolio, Charles Schwab’s robo-advisor. Charles Schwab offers a wide ETF selection and automatic rebalancing. The account minimum is high; the account minimum is $50,000. Another downside with this robo-advisor is high cash allocation. Also, the tax-loss harvesting is only available on $50,000 or more.
This robo-advisor gives you access to certified financial planners. Investors also enjoy low-cost investments and automatic rebalancing. Customers also get to enjoy bonuses on other SoFi products. The management fees are relatively low; the fees are 0.25% of assets. The account minimum is $500. This is on the low side and a lot of investors can invest. They also offer excellent customer service to customers. Unfortunately, you will not enjoy tax-loss harvesting with So-Fi. The account types are also limited and they have a short track record. SoFi is also running a promotion where investors get to enjoy free management.
This robo-advisor has attracted many beginners due to its simple design. This platform has $0 minimum balance requirement. The several investment packages give you lots of options when it comes to investment. One of this robo-advisor’s winning points is their Socially Responsible Investment (SRI) portfolios. You will also get human guide when you need help. You will also get access to free portfolio analysis. Customers that have taxable investment accounts enjoy free tax-loss harvesting. Unfortunately, the account management fees are high, and the personal finance tools are limited. The management fee is 0.25% of the investment.
This advisor focuses on women within the low income bracket. The fees ranges from 0.25% to 0.5% of the assets. You can also have unlimited access to advisors to take good investment decisions. Even though ElleVest focuses on women, they have products that appeals to all gender. Unfortunately, this robo-advisor does not offer tax-loss harvesting.
Vanguard Personal Advisor Services is worth mentioning due to the excellent service it offers. This robo-advisor offers a larger investment selection and a comprehensive management. Vanguard can boast of $3.6 trillion in assets. Customers have access to financial advisors. Vanguard charges 0.30% of assets as management fees. Vanguard’s operations differ a little from other robo-advisors. They do not focus on ETFs alone. Their main focus is on actively managed funds and index funds. Vanguard also allows you to purchase non-vanguard funds at a fee. This helps you to invest in options that may prove profitable even if they are not Vanguard investments. Vanguard offers several account options including IRAs, brokerage accounts, trusts, and 529 plans accounts. This advisor offers tax-loss harvesting, however, this strategy is different from the standard one performed by most of the other robo-advisors. Their tax-loss harvesting is performed on a client-by-client basis unlike the standard one which is performed daily. Also, Vanguard does not do automatic rebalancing, it reevaluates portfolio’s quarterly. Vanguard also dedicates one financial advisor to you. You can email your advisor to talk to him about your challenges or you can also schedule a call with him or her. Your financial advisor can keep track of your investments and give you personalized advice. The account minimum is $50,000. This means you will need a minimum of a whopping $50,000 to invest. This is extremely high and people on a low budget cannot sign up. Vanguard does not offer any promotion as well.