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Best Robo-Advisors: 2018 Top Picks

Advisors, Investing

NerdWallet offers financial tools and advice to help people understand their options and make the best possible decisions. The guidance we offer and info we provide are deeply researched, objective and independent.

We spent over 300 hours reviewing the top robo-advisors before selecting the best for our readers. And to help you find the one that’s best for you, we’ve highlighted their pros, cons and current offers.

Given the recent proliferation of robo-advisors, you’d think it’s almost passé to have a human manage your investments in 2018. With the launch of numerous automated advisories in recent years and increased competition within the industry, it all boils down to good news for consumers.

Here’s how the industry has evolved: The number of providers continues to swell (NerdWallet conducted an in-depth analysis of more than 20 robo-advisors this year), as does the range of services (things like socially responsible investing or access to financial advisors) and low-cost options for all types of investors. Independent startups like Betterment and Wealthfront still lead the pack, but robos tied to incumbent online brokers have stepped up their offerings.

What is a robo-advisor?

A robo-advisor is an online, automated portfolio management service. Because these companies use computer algorithms — a set of rules to choose appropriate investments based on your risk tolerance and time horizon — they can offer robo-advisor services for a fraction of the cost of a human financial advisor.

That lower-cost management, combined with features like automatic portfolio rebalancing and tax-loss harvesting, can translate into higher net returns for investors. A robo-advisor is a good fit for you if you prefer to be largely hands-off with your investments — letting someone else do the work of building and optimizing your portfolio — and you don’t have the kind of complex financial situation that requires a direct relationship with a human financial advisor.

To help you pick the best robo-advisor for you, we’ve selected the top two online advisors in six categories.

NerdWallet’s top robo-advisors in 2018

NerdWallet rating
Fees
0.25%
management fee
Account minimum
$500
Promotion
$15,000amount of assets managed with no fee

The bottom line

Wealthfront has built client trust by offering free management on the first $10,000 invested — $15,000 with NerdWallet’s promotion — but the company’s direct indexing service really shines, adding as much as 2% to annual investment performance for eligible accounts.

Show pros & cons

Pros

  • First $15,000 managed free (NerdWallet promotion).
  • Low ETF expense ratios.
  • Daily tax-loss harvesting.
  • Direct indexing on accounts over $100,000.
  • Automatic rebalancing.
Reader favorite

Cons

  • No fractional shares.
  • No large-balance discounts.
Read full review

NerdWallet rating
Fees
0.4%
management fee
Account minimum
$0
Promotion
$50cash bonus with deposit of at least $1,000 in first 30 days

The bottom line

Wealthsimple’s $0 minimum balance requirement, hands on human help and its no-fuss, streamlined design make it an attractive place for beginners to start their investing journey. But the company’s real standout feature among the robo-advisor competition is its lineup of socially responsible investment (SRI) portfolios, a refreshing addition for values-based investors. Another unusual offering that customers with taxable investment accounts will appreciate is free free tax-loss harvesting, no minimum account balance required.

Show pros & cons

Pros

  • No account minimum
  • Free portfolio analysis
  • Free tax-loss harvesting
  • Socially-responsible investment options
Reader favorite

Cons

  • Higher account management fees
  • Limited free-management promotion
  • Limited personal finance tools
Read full review

NerdWallet rating
Fees
0.25%
management fee
Account minimum
$0
Promotion
Up to 1 yearof free management with a qualifying deposit

The bottom line

Betterment has maintained its status as the largest independent robo-advisor for a reason: The company offers a powerful combination of goal-based tools, affordable management fees and no account minimum.

Show pros & cons

Pros

  • No account minimum.
  • Fractional shares limit uninvested cash.
  • Robust goal-based tools.
Reader favorite

Cons

  • No direct indexing.
Read full review

NerdWallet rating
Fees
0.25%
management fee
Account minimum
$0
Promotion
Up to $750cash bonus with qualifying deposit

The bottom line

This advisor markets itself to women and takes a goal-focused approach that factors in women’s lower incomes, lifetime earnings and longer lifespans. With its $0 account minimum, competitive advisory fees (ranging from 0.25% - 0.5% of assets) and unlimited access to financial advisors (Premium clients can talk to CFPs), Ellevest is an appealing choice for investors of any gender.

Show pros & cons

Pros

  • Low account minimum and fees
  • Goal-focused investing approach
  • Portfolio mix that factors women’s needs
Reader favorite

Cons

  • Few accounts supported
  • No tax-loss harvesting
Read full review

NerdWallet rating
Fees
0.3%
management fee
Account minimum
$5K
Promotion
Noneno promotion available at this time

The bottom line

TD Ameritrade Essential Portfolios offers pricing, service offerings and portfolios that are comparable with what consumers now expect from online advisors. Existing TD Ameritrade customers who are looking for a hands-off, digital solution should certainly give it a look, but all consumers will benefit from the low investment expenses here.

Show pros & cons

Pros

  • Low investment expense ratios
  • Competitive management fee
  • Niche account types
  • Morningstar-built portfolios
Reader favorite

Cons

  • Small portfolios
  • No tax-loss harvesting
Read full review

NerdWallet rating
Fees
0.3%
management fee
Account minimum
$50K
Promotion
Noneno promotion currently offered

The bottom line

Vanguard Personal Advisor Services is an excellent choice for investors who can meet the $50,000 account minimum and want to use the computer algorithms of a robo-advisor while maintaining access to a human touch.

Show pros & cons

Pros

  • Low management fee for a hybrid advisor
  • Larger investment selection
  • Comprehensive management
  • Access to financial advisors

Cons

  • High account minimum
  • Some clients may incur transaction fees
Read full review

NerdWallet rating
Fees
0.28%
management fee
Account minimum
$25K
Promotion
Noneno promotion available at this time

The bottom line

Charles Schwab brought some heat to the online advisor battle with its Schwab Intelligent Advisory, a hybrid service designed to be a middle ground between the online broker’s financial consultants and its existing robo-advisor, Schwab Intelligent Portfolios.

Show pros & cons

Pros

  • Access to financial advisors
  • Wide ETF selection
  • Automatic rebalancing

Cons

  • $50,000 account minimum
  • High cash allocation
  • Tax-loss harvesting only available on $50,000 or more
Read full review

Best robo-advisor for 401(k) management

Blooom will manage your employer-sponsored retirement plan.

Most robo-advisors manage IRAs and taxable accounts but leave you in the dark about your 401(k). Blooom attempts to fill that hole. The company charges a flat monthly fee of $10 and focuses on management of employer-sponsored plans like 401(k)s and 403(b)s.

Blooom works within the investments offered by your plan and offers free analysis so you can test the service before signing up. It also provides financial advisors who can help investors with a range of financial planning questions. The industry isn’t completely lacking competition; Vanguard Personal Advisor Services and Personal Capital both offer 401(k) guidance, though not direct management. But Blooom excels in its ability to manage any 401(k), no matter where the account holder works or where the account is held. There’s no need for your employer to have a partnership with the service.


Best robo-advisors: Summary

Robo-Advisor
Best
for
Highlights
Annual Fee
Promotion
Account minimum
Start investing
Wealthfront
Wealthfront
Overall
and taxable accounts
Tax-efficient direct indexing (accounts $100,000+)
0%-0.25% of account balance
$15,000 managed free (NerdWallet readers)
$500
Wealthsimple
Wealthsimple
Socially responsible investors
Offers automatic rebalancing; no account fees
0.40%-0.50% of account balance
$50 cash bonus with qualifying deposit
$0
Betterment
Betterment
Overall and taxable accounts
Goal-based tools help savings, guide asset allocation
0.25%-0.40% of account balance
Up to 1 year of free management with qualifying deposit.
$0
Ellevest
Portfolio mix
Goal-based tools; unlimited text & email access to a team of financial professionals
0.25%-0.50% of account balance
Up to a $750 cash bonus with qualifying deposit
$0
TD Ameritrade Essential Portfolios
Tdameritrade.com-promotions
Honorable
mention for best overall
Exhaustive list of account types handled
0.30%
on account balances
n/a
$5,000
motifinvesting
Portfolio mix and socially responsible investors
Pre-built portfolios; customizable motifs
Commission: $4.95 per share; $9.95 per motif. Automated investing starts at $4.95 per month.
Try Motif Blue for one month free
$0
Vanguard Personal Advisor Services
Vanguard Personal Advisor Services
Access to a financial advisor and portfolio mix
Portfolios built on client-by-client basis with advisor
0.30% of account balance
n/a
$50,000
Schwab Intelligent Advisory
Access to a financial advisor
Unlimited access to financial advisors; comprehensive management
0.28%
n/a
$25,000
Blooom
Blooom
401(k)s
Manages employer 401(k) plans for flat fee
$10
per month
One month free management
$0

Not sure which advisor to choose? Here’s what you should consider:

Management fees

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

Why it matters: Any fee, including a management fee, reduces your return. If you’re earning a 7% annual return on your portfolio, and you’re paying a 0.25% annual management fee, your return is effectively 6.75%. Even small fees add up over time.

Expense ratios

These are like management fees, only they’re paid not to the robo-advisor, but to the investments the robo-advisor uses. Mutual funds, index funds and exchange-traded funds all charge this annual fee to cover the costs of running the fund.

Why it matters: Same reason as above: All fees eat into your investment return. You can’t avoid expense ratios as a fund investor, whether you invest through a robo-advisor or on your own. But you can keep them down by choosing an advisor who uses low-cost funds. Knowing average mutual fund expense ratios can help you gauge whether you’re paying too much.

Account types

Investment accounts fall into two general categories:

  • 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, and how you can take distributions. Read more about retirement accounts.
  • Nonretirement accounts. Often called taxable accounts, there are no specific tax advantages for contributions to these, but they’re also not subject to contribution limits or distribution rules.

Why it matters: Make sure the robo-advisor you choose manages the kind of account you want to open. Your account also helps determine which features apply to you — for example, tax-loss harvesting, discussed below, is only used on taxable, nonretirement accounts.

Investments

Most robo-advisors use low-cost index funds and ETFs.

  • Index fund: A mutual fund that passively tracks an index or benchmark. A Standard & Poor’s 500 index fund, for instance, aims to mirror the performance of the S&P 500. Index funds attempt to follow the market, not beat it, and hold a group of individual investments, making them inherently diversified. Learn more about index funds.
  • ETF: Like an index fund, an ETF holds many individual investments and tracks an index or benchmark. The major difference is that ETFs trade on an exchange, like individual stocks, and can often be purchased for a lower investment than a full-fledged fund. Learn more about ETFs.

Why it matters: Be sure the advisor you choose offers the investments you want, and make sure those investments are low cost. A select few robo-advisors add in actively managed mutual funds and individual stocks, or they customize portfolios completely.

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. The IRS has plenty of rules around this — and the practice itself is fairly complex — so it’s a boon if a robo-advisor is willing to do it for you. Here’s a full explanation of tax-loss harvesting.

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.

Why it matters: It might not. Tax-loss harvesting doesn’t apply to retirement accounts, where taxes are deferred and capital gains taxes don’t come into play. It only applies to taxable accounts, where it might save you a significant amount of money.

Rebalancing

A portfolio is fluid, and market fluctuations can cause the mix of investments you hold — called your asset allocation — to get out of sync with your goals. Rebalancing brings that allocation back to its original mix. Many robo-advisors check for rebalancing opportunities daily and make portfolio changes when an allocation strays by a set amount — say, 5% or more.

Why it matters: When a particular asset class is doing well — let’s say the U.S. stock market is 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 50% stocks and 50% bonds, a portfolio that has shifted toward 70% stocks is probably too risky. Learn more about rebalancing.

Access to human advisors

Many robo-advisors have merged computer-driven portfolio management with access to human financial advisors. The level of that access varies: Some services offer a dedicated advisor to individual clients; others offer only email or online chat with a team of advisors. As you can imagine, you’ll pay more for the former.

Why it matters: The financial advice industry has traditionally locked out small account balances. These services bring at least some level of human advice to accounts of any size. If you’re loath to turn things over completely to a computer, a hybrid service is a good middle ground. Here’s more about how to find the best financial advisor for you.

Socially responsible investing

Often called SRI, impact investing or values-based investing, this strategy is employed by investors who aim to align their investments with their values. Companies that promote social good are often included in SRI funds and portfolios; companies in controversial industries, such as guns or fossil fuels, may be excluded.

Why it matters: If putting your money where your values are is important to you, you’ll want to choose a robo-advisor that offers investments that meet those standards.

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