The growing popularity of robo-advisors means sifting through more offers to automate your investment savings, but which one is the best for you?
Betterment, Wealthfront and Wealthsimple are three of the best robo-advisors, but each company differentiates its offerings in some notable ways.
Some factors that may make a difference in your choice: How much money do you have to start with? Is socially responsible investing, or being able to invest according to your beliefs, important to you? Do you want to also have access to a human financial advisor? (We’ve written a primer if you want to learn more about how robo-advisors work.)
At a glance
Broker | Highlights | Commissions | Account Minimum | Current Offers | Start Investing |
|---|---|---|---|---|---|
Betterment | Offers access to human advisors for additional fee. | Commissions 0.25% management fee | Account Minimum $0 | Current Offers Up to 1 year of free management with a qualifying deposit | on Betterment's secure website |
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Wealthfront | Free management of first $5,000 (for NerdWallet readers); advanced tax optimization strategies. | Commissions 0.25% management fee | Account Minimum $500 | Current Offers $5,000 amount of assets managed for free | on Wealthfront's secure website |
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Wealthsimple | Socially responsible investments; free tax-loss harvesting | Commissions 0.40% - 0.50% management fee | Account Minimum $0 | Current Offers $10,000 amount of assets managed for free for one year | on Wealthsimple's secure website |
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All robo-advisors use passive investing strategies, which studies show often lead to higher overall returns. Better yet for the consumer, you can start investing with a robo-advisor without knowing much about how markets work.
Betterment
Betterment requires no minimum deposit to begin investing, and its 0.25% management fee is one of the most competitive in the industry. For those who want to invest in companies whose business practices align with your values, Betterment offers a socially responsible portfolio.
Betterment has a full range of tools for goal-based savings. The firm also offers the purchase of fractional shares so you can invest even if you don’t have enough cash to buy a full share. If advice from human advisors is important to you, Betterment’s premium tier allows unlimited phone calls with advisors, but the service requires a minimum balance of $100,000 and bumps its management fee to 0.4%.
Fees
0.25%
management fee
Account minimum
$0
Promotion
Up to 1 year
of 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.
Cons
No direct indexing.
Betterment offers tax-loss harvesting, but it has no direct-indexing tool, which can further help savings for investors with taxable accounts. Also, the company doesn’t support 529 college savings.
» Read NerdWallet’s full Betterment review
Wealthfront
Wealthfront is the only one of the three that requires a minimum account balance, but the amount is low ($500). Its 0.25% management fee is low, too, and NerdWallet readers can get their first $5,000 managed for free. Wealthfront’s Path tool helps with financial planning, be it for buying a house, retirement, college or general savings goals. It’s also one of the few robo-advisors to manage 529 college savings plans.
For accounts with balances of $100,000 or more, Wealthfront offers tax-optimized direct indexing, a more powerful tool for tax-loss harvesting.
Fees
0.25%
management fee
Account minimum
$500
Promotion
$5,000
amount of assets managed for free
The bottom line
Wealthfront has built client trust by offering free management on the first $5,000 — 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 $5,000 managed free (NerdWallet promotion).
Low ETF expense ratios.
Daily tax-loss harvesting.
Direct indexing on accounts over $100,000.
Automatic rebalancing.
Cons
No fractional shares.
No large-balance discounts.
Wealthfront doesn’t offer access to advisors, a downside for customers who want occasional human help with investing, nor does it offer the purchase of fractional shares. Also, Wealthfront requires you keep a cash balance equivalent to the estimated fees you’ll pay over the next year.
» Read NerdWallet’s full Wealthfront review
Wealthsimple
Wealthsimple has a robust offering for socially responsible investing, as well as halal investing products that comply with Islamic law. Wealthsimple earns its name with its beginner-friendly interface and gives all customers access to financial planners. And there’s no minimum required to open an account.
The firm’s management fee range of 0.4% to 0.5%, depending on your account balance, is higher than those at Wealthfront and Betterment.
Fees
0.40% - 0.50%
management fee
Account minimum
$0
Promotion
$10,000
amount of assets managed for free for one year
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 tax-loss harvesting, no minimum account balance required.
Show pros & cons
Pros
Access to human advisers.
Free portfolio analysis.
Socially responsible investment options.
No account minimum.
Cons
Higher account management fees.
Limited personal finance tools.
Aside from its higher management fees, some consumers may find Wealthsimple’s offering too streamlined: Those who want retirement-planning tools, calculators or a strong investor-education experience won’t find that here.
» Read NerdWallet’s full Wealthsimple review
Final look
Choosing among the best advisors means looking at what features, functions and fees best suit your investing needs. Regardless of which you select, the winning choice is the decision to invest toward building your future wealth.
Best for: No minimum / Access to financial advisors (with Premium plan) / Socially responsible investing / Fractional shares Falls short: No direct-indexing tool / No 529 plan |
Best for: Digital-only management / Nonretirement (taxable) accounts / Saving for college Falls short: No human advisors / No fractional shares / Cash balance requirement |
Best for: No minimum / Access to financial advisors / Socially responsible investing / Halal investing portfolio Falls short: High account management fees / Lack of personal finance tools |
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