Robo Advisors are robotic financial advisors that use algorithms to automatically select investments for the customer, and also advise them on other relevant financial decisions. Robo-Advisors are not new to fintech; they have been around for over a decade.
A standard robo-advisor collects financial information from the customers, like their financial situation and future goals through an online survey and then utilizes that data to offer advice.
While there are a variety of robo-advisors available today, we have shortlisted a few for you in accordance to the category they could most benefit.
For The Beginners
Acorns makes it easy for a user to save and invest. The first step that the user has to take is to link a card – debit or credit and checking account. Acorn uses the spare change and automatically makes the investment on your behalf. Acorns uses Modern Portfolio Theory (MPT) to determine the best asset allocation for the investor’s needs. The user has to answer a few questions regarding their age, income, and financial goals, and Acorn takes care of the rest. This automatic system that takes the complexities out of investing.
SoFi Automated Investing
SoFi Automated Investing is one of the best robo-advisors in the industry. When you sign up, SoFi gives you five portfolio options based on your time horizon and risk tolerance. SoFi sets up a portfolio of ETF based on the investment goal you select for yourself. The platform does not charge you and advisory or administrative fees and offers access to low cost ETFs. The platform automatically reviews and rebalances your investments as needed to keep you on track. It also offers real-time support, including from financial advisors. You can reach out for questions by email, phone or live chat.
For Socially Responsible Ones
Ellevest is a robo-advisor run by women for women, however, people of all genders can open an account with Ellevest. Ellevest is known to have incorporated an algorithm that takes into consideration pay gaps, career breaks, and other factors or challenges that may exist in a woman’s life. Ellevest considers your risk tolerance and goals when putting together your portfolio. It also offers its Impact Portfolio as an option to select instead of the core portfolio, which is geared more toward socially-responsible investing. Most of the robo-advisors charge you by the size of your account, but Ellevest lets you choose features you want, pay a monthly fee, and it takes care of the rest.
Founded in 2014, WealthSimple combines smart tech with smart financial advice. It also known as a socially responsible platform since the portfolios draw from six exchange-traded funds that focus on companies involved efforts to lower carbon exposure and supporting gender diversity in senior leadership roles and the likes. WealthSimple allows you to put your money in a managed portfolio, this service falls under the category of wealth invest, do self-directed trading under Wealthsimple Trade or put your money in a high-interest hybrid savings account under Wealthsimple Cash.
Blooom is a Registered Investment Advisor. It is a go-to robo-advisor for those who are looking for a retirement plan specialist. Blooom can manage all your plans including IRA accounts. Similar to its counterparts, it creates your portfolio allocation, maintains those allocations, and reinvests dividends. It also identifies and minimizes hidden investment fees in your employer-sponsored retirement plan, which is usually higher than in other plans. By lowering those fees, Blooom can enhance the performance of your retirement assets.
For tax loss harvesting
Founded in 2008, Betterment is one of the most innovative robo-advisors available in the industry. Betterment is also one of the first robo-advisors to use technology to automate the investment process. Betterment, with its evolution, has added additional asset classes and cash management products. Betterment’s platform is instinctive and full of educational resources which makes it a great choice for beginners. It also offers tax-loss harvesting for all accounts, no matter the size, and a range of checking and savings account options.
Launched in 2011, Wealthfront is another pioneer in the robo-advisor segment. Weathfront enables investors to invest in diversified, ETF based portfolios in a fully automated way and at a low cost. To invest their money with Wealthfront, the user requires a minimum deposit of $500. Wealthfront uses its technology to create automated asset allocation, taking into account users risk tolerance and financial needs. The platform continually makes sure that the allocation is correct with automatic rebalancing.
Charles Schwab Intelligent Portfolios
Charles Schwab’s robo-advisor or Intelligent Portfolios offer a wide range of its own EFTs. The service also offers tax-loss harvesting and is available on accounts with a minimum balance of $50,000. Similar to other popular robo-advisors, Schwab Intelligent Portfolios is a fully automated investment portfolio. The portfolio is allocated based on your risk profile and is rebalanced everyday as per the requirement. It offers a virtually unlimited selection of investments and the platform offers one of the lowest commissions in the industry. It is also possible to have Schwab Intelligent Portfolios managed for you while also maintaining a self-directed portfolio with the same broker.
SigFig has been a popular choice among robo-advisors because of their low-cost portfolio management feature. The company’s minimum investment is higher than most of its competitors but the unlimited free financial counseling feature that it offers, becomes an unmissable perk, since this is usually found only in premium automated investment service providers. Most robo-advisors work directly with individual investors, however, SigFig is a kind of add-on where you plug your existing, third-party brokerage account into its Asset Manager service. In addition to its asset-management service, SigFig has a Portfolio Tracker system that lets you sync outside accounts and keep track of your balances and receive advice.
WiseBanyan automates and simplifies the investment process for the users. It also offers a personal touch by connecting the users with a personal finance expert. WiseBanyan does not require a minimum portfolio balance, it allows investors of all levels to start investing for their future sooner. However, it does charge a premium if you are investing in an IRA. WiseBanyan works by taking your money and investing it to buy a portfolio of ETFs while managing the dividends and rebalancing according to your choices.