The Robo Investor

If you’re an M1 Plus Member, you get many great benefits that standard M1 investors don’t get and now this includes the exciting benefit of using M1’s latest feature – Smart Transfers.

* This article is about M1s Smart Transfers. If you’re new to investing and are here because you are thinking about signing up with M1 Finance, make sure to check out our in-depth review first.

Up until now, M1 relied on scheduled or manual transfers. For example, you could set up a transfer from checking to your Invest account weekly, bi-weekly, or monthly.

Many investors set up transfers to coincide with their pay dates. You could also manually transfer funds if you found yourself with extra funds or just wanted to invest a little more. This was always a ‘one-time’ deal, though and it took a lot of effort.

You had to manually make the transfer happen. Not that it was the end of the world, but with all the busyness going on today, many investors overlooked perfectly good money they could be investing or transferring to their M1 Spend Plus checking, earning 1% APY rather than sitting idle. Money sitting doing nothing is like throwing earnings out the window.

M1 Smart Transfers changes all of this and more. Now you don’t have to rely on remembering to transfer funds or waiting for the ‘scheduled transfers’ to occur.

Smart Transfers sets up rules that make it easy to automatically transfer your funds.

You don’t have to worry about forgetting, overlooking the opportunity, or not knowing how to handle the transfer.

Here’s how it works.

What are Smart Transfers?

Smart Transfers, otherwise known as cash sweeps, are rules you set up to sweep cash either into your investment account or back into your Spend account based on your rules.

The sweeps focus on ‘overbalances’ and refers to money in your investment account that’s sitting idle (dividend payments or sell payment proceeds) or money sitting in your checking account (Spend) that you don’t need there.

You set the rules and M1 does the rest, putting an end to idle money.

Set up the Rule

First, you set up the ‘rule.’ Choose an account, either your M1 Spend Plus account or Invest account to start. Now set a cash balance that you need in the account.

Example

Rules for the Invest Account

It’s important to clear a few things up about transfers from the Invest account to your Spend account.

First, M1 will only transfer cash. If you don’t have idle cash, no transfer will take place. In other words, M1 won’t sell securities to transfer cash over. The rule only applies to the uninvested money you may have sitting around, which commonly occurs from dividend payments if you don’t have them automatically reinvested or when you sell securities and don’t reinvest the cash.

How to Set up M1 Transfers

Setting up M1 transfers is incredibly easy.

Start by going to the transfers tab and click ‘Move Money.’ You’ll be presented with a list of options – choose ‘Smart Transfers.’ Now choose ‘Spend Overbalance’ or ‘Invest Cash Overbalance.’

You then choose the ‘trigger balance’ and the account to send it to. If you’re setting a rule for your Spend account, you’d enter $1,000 and Invest account. This sets up the rule to send Spend overbalances to your Invest account.

Click ‘Create Smart Transfer’ and you’re done. You don’t have to set the rule up again unless you want to change the parameters.

You can edit Smart Transfers at any time. Just click on the Smart Transfer you want to edit and click ‘edit.’ Make any changes on the screen that you want – just like you did when you set it up, and click ‘Update.’

Pausing Smart Transfers

You can pause Smart Transfers at any time. Go into the transfer you want to pause and toggle off the button for ‘Enable Smart Transfer.’ This pauses it indefinitely until you toggle it back on.

If you decide you don’t want the rule any longer, click on ‘edit’ like you would to change it, but rather than changing the information, click ‘delete.’

The Perks of M1 Plus

If you haven’t jumped at the chance to be an M1 Plus member yet, check out the amazing benefits in addition to Smart Transfers:

• Afternoon trade window – Standard M1 customers may only trade during the morning trade window. M1 Plus members, however, may conduct afternoon trades, which occur at 3 PM ET.
• Earn cash back – M1 Plus members receive 1% cashback on all debit card purchases. You’ll receive the cashback on the 10th of the month following the month you made the purchases.
• Earn interest – M1 Plus members earn interest (1.0% APY) on the final day of each month on their balances in M1 Spend.
• Lower loan interest rates – M1 Plus members receive a 1.5% lower rate from the standard M1 Borrow rate.

M1 Finance is a Great Option for Traders

Whether you’re a new or experienced investor, M1 Finance offers incredible benefits for traders. With commission-free trades and a hands-on approach, M1 is great for the trader learning the ropes to handle his/her investments without a robo-advisor.

Speaking of trading, check out our comparison of Robinhood and M1 Finance to find out which app we recommend for trading.

M1 offers pre-built portfolios making it easy to choose your investments or you can build your own portfolio, which they call pies. You decide how you want to invest and M1 does the rest. It’s a great tool for any investor who doesn’t rely on heavy research or tools but just wants the ability to invest with a hands-on approach.

Why you Should Use Smart Transfers

It may seem unnecessary to use Smart Transfers, especially if you already have automated transfers set up, but there are benefits.

You set up automated transfers based on your pay dates. But what if something changes? Maybe you get a bonus or receive a monetary gift or a large tax refund. Suddenly you have more cash in your Spend account. Chances are if you leave it there, you’ll spend it, right?

If you set up a rule to automatically transfer the funds beyond a specific dollar amount, though, the temptation to spend isn’t there anymore because M1 will invest the money as you set up in the rule.

Even if you would have transferred the funds eventually, every day costs you money. If you have the rule set up to transfer the money right away, you may invest a few days, weeks, or even months sooner because who knows when you would have gotten around to it.

The more time your money is in the market, the better your chances of greater returns. It may not sound like much, especially if it’s only a few days, but it all adds up – sometimes to thousands of dollars when you look at the big picture.

Smart Transfers, as the name suggests, are also smart. If your balance dips below your threshold, you don’t have to do anything. It won’t transfer funds until you reach and go beyond your threshold again.

Let’s say you had an emergency and you dipped into your Spend account. You now have $500 rather than $1,000. M1 won’t transfer any funds to your Invest account until you replenish the account back to $1,000 and then it will only invest the excess.

There’s More to Come

M1 Finance has also said ‘they aren’t done yet.’ Smart Transfers aren’t fully complete, which means there are more surprises coming your way.

Their hint was this – ‘imagine stringing together a chain of Smart Transfers.’ While we aren’t sure what they’re up to yet, it’s intriguing to know they still have more goodies up their sleeve to make investing with M1 even more enticing.

Conclusion

If you haven’t tried M1 Smart Transfers yet, now is the time! With its new release, more investors are bound to check out M1 and how it works. Smart Transfers is something most brokers don’t have, giving M1 the leg up on the competition.

If you’re tired of forgetting to make transfers or not knowing when it’s okay to transfer funds to your Invest account or the other way around, take advantage of technology and Smart Transfers.

Best for DIY

Account Minimum

$100

Management Fee

0.00%

Portfolio

The user can create portfolios which consist of low-cost ETFs or individual stocks

Account Types

Individual and joint taxable accounts; traditional, Roth and rollover IRAs, trusts and even business accounts.

Rebalancing

Tax Loss Harvesting

Fractional Shares

Automatic Deposits

SRI

Human Advice

Best for

DIY Investors. If you are enthusiastic about getting your feet wet in the investing world, M1 Finance is the robo advisor of your choice

Summary

M1 Finance is the best choice for self-directed investors that want to pick from existing portfolios or customize their own.

Visit Website

Read Review

Best for DIY

Account Minimum

$100

Management Fee

0.00%

Portfolio

The user can create portfolios which consist of low-cost ETFs or individual stocks

Account Types

Individual and joint taxable accounts; traditional, Roth and rollover IRAs, trusts and even business accounts.

Rebalancing

Tax Loss Harvesting

Fractional Shares

Automatic Deposits

SRI

Human Advice

Best for

DIY Investors. If you are enthusiastic about getting your feet wet in the investing world, M1 Finance is the robo advisor of your choice

Summary

M1 Finance is the best choice for self-directed investors that want to pick from existing portfolios or customize their own.

Visit Website

Read Review

Robo-advisors were put to the test these last six months. As the pandemic spread and hurt the economy, the stock market fell quickly and robo-advisors had to bear the heavy burden of re-allocating portfolios, not to mention trying to stay afloat.

In fact, robo-advisors saw more cash coming in and out than they’ve ever seen before.

They’ve also seen an incredible increase in new sign-ups. Since robo-advisors are fairly new since the last economic crisis of 2008, it’s interesting to see how they’ve performed.

3 Reasons why Robo-Advisors did so well

Experts don’t agree on the reasons, but some of the consensus includes:

1. Most Robo-Advisors use goal-based investing.

They take into consideration an investor’s risk tolerance, timeline, and intended financial goals. As an investor nears his goal, robo-advisors naturally choose conservative investments to reduce the risk of loss.

More conservative investments mean a lower risk of loss even during an economic downturn. While there’s a healthy mix of investors close to their goals and those not so close, robo-advisors found a way to ride the storm, helping investors through it.

2. Robo-Advisors offer allocation shifts

Many investors immediately pull out of the market when investments go south. It makes sense why they would do it, but it’s the worst thing they could do. Investors using a robo-advisor are less likely to do so because of the automated re-allocation.

If anything, robo-advisors reallocated to less risky investments for the time being, such as bond ETFs and then switched investors back to stock ETFs once the market rebounded. Investors staying in the market, but reallocating temporarily played a role in robo-advisors’ success.

3. Frequent Communication

If there’s one thing all investors needed during the pandemic it’s communication. That can be hard with a robo-advisor since most communication is digital, but many advisors offer alternatives including live chat, email, support, and even phone support.

What did Robo-Advisors Do?

Robo-advisors typically buy-and-hold. One of the main benefits of using one is the limited emotional investing you can do. When you do DIY investing, it’s human nature to pull out of the market when it takes a nosedive like it did in February/March of this year.

Robo-advisors don’t encourage that and actually make it hard to pull out for that very reason. Most robos use long-term passive investment strategies, which meant most portfolios were left alone, or if they were affected, have since bounced back.

Which Robo-Advisors did Good?

As you probably guessed, some robo-advisors did good while others had a rougher time through the pandemic, but most remained open.

TD Ameritrade’s Essential Portfolios, for example, was able to get most of the market’s upswing rather than downswing. They have a large focus on fixed-income securities which didn’t see the same downfall as equities, so that helped offset the risk.

Charles Schwab Intelligent Portfolios, on the other hand, had the opposite issue. They were on the market’s downside. This is because Schwab Intelligent Portfolios focus heavily on international emerging markets, which are much riskier than fixed-income assets.

Many robos focused heavily on tax-loss harvesting throughout this time, and Betterment advisors stated most phone calls and inquiries they received were about this issue. Investors wanted to know how to offset their tax liabilities during such a volatile time.

Does this mean rebalancing trades won’t happen?

They will, it may just take time. Most robo-advisors didn’t buy into the ‘sell now’ phenomenon and rather are waiting to see what happens.

During a downturn, most investors sell equities and buy fixed-income assets for the stability and lower risk of loss. The trading volume wasn’t nearly as high as one would think during the pandemic, though.

The most important thing robo-advisors did, whether human or computer, was to avoid emotional investing. Even reallocating portfolios wasn’t necessary at this point, but it may become apparent down the road.

How Could Robo-Advisors do Better?

Robo-advisors did a great job getting through the worst of the pandemic, but moving forward, many firms may implement more support to help investors during times of crisis, such as the pandemic.

Offering more life-planning services may help investors feel better prepared and less likely to pull out of the equities market. Helping clients realize the importance of emergency funds and how to cut expenses is crucial. While it may seem simple to jump right into your portfolio and cash out your investments, it’s the worst decision long-term.

The right robo-advisor will help you see through the hard times. Even if you have to reallocate your portfolio, it’s better than selling your investments and realizing a serious loss, not to mention tax liabilities.

Set yourself up for the future by choosing the robo-advisor that aligns with your beliefs and who will help you through the pandemic should it or something similar occur again.

Robo Chooser

Use the following Quiz and find out which robo advisor is best for you.

If you have any questions, please comment below.

Before you invest, it’s important to understand your choices, how they work, and how to determine which asset classes are right for you.

Traditional beginning investors stick with stocks and bonds, but there are many other investments available today that if you’re willing to take the risk, are at your disposal.

What are the 3 Asset Classes?

The 3 traditional asset clases.

Traditional asset classes are the investments that first come to mind when you think about investing. But what are the 3 traditional asset classes? The answer is

• Stocks
• Bonds
• Cash

When we say cash, we mean cash at home (under your mattress) and cash in a high-yield account, such as a money market or CD. Cash should earn at least a fixed interest rate while it sits uninvested.

When you own stocks, you have ownership in a company. You can buy common or preferred stock. Common stock gives you voting rights at shareholder meetings (if you choose to do so). Preferred stock doesn’t include voting rights, but you have a higher priority on payouts. Stock prices vary daily and sometimes several times a day. The idea is to ‘buy low and sell high,’ but of course, that doesn’t always happen.

If you invest in bonds, you invest in a company’s debt. You are the ‘bank’ or the person lending the money. The company pays you back interest at a fixed interest rate. Most bonds are with government entities or corporations and carry little risk, but there’s always a risk of default, especially if you invest in junk bonds.

What are the 4 Asset Classes?

We already discussed the 3 asset classes above, as they are the traditional assets. However, today, experts agree that there is a 4^th asset class – real estate. This asset class also includes tangible assets – any physical assets you can touch and invest in fall into this 4^th category. So we have:

• Stocks
• Bonds
• Cash
• Real estate

Investing in real estate is possible in a few ways:

• Buy a property and hold it – Traditional real estate investing means you buy a property, fix it up, and rent it out. You use the rent to cover the mortgage (if applicable) and make a profit off the monthly cash flow.
• Buy a fixer-upper – You can buy a property at below market value, pay to fix it up, and then sell it for a quick profit. Investors usually do this within 6 months or less.
• Invest in real estate investment trusts – If you don’t want to physically own property, you can invest in REITs which provide funds to property managers and investors to invest in real estate. You earn a prorated amount of the earnings based on the type of investment (equity or debt).

What are the 7 Asset Classes?

If you want to take the asset classes even further, there are 7 total asset classes. In addition to stocks, bonds, cash (money market), and real estate, there are international emerging markets, commodities, and foreign currency. To sum it up we have:

• Stocks
• Bonds
• Cash
• Real estate
• International markets
• Commodities
• Foreign Currencies

Riskiest Assets vs Safest Assets

If you invest, you take a risk, otherwise, it wouldn’t be investing – it would be saving. But within investments, there are safe and risky investments.

Safe Assets

If there’s such a thing as safe assets, cash, money market, and some bonds fall into this category. Bonds do carry some risk depending on if they’re government bonds or otherwise. There’s always a risk of default, but it’s not high. Other safe ‘investments’ include CDs and treasury bill investments.

Risky Assets

Risky assets are any asset that has a risk of a total loss, such as stocks, commodities, mutual funds, and index funds. Commodities, real estate, emerging markets, and foreign currency all have high risks too.

What to Invest in?

You have many options when you invest, so how do you know what to invest in? It comes down to your risk tolerance. Are you looking for growth or stability? Do you want an active role in investing or passive?

These are just a few questions to ask yourself as you choose your investments. Here is one key idea to consider.

Growth vs Value

Growth investors look for companies with strong earnings or better-than-average earnings. These companies are expected to keep delivering high earnings, but of course, there’s no guarantee.

Growth stocks include two types of companies:

• Established companies – Companies with a history of high returns who are expected to continue with these earnings are good for growth investments
• Emerging companies – Some companies come out of the starting gates rearing for success, with a high potential for earnings

Characteristics of Growth Funds

Growth funds have the following characteristics:

• Higher initial prices – Investors put more into these investments, but expect much higher earnings as the company grows
• Historical growth records – Growth companies have a history of high earnings levels even during economic downturns
• High risk – Growth companies’ stock prices could fall at any point due to negative news or other unprecedented issues

Characteristics of Value Funds

Value funds are the opposite of growth funds. They don’t have the growth expectation, but rather remain stable.

• Lower initial prices – Value funds have stable or lower prices than growth stocks because investors know that even if the company’s stock falls, it will bounce back
• Lower prices than competitors – Value companies often have even lower stock prices than their competitors because of temporary issues that caused investors to pull out and react to negative issues going on with the company, but the prices usually bounce back
• Lower risk – All stocks carry some risk, but value stocks are good for buy-and-hold investors because they usually hold their value or return to it

So which do you choose? Is growth or value better?

There’s no way to predict which is better 100%, as each investor has different needs/wants. Growth stocks typically do well when interest rates fall and earnings increase. But when the economy does poorly, growth companies are the first to suffer.

Value stocks are often more cyclical. They do well when the economy recovers because of their low prices, but take the longest to increase in value.

The right strategy for most investors is to diversify between the two.

Don’t put all your eggs in one basket – invest a little bit in each type instead.

4 Steps to Choose the Right Investments

So how do you set up the right portfolio? While there’s no tried-and-true or 100% foolproof way, the following steps may help minimize your risk.

1. Decide on asset class mix

Choose your asset class mix. We don’t recommend choosing only one. Again, diversify your investments. If you invest in stocks, put a portion of your assets in bonds too. You can even keep a small portion in cash or a money market. You’ll earn a little interest and have no risk of a loss.

If you choose higher-risk assets, such as commodities or real estate, really diversify. Figure out your risk tolerance and what you can stand to lose. Choose your asset class accordingly. If you choose commodities or real estate, balance out the risk with bonds or cash. You could even balance it out with stocks – as one asset class usually does well while the other struggles.

In other words, don’t put all your money into one investment class. It’s not worth the risk.

If you don’t offset your risk, you could lose it all and that’s not something anyone wants.

2. Decide on passive or active investing approach

Next, decide what type of role you want in your investments. Do you want a hands-on role? Do you want to choose your investments, manage the portfolio, and reallocate it as it shifts away from your goals?

Some investors prefer this type of investing. They like having control and knowing where their money is – they don’t like the unexpectedness of automated reallocation which many robo-advisors offer.

Typically, experienced investors take an active approach, and new investors or experienced investors that don’t want the stress take a more passive role.

Passive investors may invest in two ways:

• Choose your investments and let the advisor do the rest. You don’t have to worry about reallocating your portfolio or even watching the market.
• Let the advisor choose everything including your portfolio mix based on your answers regarding risk tolerance and your financial goals.

3. Know the different fees

Before you invest, determine the cost. All advisors charge fees, even if they have 0% management fee, you’ll pay a fee somewhere down the road.

Ask about management fees, commission fees, and any miscellaneous fees brokers may charge. Miscellaneous fees may include statement fees, transfer fees, withdrawal fees, and wire fees. Read all about hidden fees here.

Most advisors charge a management fee which is a percentage of your assets under management. For example, many robo-advisors charge 0.25% of assets under management. Some advisors charge this monthly, others charge it quarterly or annually.

4. Understand your Tax Liabilities

Some advisors help minimize your tax liabilities, which honestly, should be a goal when you’re investing. If you have too many capital gains, the taxes eat away at your profits. Advisors that offer tax-loss harvesting help offset your tax liabilities by selling certain investments at a loss. The loss offsets your capital gains which decreases your tax liability.

While it seems strange to want to sell an asset at a loss, the loss is often less than the tax liability, making it worth it.

Asset classes and Robo Advisors

Beginning investors often choose robo-advisors for their versatility and low costs. You get the advice of a professional advisor, but via a computer program. Some robo-advisors even offer human support, giving you the best of both worlds.

If you’re thinking of using a robo-advisor, it’s important to know what they invest in and how you choose your investments.

What do Robos Invest in?

Robo-advisors often invest in ETFs and index funds. These are hand-picked investments that mimic the S&P 500s returns. ETFs and index funds have fund managers and charge what they call expense ratios to cover the cost of managing them, but they offer a lower risk level because they are already diversified.

Some robo-advisors invest directly in stocks or bonds, and others invest in mutual funds. Watch out for mutual fund investments, though, as they often cost much more because of the management that’s involved since mutual funds are actively managed.

Conclusion

Do your research and soul searching before you invest. How much can you stand to lose and still sleep at night? How close are you to retirement?

If you have a low-risk tolerance, stick to bonds, cash, and possibly ETFs. If you have a growth mindset and don’t mind taking risks, stocks, mutual funds, commodities, and real estate investments are great options too.

Robo Chooser

Use the following Quiz and find out which robo advisor is best for you.

If you have any questions, please comment below.

According to this statistic the Neobanking segment is expected to show a revenue growth of 42.2% in 2023. the combined asset under management of robo advisors will hit the $1 billion dollar mark in early 2022.

By 2024 it is expected to reach $2.49 billion (!)

As you can see robo-advisors are quickly becoming more and more popular. But who are the big players in this industry? Who is managing the most amount of money?

Comparison Table (Updated 2023)

Please note that this info is gathered from different online sources and I can by no means guarantee its accuracy. This should purely serve for entertainment purposes.

Here’s something to consider: in the previous year there was an estimated 50% growth in the robo-advisor’s AUM number. Industry experts predict that this this number will continue to increase dramatically.

Now let’s take a look at the 5 biggest players in the robo-advisor space so you can decide if any of these could be a good fit for you.

1. Vanguard

Vanguard is the biggest name in investments as well as the new robo-advisor industry. There are two robo-advisor options that clients can choose from:

• Vanguard Personal Advisor Services and
• Vanguard Digital Advisor.

These are the two unique options that we will take a closer look at.

Vanguard Personal Advisor Services

This option combines the human touch with a real financial advisor offering guidance and computerized investment management.

It starts with a financial expert working with a client to create the best investment portfolio. They will also manage and rebalance it as necessary to meet the individual needs and financial situation of each client. It’s important to know that this option does require a minimum account balance of $50,000. This may be a high entry barrier for some, the amount is partly justified by the excellent human advise you get with this service.

Additionally, you will get charged a 0.30% AUM fee as well as other commissions and fees. This all depends on the specific investments that you choose. If your account has less than $500,000 invested, you will have a team of advisors to work with. If you have more than that, you get your own dedicated financial planner that works closely with you.

Retirement Investors

Account Minimum

$50,000

Management Fee

0.30% (charged quarterly)

Portfolio

Vanguard chooses funds from the over 100 Vanguard mutual funds and ETFs according to your investment goals.

Account Types

Individual, Joint, Roth, traditional, SEP, Simple and rollover IRAs. Trusts.

Rebalancing

Tax Loss Harvesting

Fractional Shares

Smart Beta

Automatic Deposits

SRI

401(k) Assistance

Human Advice

Best for

Vanguard is perfect for retirement investors who are in need of human assistance.

Summary

Vanguard offers personalized portfolios that are built with the assistance of a human financial planner. Accounts over $500,000 get a dedicated advisor

Visit Website

Read Review

Retirement Investors

Account Minimum

$50,000

Management Fee

0.30% (charged quarterly)

Portfolio

Vanguard chooses funds from the over 100 Vanguard mutual funds and ETFs according to your investment goals.

Account Types

Individual, Joint, Roth, traditional, SEP, Simple and rollover IRAs. Trusts.

Rebalancing

Tax Loss Harvesting

Fractional Shares

Smart Beta

Automatic Deposits

SRI

401(k) Assistance

Human Advice

Best for

Vanguard is perfect for retirement investors who are in need of human assistance.

Summary

Vanguard offers personalized portfolios that are built with the assistance of a human financial planner. Accounts over $500,000 get a dedicated advisor

Visit Website

Read Review

Vanguard Digital Advisor

This options is your standard robo-advisor that offers the same rebalancing and other benefits as other platforms. Here’s what makes this option different from the others:

• Use of Vanguard’s low-fee exchange traded funds (ETFs)
• Low investment management fee of 0.15%
• Access to Vanguard, an already established and reputable investment brand.
• Other new features coming soon such as debt management assistance and emergency fund.

2. Personal Capital

Another option that we like is Personal Capital. This platform has about $12.3 billion AUM as of 2021. What makes this platform great is that it is an automated investment manager that has a free option for users. Personal Capital’s free money management software gives its users a total view of your financial picture in a single, convenient location.

When looking at your dashboard, you can view all your income, debt, investments, and bills in one place. Those are only a few things that you can see all in one place. You can link your bank accounts to the website, giving a more accurate picture of your financial situation. The site will take this information and offer valuable financial advice.

With the free retirement planner, you can test out a variety of scenarios that help you see if your assets and income can hold up to those situations.

As if this wasn’t enough for you, you can get basic services completely free. You could also pay extra for the Personal Capital Advisors, a highly comprehensive automated investment advisory service staffed with dedicated financial planners. There are some stipulations to this paid service. You do need to have at least $100,000 in your account.

The approach used by Personal Capital is quite unique. It uses sector-based asset allocation as well as access to individual stocks. This platform also offers the usual tax-harvesting and rebalancing. If you have managed accounts, you also have a certified financial planner working with you.

However, PC also has a stellar robo-advisor that has been performing well. For wealthier investors, you can access a high-yield cash account and various other services. The dashboard and basic features are free, but you will have to pay .89% in fees for accounts up to $1 million. Should your portfolio grow beyond this, these fees will decline.

High-net-worth

Account Minimum

The account minimum is $100,000. This will give you access to the free management tools.

Management Fee

The management fee for accounts between $1,000,0000-$3,000,000 is 0.89%. Once the account reaches $10,000,000 the fee will drop to 0.49%.

Portfolio

Customized for each client

Rebalancing

Tax Loss Harvesting

Fractional Shares

Automatic deposits

Smart Beta

SRI

401(k) Assistance

Human Advice

Account Types

Individual, Joint, Roth, traditional, SEP & rollover IRAs and Trusts.

Best for

Investors with a high net worth that are looking for tax optimization and a hands-off investing approach with access to human financial planners.

Summary

Personal Capital has great financial management tools and is definitely the robo advisor of choice when it comes to high profile investing.

Visit Website

Read Review

High-net-worth

Account Minimum

The account minimum is $100,000. This will give you access to the free management tools.

Management Fee

The management fee for accounts between $1,000,0000-$3,000,000 is 0.89%. Once the account reaches $10,000,000 the fee will drop to 0.49%.

Portfolio

Customized for each client

Rebalancing

Tax Loss Harvesting

Fractional Shares

Automatic deposits

Smart Beta

SRI

401(k) Assistance

Human Advice

Account Types

Individual, Joint, Roth, traditional, SEP & rollover IRAs and Trusts.

Best for

Investors with a high net worth that are looking for tax optimization and a hands-off investing approach with access to human financial planners.

Summary

Personal Capital has great financial management tools and is definitely the robo advisor of choice when it comes to high profile investing.

Visit Website

Read Review

3. Betterment

While Betterment offers a variety of similar benefits as other robo-advisors, what makes it really stand out is innovative approach to customer service.

First of all, you can text any questions that you have to a real human advisor whenever you need to. It’s innovative approach has led this platform to become one of the leaders in robo-investing. Not only does it offer easy access to human financial planners, you also have socially responsible investment options.

What’s better than all of that? Betterment doesn’t settle and is constantly working to improve. They consistently release new and innovative financial products. Their priority is offering better service to their clients. Some of their products include:

• Low-cost financial planning packages, a la carte
• High yield savings account
• Goldman Sachs Smart Beta portfolio

Another great reason why Betterment is a good option is because there’s no account minimum if you use the digital plan. Here is a look at their charges:

• Charge 0.25% AUM on accounts that are valued up to $2 million. (Digital Plan)
• Charges fall to 0.15% AUM on accounts valued over this amount. (Digital Plan)
• Premium plan does require over $100,000 minimum investment
• Charge 0.40% AUM on accounts under $2 million. (Premium Plan)
• Charges fall to 0.30% on accounts valued over $2 million. (Premium Plan)

When you sign up for their premium plan, you also gain access to certified financial planners.

Best service

Account Minimum

$0 for Betterment Digital and $100,000 for Betterment Premium

Management fee

0.25% for Digital and 0.40% for Premium

Portfolio

ETFs from about 12 asset classes. The user can choose between a recommendation or decide the percentage of portfolio in each investment.

Rebalancing

Tax Loss Harvesting

Frational Shares

Human Advice

Smart Beta

401(k) Assistance

SRI

Automatic Deposits

Supported Accounts

Individual and joint accounts. Roth, traditional, SEP and rollover IRAs. Trusts. 401(k) plans. (Betterment for Business) Non-profit.

Best for

Investors who are looking for hands-off, "set it and forget it" type of robo advisor with low fees.

Summary

Betterment uses a goal-based investment approach. The portfolio consists mainly of low fee ETFs. The service is great, it is easy to use and very beginner friendly. It is also the largest independent robo-advisor. The premium allows for in-depth investment advice and unlimited access to certified financial planners. The only downside is that fees increase once you hit $100,000.

Sign Up

Read Review

Best service

Account Minimum

$0 for Betterment Digital and $100,000 for Betterment Premium

Management fee

0.25% for Digital and 0.40% for Premium

Portfolio

ETFs from about 12 asset classes. The user can choose between a recommendation or decide the percentage of portfolio in each investment.

Rebalancing

Tax Loss Harvesting

Frational Shares

Human Advice

Smart Beta

401(k) Assistance

SRI

Automatic Deposits

Supported Accounts

Individual and joint accounts. Roth, traditional, SEP and rollover IRAs. Trusts. 401(k) plans. (Betterment for Business) Non-profit.

Best for

Investors who are looking for hands-off, "set it and forget it" type of robo advisor with low fees.

Summary

Betterment uses a goal-based investment approach. The portfolio consists mainly of low fee ETFs. The service is great, it is easy to use and very beginner friendly. It is also the largest independent robo-advisor. The premium allows for in-depth investment advice and unlimited access to certified financial planners. The only downside is that fees increase once you hit $100,000.

Sign Up

Read Review

4. Schwab

Schwab is one of the biggest names in investment. Their robo advisor Schwab Intelligent Portfolios was among the top performers back in 2017. In 2019, this robo-advisor managed $40.7 billion in AUM.

One of the things that makes this platform stand out is there’s a portfolio option with no management fees. Their basic Schwab Intelligent Portfolios option has zero management fees, making it an ideal choice. However, you do need a minimum $5,000 balance if you want to open an account with this platform. As is standard with the big robo-advisors, you get rebalancing and tax harvesting features.

Now you may be wondering how this service makes money without these fees. Schwab gets management fees from their own ETFs as well as other 3^rd party funds that they recommend to clients. You can find investment opportunities with IRAs, 401k retirement plans, taxable accounts, trusts, and 401k rollover.

In addition to these services, investors can get more personalized services through the premium platform. The Schwab Intelligent Portfolios Premium offers users a variety of services, such as:

• Unlimited consultations with real human financial planners
• Comprehensive financial plans
• Interactive online planning tools.

To access extra services, you need to meet specific criteria like:

• $30 per month subscription
• One time $300 planning fee
• $25,000 AUM

Additionally, you can visit any physical branch to ask any questions that you may have.

Great Usability

Account Minimum

$5000

Mangement Fee

0.00%

Portfolio

53 ETFs covering as many as 20 asset classes. A lot of customization possible.

Rebalancing

Tax Loss Harvesting

Automatic deposits

Fractional Shares

Smart Beta

SRI

401(k) Assistance

Human Advice

Account Types

Individual, Joint, Roth, traditional & rollover IRAs and Trusts.

Best for

Investors with a little bit more to spend who are just starting out and want to have access to a human financial planner.

Visit Website

Read Review

Great Usability

Account Minimum

$5000

Mangement Fee

0.00%

Portfolio

53 ETFs covering as many as 20 asset classes. A lot of customization possible.

Rebalancing

Tax Loss Harvesting

Automatic deposits

Fractional Shares

Smart Beta

SRI

401(k) Assistance

Human Advice

Account Types

Individual, Joint, Roth, traditional & rollover IRAs and Trusts.

Best for

Investors with a little bit more to spend who are just starting out and want to have access to a human financial planner.

Visit Website

Read Review

5. Wealthfront

One of the reasons why Wealthfront is a great option to consider is because it is considered to be the low-cost leader in the industry.

When you trust them, you get a lot of benefits such as low fees and great research. You also get index matching that is based on your individual risk profile. At Wealthfront, you will find direct indexing and daily tax-harvesting as well as automatic rebalancing. As of 2021, the AUM of Wealthfront was $21 billion.

Now, what does this mean for you? The tools that Wealthfront offers can let you see exactly what you need to save and invest for your future. These tools can also show you how any potential life changes can affect your financial situation. We like how this platform offers you a comprehensive picture for financial planning and can help you answer any financial questions without the need of actually talking to a traditional financial planner.

If you have an account that has less than $5,000, you get this service for free. For accounts that are valued over $5,000, Wealthfront does charge a 0.25% AUM.

As is common with other similar robo-advisors, this platform invests its client’s funds in various exchange-traded funds. These funds track 11 of the major asset classes and you can get access to multiple types of accounts. If you have a larger account, you can also have the opportunity to invest in various individual stocks or access direct indexing.

In addition to these services, you can also get cash management solutions and lending options with this platform. One of the best things that we love is that Wealthfront has one of the most comprehensive financial tools available that you can get today.

Best for low fees

Account Minimum

$500

Management fee

0.25%

Portfolio

ETFs from 11 different asset classes

Rebalancing

Tax Loss Harvesting

Frational Shares

Automatic deposits

Smart Beta

SRI

Human Advice

401(k) Assistance

Account Types

Individual, Joint, Roth, traditional, SEP & rollover IRAs. Trusts and 529.

Best for

Investors who are looking for a low-cost, hands-off investing approach. The service is completely software-based so if you are looking for a dedicated human advisor it would be better to look elsewhere.

Summary

Wealthfronts portfolio consists of ETFs with very low expense ratios. It stands out not only due to its low fees but also due to their "Path Algorithm". The Algorithm will help you keep track on your goals.

Sign Up

Read Review

Best for low fees

Account Minimum

$500

Management fee

0.25%

Portfolio

ETFs from 11 different asset classes

Rebalancing

Tax Loss Harvesting

Frational Shares

Automatic deposits

Smart Beta

SRI

Human Advice

401(k) Assistance

Account Types

Individual, Joint, Roth, traditional, SEP & rollover IRAs. Trusts and 529.

Best for

Investors who are looking for a low-cost, hands-off investing approach. The service is completely software-based so if you are looking for a dedicated human advisor it would be better to look elsewhere.

Summary

Wealthfronts portfolio consists of ETFs with very low expense ratios. It stands out not only due to its low fees but also due to their "Path Algorithm". The Algorithm will help you keep track on your goals.

Sign Up

Read Review

FAQ

(Find the full Robo-FAQ here)

Which robo advisor has the most asset under management?

Vanguard. The investment giant manages a total of $161 billion (2021)

What Should I Look at When Considering Different Robo-Advisors?

Some of the most important things to consider when looking at robo-advisors include:

• Investment strategies
• Add-on services that you may be interested in, like tax-loss harvesting.
• What types of investments are available
• Services
• Fees
• Whether or not you get access to human financial advisors.
• Minimum initial investments required

Everyone has their own individual needs. This means that one platform may work for someone else, but not you. You need to carefully consider what your needs are and do your research based on that.

Who Actually Benefits from a Robo-Advisor?

There are plenty of people who would benefit from using a robo-advisor over a traditional one. You may benefit from a robo-advisor if:

• You are a new investor who doesn’t have the time or interest to manage their finances, but understands the importance of building their future wealth.
• You are a DIY investor, but still want a financial planner to help manage your investments.
• You are just looking to pay a lower fee while still getting financial advice from an expert.
• You are a sophisticated investor that wants to pay lower fees and gain access to a financial planner.

As you can see, there are a lot of different types of investors that benefit from a robo-advisor.

What’s the Difference between a Robo-Advisor and a Traditional Financial Advisor?

Aside from the obvious difference, a robo-advisor and traditional advisor has their own approach to investments. A robo-advisor will have several pre-determined options for investments. By answering certain questions that are related to age and risk-tolerance, your personal investment portfolio gets decided by the advisor. These platforms usually invests in low-fee and pre-selected ETFs or mutual funds, from a limited number of options. The fees are much lower, but you also don’t get extras like tax planning or estate planning.

The traditional approach uses a human financial advisor rather than an algorithm. You get access to more investment options, but you also have a higher fee structure in most cases. But, you get the benefit of talking to a financial advisor when you have questions. They can also offer other services such as guidance on estate, tax, money, and insurance planning that you can’t get with a robo-advisor.

What Does “Rebalancing” Mean?

When you first create your portfolio, you answer questions that will determine your risk profile. The investments get allocated into different asset groups based on your risk profile, which is referred to as asset allocation. As the values of these investments change, a rebalancing occurs to go back to the original asset allocation. This is rebalancing.

What Does “Tax Loss Harvesting” Mean?

This is a strategy that is used to sell securities that have dropped its price since you purchased them. The tax loss will offset the sale of the security that as increased in price to reduce taxes.

Conclusion

Does the AUM really matter when picking your robo advisor?

This list contains the 5 top robo-advisors based on the metric of AUM, but that’s not the only factor that you need to consider when choosing. You have to take a close look at any option that you are considering.

Every platform has their own pros and cons that you should be aware of before you invest your money with them.

There are things that are unique to the brand, but some of the features that are similar in each include:

• Relatively lower required initial investments
• Account rebalancing
• Account management requires lower fees
• Various investment options depending on investor’s risk levels

What this means is that you need to consider what each robo-advisor offers and whether or not they meet your particular needs.

Robo Chooser

Use the following Quiz and find out which robo advisor is best for you.

If you have any questions, please comment below.

Retirement plan rollovers happen all the time. Whether you change jobs and need to rollover a 401K or you want to roll over an IRA to another broker, investors do this multiple times in their lives. 

It’s not as hard as it sounds, but make sure you know what you’re doing or you could put yourself in an unfriendly tax situation. Are you ready to learn what you need to do?

Check out the tips below. 

Reasons to Rollover your IRA or 401K

The #1 reason people rollover retirement funds is changing jobs.

When you have an employer-sponsored 401K, but you leave that employer, you should take the 401K with you. On the rare occasion, you may leave it, but that’s not always feasible or financially responsible. 

When you leave an employer, the best-case scenario is rolling the 401K over into your new employer’s 401K. If your new employer doesn’t have one or you’re not eligible right away, roll it over into an IRA. 

Just avoid cashing it out. If you do, and you’re younger than 59 ½, you’ll pay fees, penalties, and taxes on the money. 

Key Factors to Consider

Before you rollover, your retirement accounts, get familiar with these regulations.

Choose a Direct or Indirect Rollover

I suggest that you look for direct rollovers whenever possible.

In a direct rollover, the original plan trustee transfers your retirement plan funds directly into the new plan. The money never touches your hands.

In an indirect rollover, the trustee issues the money to you and you roll it into the new retirement plan. You’ll pay a 10% penalty fee on IRAs and a 20% penalty fee on 401Ks for the indirect rollover.

Potential Fees

Besides the 401K or IRA fees mentioned above, there are a few other fees you may pay if you aren’t careful.

If you receive retirement funds, you have 60 days to reinvest them in another tax-advantaged account. If you don’t, the IRS considers it a cash withdrawal and you’ll pay taxes on the funds, as they increase your income.

Besides the taxes, the IRS charges a 10% early withdrawal fee, aka additional tax. There aren’t any exceptions. 

What are your Rollover Options?

If you’re leaving your job or want to change your IRA, you must consider what to do with your retirement account. There are a few options to consider:

Rollover a 401K to an IRA

You’ll have the most freedom if you rollover to an IRA and it has many benefits:

• IRAs have more investment options versus 401Ks, which only allow investments in the choices the sponsor includes
• You control the IRA, which means you can buy/sell assets as often as you want
• You choose the plan trustee and change him/her as often as you wish
• You can choose investments that keep your fees low
• You may be able to withdraw funds easier

Rollover a 401K to Another 401K

If you’re immediately eligible for a 401K at your new employer, you may make a direct rollover into the new 401K. Make sure you know the investment options, fees, and rules of the new 401K before making this move.

IRA to 401K Rollover

If you started an IRA account before you had a 401K account, you can roll the funds over into your 401K.

First, your new employer must allow it. Check with HR and/or the plan trustee to find out the rules. You may only roll over the tax-deductible funds from the IRA plan. The process can get complicated; make sure you work closely with the plan trustee so you know the requirements and fees involved.

IRA to IRA

This is the easiest transfer. There are few restrictions since you’re in charge of the funds and where you invest them. Make sure you know the investments and fees before jumping ship to make sure it’s the right choice.

The IRS Rule for IRAs

One rule applies to all IRA rollovers. If you move funds from one IRA to another tax free, you can’t roll over more funds from the same IRA or rollover those same funds for 12 months. 

The Right Way to do a Retirement Account Rollover

Before you rollover any funds, whether a 401K to an IRA, 401K to a 401K, or IRA to IRA, you’ll use the same steps:

1. Find your new account.

If you’re setting up a new IRA, choose it and get it set up first. If you’re rolling over into a new 401K, get everything situated with your new employer ensuring the account is ready to receive funds before you do anything else. If you take the money out first, you may face unnecessary tax consequences.

2. Find out what your plan administrator needs.

Remember, you aren’t rolling the funds over; your plan administrator does it. Give him/her plenty of notice of the rollover. Make sure you use the term ‘direct’ rollover so they don’t distribute the funds to you and trigger a tax consequence.

Make sure the trustee writes the check to the new plan directly and not you. A check made out to you triggers taxes and the 10% early withdrawal penalty, plus any withdrawal fees the plan charges for personal withdrawals. 

3. Fund your new account.

If the plan administrator gives you the funds, make sure you get them in your new account within 60 days. Waiting even until 61 days, triggers those pesky taxes and 10% penalty, which eats away at your retirement funds.

4. Report the switch on your taxes.

Your old plan administrator will issue you tax Form 1099-R. This just signifies the rollover. If you did it within the IRS regulations, you shouldn’t owe any taxes. You’re just informing the IRS of the switch. If you held onto the funds or had them directed to you, rather than directly to the new retirement account, though, you’ll have a tax liability that you must report and pay. 

Want to Check up on your 401K?

Are you worried that your 401K may not be up to par? Blooom, a robo-advisor specializes in 401Ks. Unlike most 401Ks that only operate in IRAs and taxable accounts, Blooom focuses on 401Ks.

Blooom will look over your 401K plan and make recommendations, just like other robo-advisors do for your IRA and taxable accounts. Bloom may suggest changing investments to avoid fees and/or enhance the account’s performance. 

Blooom also helps you decide when rollovers make sense and if so, what type of account you should consider, whether your company’s new 401K or a new IRA. 

What’s the Best Option?

Each investor has his/her own preferences, but I highly suggest not leaving your 401K with your old employer.

Not only will you lose touch with it (out of sight, out of mind), but you can’t make further contributions. So you sit at the mercy of the old 401K plan’s investments, but can’t increase your account. It just makes for more confusion, especially if you start another retirement account with your new employer or open an IRA.

Choosing between your new company’s 401K or your own IRA is the real decision.

If you know your new company’s 401K has viable investment options and low fees, go for it. This is especially important if your new employer matches your contributions. Don’t give up free money!

If your employer doesn’t match, or the fees and investment options don’t resonate with you – do your own thing. Open your own IRA where you are in full control of the investment choices, allocations, and frequent changes.

No matter what you choose, make sure you follow the IRS guidelines to avoid triggering a tax liability.

Check out the aforementioned Blooom, a robo-advisor which specializes in 401Ks.

If you have any questions, please don’t hesitate and comment below.

There has been heated discussion on the question whether a robo-advisor is actually an advisor at all.

A robo advisor is an online platform that has several algorithms in place that make investment decisions.

However some robo advisors don’t actually offer any real financial advice at all.

What they do offer are portfolio recommendations. Once you are clear about your portfolio preferences, the robo advisor will then recommend opportunities to invest or save money.

Check out this article – What is a robo advisor – Frequently Asked Questions

Are you not sure if to chose a traditional human advisor or opt for the automated investing a robot can offer?

Great, then let’s take a closer look at the advantages and disadvantages robo advisors have over classical financial advisors.

Robo-Advisor vs Financial Advisor: What’s the difference?

Let’s define each before we go into detail:

Personal financial advisors help you manage the various aspects of your finance. You will hire an advisor to do anything from investing to estate planning and more.

Typically, an advisor is someone who you will meet locally, at his or her office. However nowadays an online meeting instead of a meeting in person is getting more and more common as well.

A lot of companies actually offer virtual access to financial advisors for less than you’d pay a traditional in-person advisor. This is already where a comparison to a lot of robo advisors can be drawn:

Why you may wonder? Because the majority of the biggest robo platforms also offer human support.

Two examples are Betterment and Personal Capital as they both pair their customers with a dedicated financial advisor. Conferences are held via skype, zoom or phone, and the services include investment management.

Robo-advisors are services which use algorithms to build and manage investment portfolios. Therefore, very little human interaction is required.

Upon signing up, you answer a variety of questions so the program can determine what kind of investments you are interested in and then you just let the algorithm do its work.

The biggest advantage here is that they’re a low-cost option, this makes a lot of sense especially when all you want is investment management instead of a complicated financial planning.

Costs & Fees

As a general rule of thumb, one can say that the more human touch required, the higher the cost for financial advice.

The fees for robo advice usually range from 0.25% to 0.50% of the amount managed per year. However there are also platforms like M1 Finance for example, which will take on clients at a 0.00% fee.

Related: Learn about the best free robo-advisors

Now let’s look at personal financial advisors:

They also charge a percentage of your assets — the average is between 1% to 1.25% per year. It is fair to mention, however, that this range can be higher for small accounts and lower for big accounts.

Account Minimum

There are financial advisors who charge an hourly fee or a flat-rate and require lower or no minimums to begin.

Speaking of traditional financial advisors, fee structure and professional qualifications are probably the most important questions to consider before hiring a financial advisor.

But then there are also higher level advisers who will require new clients to have a balance of at least $200,000 in order for them to get financial attention.

Obviously no good advice will ever be completely for free and online financial planning services also structure their fees in different ways, but they are generally cheaper than a traditional financial planner.

Some online services charge a monthly or annual fee that increases with the amount and complexity of the financial advice you need. Others will just charge you a percentage of your account balance.

A great example is Betterment. They offer financial-planning and base the the fee on the amount of time that you require speaking to one of their staff.

Advantages of Robo-advisors

A lot of people may not trust a robot to do their investments and think of it as too risky.

This is a common misconception.

The robo-advisor industry is actually built on passive investing: The biggest part of the robo portfolios are usually made up of ETFs and mutual funds. For example, the S&P 500 index of large companies or the Nasdaq 100, which typically contains technology stocks.

This is a pretty conservative approach, rather than beat the market, which is extremely hard to do, these portfolios intend to match whole market gains over time.

At this point it is also important to mention that you should be cautious about financial advisors who attempt to beat the market. A high-level financial advisor can of course beat the market but they can also do worse. In fact, the odds of your average financial advisor to beat the market in the long run are slim.

Comparison table

The following comparison table shows the differences between robo-advisors, online planning services and traditional financial advisors:

Robo-Advisor

Financial Planner

Avg Fees

0.00% - 0.50%

1.00% - 1.50%

The good

Great way to get started in the investing world. Investment guidance and portfolio management are provided at a minimum cost.

Great for high profile investors who need to make complicated financial decisions.

The bad

If your financial situation is very complex, it can be hard to find a holistic solution for all your needs.

Too costly for beginners. The possibility of human error is also something that should be taken into account.

Robo-Advisor

Avg Fees

0.00% - 0.50%

The good

Great way to get started in the investing world. Investment guidance and portfolio management are provided at a minimum cost.

The bad

If your financial situation is very complex, it can be hard to find a holistic solution for all your needs.

Financial Planner

Avg Fees

1.00% - 1.50%

The good

Great for high profile investors who need to make complicated financial decisions.

The bad

Too costly for beginners. The possibility of human error is also something that should be taken into account.

Advantages of personal  financial advisors

While robo-advisors can certainly be a good option, investors shouldn’t be completely opposed to hiring a financial advisor.

Now you may wonder, why even bother with a human financial advisor?

Where a human financial advisor really thrives is when we are talking about the overall assessment of your financial situation.

This could be anything from when to have baby, how to buy a new house or how to start your own business.

Robots are perfect when it comes to portfolio management, they can automatically buy and sell assets and rebalance your portfolio.

However they are not good at helping you getting the big picture.

For many, a traditional in-person advisor is outside of their budget. That is why an online planning service can manage your investments for less.

The funny part is, some traditional advisors are now actually using robo-advisors themselves. The B2B business for robo advisor is thriving.

Summary

The robo-advisor revolution has changed the landscape. There are more choices and, importantly, the cost for investment management has gone down significantly.

Here’s is a little summary of what to consider when choosing between a robo-advisor and a human financial advisor:

The choice depends entirely on what kind of help you need.

If you need someone that can help you with all things finance from planning to build a new home to quitting your job etc… then a human advisor is the way to go. Another reason to opt for a financial planner would be to if your investments are extremely diversified and impossible to manage under the umbrella of one online platform. Just know that you will have to pay a ton of money in fees.

A robo-advisor is better for a hands-off approach and the fees are a lot lower. It is not fair however, to speak of robo advisors in such general terms. There are different services for different needs. M1 Finance for example is a platform that encourages you to learn about the different options. It allows for a ton of customization and can not in the least be considered a “hands-off tool”.

When making your final decision, please also keep in mind, especially if you’re just starting out, that you can set up the service of a robo-advisor first and then hire an advisor later once you are truly in need of sophisticated financial planning.

Robo Chooser

Use the following Quiz and find out which robo advisor is best for you.

If you have any questions, please comment below.

With a rising number of Robo-Advisors out there it is getting harder and harder to understand the differences between each service.

There are, however, 7 main differences that will allow you to distinguish between the features of each service.

Every investing situation is different, therefore it is paramount to learn about the some of the main deciding factors.

We have ranked the 7 differences by importance.

Now, without further ado, let’s dive right into it.

Some examples of actively managed Robo Advisors

• Personal Capital
• Elm Partners
• Merrill Edge
• T Rowe Price
• Titan Invest

It is important to mention that you can’t really make out either of the approaches to be better than the other.

Every portfolio is different and the factors that eventually determine a good ROI are endless. Both active and passive robo-advisors usually diversify your portfolio to a point where the ups and downs of the financial markets are considered.

If you have made it here you are probably considering letting a robot help with your investments.

A robo advisor, however, is not for everyone.

Let’s look at the pros and cons of investing with a robo advisor to help you decide if this is really the right fit for you. 

Pros of Using a Robo-Advisor

1. Low Fees

2. No human error

3. Human financial advisors use robots themselves

4. Ease of Access

5. A lot of variety

6. Low Minimum Balances

Cons of Using a Robo-Advisor

1. Customization

2. Not all of them have very low fees

3. They are not really the only alternative to a traditional financial planner.

4. No Face-to-Face Meetings

Conclusion

Robo-advisors are here to stay. In fact, the robo-advisory wave is just getting started: There are more services to chose from and competition will only bring the already low fees even lower.