6 Best Robo-Advisors in October 2022

Overview

For new investors, it’s hard to go wrong with SoFi Automated Investing and its $1 opening deposit, no annual management fees and free access to a financial advisor. You’ll complete a standard investor questionnaire, and the results will generate your ideal portfolio that is composed of exchange-traded funds (ETFs).

Funds will be a mix between SoFi-branded ETFs and those from low-cost market leaders like Vanguard and iShares. However, no matter the funds used in your portfolio, the SoFi platform automatically rebalances your holdings each quarter. Rebalancing keeps your portfolio aligned with your risk tolerance and time horizon, regardless of market conditions.

It’s worth noting that SoFi ETFs, which the platform could use for the bulk of your portfolio, have expense ratios that trend higher than average for similar funds. However, SoFi is waiving its management fees on all SoFi-branded ETFs in its robo-advisor portfolios through December 2022. This waiver could translate to substantial savings, especially if the fee waiver continues.

Finally, you might find that SoFi’s product suite hits a sweet pot — especially if you prefer to keep your finances streamlined. With products ranging from personal loans and mortgages to checking, savings and insurance products, you could easily consolidate investing, borrowing and banking under one roof.

Overview

While likely not the ideal solution if you’re a new investor due to higher investment minimums ($5,000 for standard and $25,000 for premium accounts), established investors will find Schwab Intelligent Portfolios offers a diverse array of account types and low-cost ETFs.

You can use the free standard account as long as you like, which will get you access to 51 ETFs, three investment strategies and six risk profiles. If you want a more personalized experience, you can subscribe to Intelligent Portfolios Premium.

Premium requires a $25,000 account minimum and has a one-time $300 startup fee plus a $30 per month ($360 per year) subscription charge. For the extra cost, you’ll get unlimited one-on-one access to a CFP. However, you’ll need to weigh the costs of Premium, especially if you have a smaller account.

For example, a $360 charge for a financial advisor on a $25,000 account translates to a 1.44% annual management fee. Likewise, your $100,000 balance will mean that the $360 fee translates to a 0.36% annual assets under management (AUM) fee — a veritable steal compared to the average 0.59% to 1.18% annual AUM fee.

Finally, Schwab’s robo-advisor offers a wide range of account types, tax-loss harvesting (for accounts $50,000 and greater) and even has a savvy income-specific option for investors nearing retirement with Schwab Intelligent Income.

Overview

As a mainstay in the robo-advisor space since 2010, you’ll find that Betterment has some of the best goal-setting and planning tools on the market. With Betterment, you can divide portions of your funds into separate buckets for personalized goals, set up automatic contributions from external accounts and forecast how future changes might affect your long-term targets.

You can also meet with CFPs, though there’s a flat-rate fee for individual appointments (starting at $299) or the Premium Investing AUM fee model for unlimited appointments (0.40%). Premium has a $100,000 minimum. Goal-setting tools are helpful, but a human financial advisor can help you navigate complex circumstances better than algorithms.

You’ll have comprehensive investment options with Betterment, including ESG-focused portfolios, with eight models and robust automatic management. Robo-advisors are great for long-term, goal-oriented investing, and Betterment offers a quality, goal-focused service.

Overview

While you likely don’t know it, SigFig powers robo-advisors for some of the world’s leading financial institutions — Wells Fargo, Citizens Bank and Santander, to name a few. However, you can go straight to SigFig and score an incredible value as a direct client.

For example, your first $10,000 invested with SigFig is free. Then, as your wealth grows, you’ll only pay SigFig’s 0.25% management fees on your balance above $10,000. While there is a $2,000  minimum opening balance requirement, that could be easy to meet if you transfer an existing IRA or brokerage account.

SigFig also rewards you for growing your wealth. Once your account balance reaches $10,000, you’ll have no-cost access to a financial advisor — a true benefit for those investing for the long term.

As you compare the best robo-advisors, here’s one way SigFig truly stands out: account custody. If you use TD Ameritrade, Schwab or Fidelity as your current online broker, your accounts can stay put and SigFig can still manage your portfolio using its comprehensive service suite — including tax-loss harvesting, tax-optimized, automatic rebalancing and more.

Overview

Wealthfront manages nearly $25 billion for its robo-advisor clients nationwide, making it one of the largest robo-advisors. Beyond the highly accessible $500 minimum investment, we particularly like that this robo-advisor offers a higher level of transparency on the historical performance of its three core portfolios (Classic, Socially Responsible and Direct Indexing) than most robos provide.

Wealthfront is the hands-down winner for investment options, with three core portfolios and 239 individual investments across 17 asset classes — including two cryptocurrency trusts. If you’re a hands-on investor who prefers to build your own portfolio, it’s impossible to beat Wealthfront’s portfolio customization options.

However, Wealthfront’s 0.25% management fee is among the highest on this list. Therefore, you’ll likely want to consider other factors that make Wealthfront an ideal fit for your investment goals, such as:

• A cash management account. With a current yield of 2.00%, Wealthfront’s on par with other robos offering cash accounts like SoFi.
• Portfolio lines of credit. If you have at least $25,000 invested in a taxable account,Wealthfront lets you take out a line of credit for up to 30% of your portfolio value.
• Direct indexing. If you’re investing through a taxable account and meet the $100,000 investment minimum, this strategy that uses a combination of single stocks and ETFs to mimic a particular market index could offer substantial tax savings. They’re the only robo-advisor to offer direct indexing, too.

Overview

In the brokerage world, Vanguard is a powerhouse known for low-fee index funds. Their Vanguard Digital Advisor robo-advisor platform holds true to their long history of low costs. While you’ll need a $3,000 minimum to get started with a Vanguard robo-advisor, your nest egg can grow with a fee structure designed to limit costs.

Unlike many other robo-advisors, Vanguard has a gross advisory fee of 0.20% AUM. Here’s what that means: You’ll be charged expense ratios for the Vanguard ETFs in your portfolio, but Vanguard will credit those fees toward your gross advisory fee. For example, if your cumulative portfolio expense ratio is 0.05%, your advisory fee will be 0.15%.

You can use Digital Advisor with various IRA types, as well as certain employer-sponsored 401(k) accounts. Vanguard’s robo-advisor rebalances portfolios daily but doesn’t have tax-loss harvesting. Vanguard doesn’t have as many investment options as some other robo-advisors, as it relies on its own proprietary index funds. Vanguard’s advanced retirement modeling is a nice feature as well.

If you want the added benefit of a human financial advisor, you’ll need to open an account for Vanguard Personal Advisor — a hybrid robo-advisor service with a $50,000 new account minimum and a maximum gross advisory fee of 0.30%.