The Best Robo-Advisors of November 2022 - MagnifyMoney
Investing

The Best Robo-Advisors in November 2022

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It may not have not been reviewed, commissioned or otherwise endorsed by any of our network partners or the Investment company.
How MagnifyMoney Gets Paid ?
Advertiser Disclosure

If you’re ready to take advantage of the conveniences robo-advisors can bring to your financial goals, there’s only one step left to take:

Finding the best robo-advisors on the market.

Well, you’ve come to the right place. We looked under the hood of more than 14 different robo-advisors and rated each automated investing platform using our comprehensive star rating system. From management fees and account minimums to environmental, social and governance (ESG) and socially responsible investing (SRI) options, we focused on the details that matter most to your experience and bottom line.

Our overall pick for the best robo-advisor in October 2022 is SoFi Automated Investing.

Best robo-advisors of October 2022

SoFi Automated Investing

Visit SoFi

on SoFi Automated Investing’s secure website

Disclosures

Best for new investors

Rating: 4.8 out of 5
Minimum deposit: $1
Annual management fee: None

What we like most
SoFi’s trifecta helps you win in multiple ways: low minimum deposit, no annual management fees and free access to financial advisors.

Pros

  • No management or trading fees
  • Checking and savings account options
  • Unlimited, no-cost access to a financial advisor

Cons

  • No ESG/SRI options
  • Investments limited to ETFs
  • Tax-loss harvesting isn’t available

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. With the ability to choose from both taxable brokerage and retirement accounts, SoFi helps you save for a variety of financial goals with ease through its cost-conscious exchange-traded funds (ETF)-based investment model.

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.

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.

Schwab Intelligent Portfolios

Visit Schwab

on Schwab Intelligent Portfolios ’s secure website

Best for larger investment portfolios

Rating: 4.7 out of 5
Minimum deposit: $5,000
Annual management fee: None

What we like most
Get unlimited access to a Certified Financial Planner (CFP) for only $30 per month with Schwab Intelligent Portfolios’ Premium subscription — a bargain if you keep a higher account balance.

Pros

  • No management fee for standard accounts
  • Wide range of account types
  • Low expense ratios

Cons

  • High investment minimum
  • Mandatory cash allocation
  • No ESG/SRI options

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 Schwab robo-advisor 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.

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.

Betterment

Visit Betterment

on Betterment’s secure website

Best for goal-setting tools

Rating: 4.6 out of 5
Minimum deposit: $0
Annual management fee: 0.25%

What we like most
Betterment’s dynamic planning tools empower you in ways many robo-advisors don’t. You can monitor outside accounts, build goal-specific portfolios and easily track your goal progress.

Pros

  • No investment minimum
  • Eight model portfolios
  • Tax-loss harvesting included

Cons

  • Higher management fees
  • Premium account option is costly
  • Limited customer support options

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.

With this top robo-advisor, 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.

SigFig

Visit SigFig

on SigFig’s secure website

Best for smaller portfolios

Rating: 4.3 out of 5
Minimum deposit: $2,000
Annual management fee: Free for up to $10,000, 0.25% on balances above $10,000

What we like most
SigFig offers two unique benefits. First, there are no management fees on your first $10,000 invested. Next, if you’re a Fidelity, Schwab or TD Ameritrade customer, SigFig can manage your portfolio directly at those brokerages.

Pros

  • Your first $10,000 invested is free
  • Multiple tax-efficient strategies available
  • No-cost access to advisors with $10,000 balance

Cons

  • No EGS/SRI options
  • Lacks banking products
  • $2,000 investment minimum

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.

Wealthfront

Visit Wealthfront

on Wealthfront’s secure website

Best for investment variety

Rating: 4.2 out of 5
Minimum deposit: $500
Annual management fee: 0.25%

What we like most
With 239 individual investment options in 17 different asset classes, Wealthfront gives you more control over your portfolio than most robo-advisors.

Pros

  • 239 investments in 17 asset classes
  • Offers a portfolio-secured line of credit
  • More ESG/SRI options than most robo-advisors

Cons

  • No financial advisor access
  • Doesn’t offer fractional shares
  • Support limited to email and weekday phone hours

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.

Vanguard

Visit Vanguard

on Vanguard’s secure website

Best for retirement investors

Rating: 4.1 out of 5
Minimum deposit: $3,000
Annual management fee: Up to 0.20%

What we like most
Retirement is the top investing goal for a majority of Americans, and Vanguard Digital Advisor’s low-cost funds and robo-advisor fee structure can equal lower fees and more savings for your second act.

Pros

  • Daily rebalancing.
  • Strong emphasis on retirement accounts
  • Expense ratios rolled into your total advisory fee

Cons

  • Few model portfolios
  • Lacks tax-loss harvesting
  • $3,000 minimum investment

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 Digital Advisor 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%.

What is a robo-advisor?

A robo-advisor is an automated investing tool that uses a computer algorithm to build and maintain your portfolio. Robo-advisors use information you provide on your risk tolerance, time horizon and investing goals to develop an ideal asset allocation. Once your portfolio is built, a robo-investing platform will invest your future contributions for you. Many robo-advisors also offer additional investor services like automated rebalancing and tax-loss harvesting.

Is getting a robo-advisor a good idea?

The straightforward answer is: It depends. While 63% of Americans say they’re open to using a robo-advisor, it may not be the ideal fit for some investors.

Robo-advisors can be great if you have straightforward finances and are saving for long-term investment goals like retirement. Their comparatively low costs compared to traditional financial advisors can help you pay less in fees and keep more of your money invested.

However, if you have a more complex financial situation and would benefit from all your investments working together, a traditional advisor who can advise across all your holdings might be a better choice.

Robo-advisor pros and cons

Pros

  • Low investment minimums
  • Low costs compared to traditional advisors
  • Wide range of account types (IRAs, taxable brokerage, etc.)

Cons

  • Limited investment types available (typically ETFs)
  • Those with complex finances may see limited benefits
  • Advanced services like tax-loss harvesting aren’t universally available

Frequently asked questions

Robo-advisor performance relative to the market depends on which stock indexes are used as a frame of reference and what kind of risk mitigation approach is chosen by the investor. Some of the biggest robo-advisors publish detailed information on historical portfolio returns that you can review.

Robo-advisors are a cost-effective approach to investing. They’re less expensive than most financial professionals and can help guide those who are new to the world of investing or have straightforward financial goals.

It depends. The ability of a robo-advisor to deliver returns depends on the underlying assets in your portfolio and returns will vary depending on your unique risk tolerance, time horizon and market conditions. However, robo-advisors can help you stick to an investment strategy for the long term and avoid making costly emotional investing decisions.

How we chose the best robo-advisors

To build our list of the best robo-advisors, we evaluated 13 providers using a 5-star rating system.

To decide a firm’s overall star rating, we focused on 13 criteria in six categories that would most impact your costs and experience as a customer:

  • Fees and costs: 30%
    You deserve to know what you’ll pay as a client at each robo-advisor. We logged every fee you could possibly be charged and awarded our highest ratings to providers with the lowest comprehensive fees.
  • Portfolio construction: 20%
    You deserve to know the assets and investment strategies available. The wider the investment options, the higher our score.
  • Account types: 15%
    Having multiple accounts with a single provider can help streamline your financial life. Our highest ratings go to providers who offer multiple account types.
  • Investor support: 15%
    Extra features like financial planning assistance, tax-loss harvesting and automatic rebalancing can make a difference for some investors. The greater the investor support options, the higher our rating.
  • Account minimums: 10%
    MagnifyMoney believes in democratizing finance. We only considered robo-advisors with investment minimums of $10,000 or less, with our highest ratings given to companies with low to no minimums.
  • Customer service: 10%
    You deserve to be taken care of every step of the way. Our highest ratings go to providers with the greatest number of customer support options, including email, chat and phone.

The “Find a Financial Advisor” links contained in this article will direct you to webpages devoted to MagnifyMoney Advisor (“MMA”). After completing a brief questionnaire, you will be matched with certain financial advisers who participate in MMA’s referral program, which may or may not include the investment advisers discussed.