As of 2020, robo-advisor assets under management (AUM) sat at a tidy $1.4 trillion, with expectations that those numbers will continue to increase — perhaps hitting AUM figures as high as $3.22 trillion by 2027.
But how can those ever-increasing AUM figures help guide your search for the right automated investing platform?
You can use robo-advisor AUM in your vetting process, as it tells you how much other investors have entrusted a particular robo to manage. So, we’ve crunched the numbers using publicly available information from recent Form ADVs, using robo-advisor AUM to offer further insights into the biggest platforms in the market.
Odds are you’ve heard of Charles Schwab, one of the most established investment firms in the brokerage world since 1971. The firm is now a leader in the robo-advisor space with Schwab Intelligent Portfolios.
With a standard account, you’ll enjoy no annual AUM fees and a $5,000 investment minimum. However, the lack of fees doesn’t translate to less service. You’ll still get tax-loss harvesting and automatic portfolio rebalancing — but keep in mind that you’ll need to keep a percentage of your account in cash at all times.
With a Premium account, you’ll pay an ongoing advisory fee but gain access to additional capabilities — including unlimited access to a certified financial planner (CFP). The Premium tier requires a $25,000 minimum investment, a $300 financial planning fee and $30 per month in ongoing advisory charges. You’ll also get access to Play Zone, a tool that helps you stress test your financial plan using various “what if” scenarios.
Launched in 2008, Betterment was the first robo-advisor to market. Today, it offers both a standard and premium service — the key differences being cost and access to a CFP for ongoing advice.
With the standard option, you can get started with no minimum investment and only a 0.25% annual AUM fee. For an account balance of $1,000, that works out to only $2.50 per year. In addition, you’ll get services like automated rebalancing and dividend reinvestment at no additional charge. You can even access tax-loss harvesting to minimize your tax liabilities with taxable portfolios.
To access Betterment’s premium account, you will need a $100,000 minimum balance and must be willing to pay the 0.40% AUM fee. However, you’ll get all the standard account features plus unlimited calls and emails with the firm’s team of CFPs. Premium also scores you no-fee access to the firm’s cash accounts, like checking and cash reserve accounts.
Wealthfront was one of the first robo-advisors, launching the same year as first-to-market Betterment. Unlike many other robo-advisors, Wealthfront offers a flat fee structure, where you’ll pay a predictable 0.25% AUM no matter your account balance. Here, you’ll find various investment accounts and portfolio options, including socially responsible portfolios, to help fulfill your goals.
While Wealthfront touts that all its product specialists hold advanced securities industry licensing and certifications, there’s no real “advice” built into their platform from those pros. Instead, those pros can answer general tech questions but don’t offer financial advice.
Why? Wealthfront is confident their platform and algorithms have all the advice you need baked into their digital services. So, our take is that Wealthfront might be a great fit if you’re an early adopter of digital tech and willing to let robots do all the heavy lifting.
Before offering a robo-advisor, Personal Capital provided users with a host of online financial planning tools. Now, it offers a full-blown hybrid robo-advisor backed by access to financial professionals in three tiers:
Pricing starts at an annual fee of 0.89% on the first $1 million invested. This fee is quite steep, considering our latest research found that the average robo-advisor fee ranges from 0.00% to 0.40% AUM. The tiered AUM fees decrease to 0.49% AUM, but you’ll have to have $10 million under management to get there.
According to the firm, its Personal Strategy portfolios offer four primary benefits: tax optimization, discipline rebalancing, Smart Weighting, and a dedicated advisor. To get those services, however, be prepared for a heavy sales pitch — complete with full-color presentations made by someone who’s likely not a credentialed financial professional. Also, you won’t meet an advisor until after signing up.
Acorns was originally a platform where you could “round up” your daily purchases and use the spare change to build an investment portfolio. Today, Acorns is a full-blown robo-advisor with access to taxable brokerage accounts and IRAs plus additional financial products like banking options complete with a debit card.
Acorns charges a flat fee per month. For a Personal account, you’ll pay $3/month or $36 per year. Family accounts come in at $5 per month or $60 per year and give you access to an Early account which helps kids start their investing journey under a parent’s supervision.
Unfortunately, you may also pay higher AUM fees with Acorns than other robo-advisors. For example, if you have a Personal account at $36 per year and only have $500 with Acorns, that translates to a whopping 7.2% AUM.
While it feels like a robo-advisor, Blooom’s a bit of a hybrid. Blooom only services retirement accounts, and they don’t directly hold your assets. Instead, they’ll manage your investments wherever they’re kept if you decide to become a client.
With Blooom, you’ll answer a few questions about your investing goals and then link your retirement accounts — both employer-sponsored plans and personal IRAs — to their platform. The firm will then analyze your existing investments to let you know how you’re doing on factors like asset allocation, fees and more. All that’s free.
Suppose you decide to become a paid client. In that case, you’ll gain access to Blooom’s fiduciary financial advisors and enjoy no minimum investment. The firm will also build and manage your portfolio based on the investment offerings available where you keep those accounts. Their flat fee ranges from $120 to $295 annually, depending on your chosen plan.
Vanguard is a mainstay in the low-cost fund space, so it’s no surprise they’re also among the largest robos. They take on the robo market from two angles: Vanguard Digital Advisor and Vanguard Personal Advisor Services.
Vanguard Digital Advisor is the firm’s pure robo-advisor platform with a decent array of retirement and taxable brokerage accounts available. In addition, you’ll find an accessible $3,000 minimum investment and a low AUM fee of 0.20% of your account balance.
Vanguard Personal Advisor Services, a new service offering, combines robo-advisory services with traditional advice from a human financial advisor. You’ll pay a 0.30% AUM fee and need $50,000 to access Personal Advisor, but you’ll also gain access to more services as your account balance grows.
At $500,000, you’ll score a dedicated financial advisor. Then, at $1 million, you’ll access trust services. Finally, if you’re among the few reaching $5 million in AUM, you’ll gain access to a dedicated team of wealth management professionals and reduced fees.
There’s no need to put the brakes on your journey to increase your investment know-how. MagnifyMoney is here to help you keep the momentum going with a few ideas for your next steps:
We will use this information to find the right advisor near you
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.