One of the more exciting developments in the world of investing in the last decade has been the rise of robo-advisors — automated investing through simple algorithms and patterns that can often generate similar or better returns to professionally-managed portfolios at a fraction of the cost. With the right robo-advisor, you can quickly diversify your portfolio with various investment options and secure better returns, and because it’s done in an entirely automated fashion, this means any additional fees are either very limited or non-existent.
To find the top robo-advisors for your money, the Best Broker rankings from GOBankingRates has taken a deep dive into the service and determined the five best options.
Here are the best robo-advisors, according to the Best Brokers ranking:
- Schwab Intelligent Portfolios
- SoFi Wealth Management
- M1 Finance
Here’s an overview of the best robo-advisors in the GOBankingRates Best Brokers ranking:
|The Best Robo-Advisors|
|Robo-Advisor||Service Fee||Account Minimum||Promotional or Introductory Offers|
|Schwab Intelligent Portfolios||$0||$5,000||No advisory fees, commissions or account service fees charged|
|SoFi Wealth Management||$0||$100||No fees for 2018, then 0.25 percent on balances over $10,000|
|Information accurate as of Aug. 29, 2018.|
Schwab Intelligent Portfolios
Schwab Intelligent Portfolios is the robo-advisor offered by Charles Schwab, a brokerage with a long history and a large base of clients now making portfolio management that much easier. The service does have a minimum starting point of $5,000, potentially putting it out of reach for many investors, but there are no additional service fees or commissions paid beyond the expense ratios of the ETFs selected for your portfolio.
It’s important to note, however, that Charles Schwab makes its money by guiding your investments toward those funds that it manages and collecting expense ratios there. Although there is an incentive for Schwab to sacrifice returns to select funds that it profits from, the firm is very transparent about this fact and — if you’re happy with Schwab-managed ETFs in your portfolio — there’s no reason why this should stop you from investing with Schwab Intelligent Portfolios.
Where Schwab Intelligent Portfolios Shines
- No additional costs
- Access to 24/7 phone support and live chat for questions
Where Schwab Intelligent Portfolios Falls Short
- $5,000 account minimum
Click to see the best features to look for when choosing a broker.
SoFi Wealth Management
SoFi Wealth Management is the robo-advisor offered by SoFi, which also offers loan products like student loan refinancing, mortgages and personal loans. Its robo-advisor service is focused primarily on ETFs and touts its ability to beat the returns of benchmarks over time. This robo-advisor also provides free access to human advisors to anyone using their service — giving investing novices a chance to get advice from financial professionals.
What’s most notable is that SoFi Wealth Management is essentially giving this service away — for now. It’s waived all fees for 2018, the first $10,000 you invest is fee-free, and there’s a flat management fee of 0.25 percent on any amount over $10,000. What’s more, if you have a SoFi loan, SoFi Wealth is completely free for the life of the loan, and you will receive a 0.125 percent discount on your loan rate.
If all that sounds too good to be true, that’s because it might be. SoFi itself will acknowledge that this is a new service that it intends to expand significantly, so there’s a chance that there might be changes to the way it charges management fees in the future. The company won’t change the fees without notifying customers first, though, so keep an eye on any messages from SoFi if you do decide to invest there.
Where SoFi Wealth Management Shines
- No fees in 2018
- No fees for SoFi Loan customers
- No fees on the first $10,000 invested
- Free access to financial advisors
Where SoFi Wealth Management Falls Short
- No live chat or 24/7 phone support
- Service is still relatively new
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WiseBanyan touts itself as the first free financial advisor, and it does a lot to back it up. The basic robo-advisory service is — in fact — totally free. The company is open about making money by offering specialized pay products that users can opt into, but you can use its robo-advisor at no cost even if you never use its pay products.
That does mean that WiseBanyan’s incentives are clearly aligned with you as it doesn’t profit from steering your nest egg into a particular investment product. What’s more, there’s no minimum to start, so there aren’t any barriers to entry. It should be noted that you will pay the expense ratios on any ETFs you invest in, though, so while the service is free, there are still costs to investing.
Where WiseBanyan Shines
- Zero fees on its basic advisory services
- No minimum investment required
Where WiseBanyan Falls Short
Here are some downfalls to WiseBanyan:
- Does not have 24/7 phone support or live chat
Click to see the Best IRA Accounts for your retirement nest egg.
Blooom is a robo-advisor that specializes specifically in rebalancing your 401k to reduce the fees you’re paying as much as possible. That makes the value of the service it offers entirely contingent on how your 401k is set up. For some, it could reveal that you’re paying way more in fees than you should and then it could save you a lot of money in the long run. For others, it might be unable to uncover enough savings to really be worthwhile.
It’s important to note that Blooom’s flat $10 a month fee means its value depends very much on how large your 401k is. If you have $1,200 in your 401k, the $120 a year amounts to a 10 percent fee that is very high. But if you’re lucky enough to have $1.2 million in your portfolio, the 0.01 percent cost is a bargain that’s probably worthwhile most of the time. So if you do think Blooom is right for you, it’s essential that you pay close attention to just where it’s saving you money and how much it is to ensure that you’re getting your $10 a month worth.
The service does offer a free analysis, so you can test out the value that it would provide, and it will automatically manage and monitor your account as long as you’re a client.
Where Blooom Shines
- Free analysis offered up front
- Optimizes your 401k to minimize fees
Where Blooom Falls Short
- Flat monthly fee could prove excessive for smaller accounts
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M1 Finance is a completely free service and has been since December 2017. Like WiseBanyan, the company tries to attact as wide a user base as possible with a completely free service and then works to monetize through additional for-pay services, all of which is to say that you won’t have to pay a dime for the service if you don’t want to.
That’s great news if you’re just looking for a no-cost platform to invest, but like most robo-advisors, M1 Finance works hard to keep its costs low and that means fewer options when it comes to things like customer service or research and educational tools. Still, if you’re a self-directed investor interested in ETF investing, you can do so on M1 Finance and avoid paying any trading fees.
Where M1 Finance Shines
- No commissions or fees
Where M1 Finance Falls Short
- No 24/7 phone support or live chat
Click to see the Best Roth IRA accounts for your retirement savings.
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Methodology: To determine its Best Robo-Advisors category ranking, GOBankingRates examined the top brokerages, excluding non-active institutions.
Criteria for ranking: GOBankingRates scored the brokerages from most to least favorable on the following factors: (1) fee for service, (2) account minimum, (3) promotional or introductory offers, and (4) customer experience, which includes: 24/7 customer service with a live person, live chat and access to research and educational tools. Brokerages were then ranked according to their total score. Data for Best Brokers was compiled from and verified against the individual institutions’ websites between June 13 and August 1, 2018. Costs, terms and conditions are subject to change at the discretion of the individual financial institutions. Some information might reflect short-term or promotional offers only, and it is possible additional terms and conditions must be met in order to obtain the terms listed. Availability might vary by region, minimum investment amounts and other factors. Please verify terms and conditions before opening an account.
GOBankingRates is a personal finance and consumer interest rate website owned by ConsumerTrack, Inc., an online marketing company serving top-tier banks, credit unions and other financial services organizations. Some brokerages mentioned in the Best Brokers rankings are clients of ConsumerTrack, Inc., which serves more than 100 national, local and online financial institutions. Rankings are completely objective, and no institution, client or otherwise, paid for inclusion or specific placement.