• Mon. Sep 25th, 2023

Best Robo-Advisors of 2023


Jun 8, 2023 #Roboadvisors

Robo-advisors provide more accessible investing and money management options at a fraction of the cost historically available in traditional models, empowering more individuals to save, invest, and grow money towards financial freedom. But there are several factors to consider when searching for the right robo-advisor to both give you a holistic sense of your total financial picture and help keep you on track toward reaching your financial goals during turbulent market conditions.

To make it easier, this unbiased, comprehensive comparison of the top robo-advisors is based on our own proprietary rating methodology that measures cash management, goal planning tools, fees, portfolio management, mobile functionality, socially conscious investing, portfolio construction, and other pertinent variables.

Best Robo-Advisors

Wealthfront: Best Overall and Best for Goal Planning

  • Account Minimum: $500
  • Fees: 0.25% for most accounts, no trading commission or fees for withdrawals, minimums, or transfers.

Fund your first taxable Investment Account and get a $50 bonus.

Best Overall: Wealthfront is a leader in the robo-advisor space and takes the crown for Best Overall platform on the market. With a comprehensive suite of investment management tools and products, Wealthfront stands above the rest for those looking for an automated financial solution.

Best for Goal Planning: Wealthfront is also our pick for the Best for Goal Planning thanks to extensive goal-setting options, free digital financial planning tools, and robust progress trackers available throughout the platform.

On June 7, 2023 Wealthfront announced the launch of its Automated Bond Portfolio. A first of its kind, the portfolio features a 5.48% blended 30-day SEC yield (net of fees), and is designed to provide a higher yield and more liquidity than a variety of popular fixed-income products.

Pros and Cons


  • Outstanding goal setting and financial planning tools

  • Variety of account options including 529 plans

  • Tax-loss harvesting applied on a daily basis

  • External account aggregation

  • Path and Self-Driving Money tools let you evaluate tradeoffs of saving for multiple goals and automatically allocate excess cash towards them


  • Fractional share trading is not supported

  • No human advisors are offered

  • Limited chat and service options


Wealthfront was one of the first automated investment platforms in the robo-advisor space, launching in 2008 and becoming an industry leader by providing an exemplary digital portfolio management experience. Wealthfront’s strength lies in its fully digital experience through a variety of portfolio customization tools and daily tax-loss harvesting. 

Wealthfront’s portfolio management is paired with strong goal setting and financial planning tools such as Path and Self Driving money at a low cost of 0.25%. The competitive price point and high quality of the platform mean that Wealthfront has one of the strongest overall robo-advisor offerings available. 

One of the most impactful features of Wealthfront’s platform is the account aggregator tool. Using this feature, you can see your financial picture in one place and leverage Wealthfront’s powerful financial planning, goal setting, and progress tracking tools. This type of comprehensive goal support can make a large difference in helping you achieve financial success. This aspect of Wealthfront is specific to your situation as the model changes to account for changes in your personal financial life.

Wealthfront’s product suite also includes checking account and spend options so that you can manage more of your money in one place. This includes direct deposits, automating transfers, payments, and mobile deposits. All of this is available whether you use the investment management product or not. A borrow feature is also available through a line of credit for users with a minimum of $25,000 invested to round out the platform. Wealthfront is making a strong pitch for being an all-in-one financial solution for its users, and not just an automated portfolio manager. 

Interactive Advisors: Best for Socially Responsible Investing and Best for Portfolio Construction

  • Account Minimum: $100 – $50,000
  • Fees: 0.08-0.75% per year, depending on advisor and portfolio chosen

Best for Socially Responsible Investing: Interactive advisors is our top choice for Socially Responsible Investing, given the significant number of investment vehicles, pre-built portfolios, and screening tools to let you invest in the world you envision.

Best for Portfolio Construction: Interactive Advisors is also our winner for Portfolio Construction as it offers the widest range of investment options in the robo-advisor space that serve investors who use several different portfolio strategies.

Pros and Cons


  • Extensive universe of investment vehicles, including fractional shares

  • More than 50 portfolio strategies

  • Strong investment research and screening tools

  • Socially conscious focus includes sustainable funds, pre-built portfolios, and screeners


  • Some portfolios have high minimums and management fees

  • Website navigation, account opening, and funding is not as intuitive as other robo-advisors

  • No tax-loss harvesting


Interactive Brokers is a powerhouse when it comes to serving traders and active investors. The broker launched its robo-advisor platform, Interactive Advisors, in 2007 to serve investors who prefer access to wide-ranging investment options and portfolio strategies while automating the portfolio management portion of their finances.

Interactive Advisors offers a unique blend of portfolio options, with self-selection from an extensive investment vehicle catalog at one end of the spectrum to mimicking professionally managed portfolios on the other end of the range. Investment options include mutual funds, stocks, ETFs, fixed income, REITs, ESG, non-proprietary funds, and managed portfolios.

The socially responsible focus of the platform allows you to extensively customize your portfolio’s focus, such as blocking individual companies that do not align with your values or selecting existing socially conscious strategies from a wide variety of established fund managers like Vanguard, BlackRock, and Wisdom Tree.

Interactive Advisors stands out among robo-advisors for portfolio construction on two fronts: One, the portfolios often contain fractional shares of stocks rather than operating solely through ETFs to create stock exposure. Two, you can choose to mirror actively managed portfolios, an option very few robo-advisors offer. Combined with the ability to screen out unwanted stocks and see the impact the omission would have using historical returns, Interactive Advisors is definitely one of the most customizable robo-advisors in the industry.

Betterment: Best for Beginners and Best for Cash Management

  • Account Minimum: $0, $10 minimum to start investing
  • Fees: 0.25% (annual) for investing plan accounts with at least $20,000 or at least $250 per month in recurring account deposits. Otherwise, the fee is $4/month. An additional 0.15% (annual) fee on accounts with at least $100,000 in assets provides account holders with unlimited access to certified financial planners. This additional fee is applied to assets in the investment and cryptocurrency accounts, but not cash accounts. For accounts with at least $2 million, there is a fee discount of 0.10%. Crypto accounts are charged a monthly fee of 1% plus trading expenses.

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Best for Beginners: Betterment wins our Best for Beginners category due to a very user-friendly experience combined with no Account Minimum ($10 to start investing), practical education resources, and intuitive guidance.

Best for Cash Management: Betterment also receives our top choice for Cash Management as its checking account and cash reserve products give users the best option for accessing and moving money in a seamless way.

Pros and Cons


  • Straightforward onboarding and funding process

  • Aggregation of external accounts

  • No account minimum to maintain, $10 to get started

  • FDIC insured checking and cash reserve account

  • Full transparency into investment strategy before funding


Betterment is one of the original robo-advisors to challenge traditional investment managers, launching in 2008 and growing to $33 Billion of assets under management. The platform has been intentional about user and asset growth, acquiring Wealthsimple’s US business in April 2021.

Betterment’s platform is built to attract new investors with $10 to get started, but no account minimum to maintain, while providing a seamless signup experience. It’s also easy to set goals, monitor progress, and leverage a variety of straightforward planning tools. Cash management options are very attractive as well, with Betterment Checking and Cash Reserve accounts covered by FDIC insurance and providing transaction functionality similar to traditional banks.

The investment platform is able to support many goals and time horizons with different accounts, each with its own investment strategy to ensure you stay on track. This also includes the option to link external accounts to Betterment’s platform and use financial tools to give you a sense of your financial picture. While Betterment is built with a digital first approach, human advisors are available to provide added guidance for an additional fee.

Betterment also pairs a checking account and cash reserve options alongside their investment offering to provide a more complete financial experience. For new investors, Betterment offers a simple solution to manage your money in a larger sense beyond just your investment portfolio.

Cash Reserve is only available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are conducted through the clients’ brokerage accounts at Betterment Securities. For Cash Reserve (“CR”), Betterment LLC only receives compensation from our program banks; Betterment LLC and Betterment Securities do not charge fees on your CR balance.

Checking accounts and the Betterment Visa Debit Card provided and issued by nbkc bank, Member FDIC. Checking made available through Betterment Financial LLC. Neither Betterment Financial LLC, nor any of their affiliates, is a bank. Betterment Financial LLC reimburses ATM fees and the Visa® 1% foreign transaction fee worldwide, everywhere Visa is accepted.

Empower (Formerly Personal Capital): Best for Portfolio Management

  • Account Minimum: $100,000
  • Fees: 0.89% to 0.49% for accounts over $1 million

Best for Portfolio Management: Our choice for Best Portfolio Management platform is Empower (formerly Personal Capital), due the firm’s outstanding tax optimization strategies and unique approach to diversification in the robo-advisor space.

Pros and Cons


  • Wide range of free investment management tools

  • Account aggregation for holistic asset management

  • Access to advisor or advisor team (depending on account balance)

  • Excellent tax optimization features

  • Strong variety of portfolio strategies and investment vehicles


  • Very high $100,000 account minimum

  • Management fees are significantly higher than industry average starting at 0.89% annually for accounts with at least $1 million

  • Mobile experience lacks some of the desktop functionalities


Empower’s platform was launched to investors seeking a balance between a digital-only experience and a traditional financial advisor model by pairing smart portfolio automation with access to human consultants as part of the experience. Empower continues to expand its reach as it was acquired by Empower Retirement in August 2020 to pair with one of the leaders in group retirement services.

It is worth noting that Empower is aimed at high net-worth investors, with an account minimum of $100,000 and the top tier service for accounts over $1 million. Although it may be out of reach for many new investors, it still scored highest in terms of both automated portfolio management and true diversification. Empower’s strength lies in its approach to portfolio management, particularly tax optimization strategies. While tax-loss harvesting is a key aspect of the platform, Empower goes further by considering different account tax statuses when placing assets and featuring tax-optimized retirement withdrawals. 

Much of Empower’s goal planning is geared around retirement which is exemplified by its Smart Withdrawal tool being a primary goal setting focus. Other financial tools such as the Recession Simulator can be used to explore the impact of a market pullback on a wider variety of investment goals. A key aspect of the platform is access to human advisors who can provide holistic guidance across the spectrum of financial planning topics and additional portfolio customization.

Empower puts your portfolio plan into action by including a variety of securities such as stocks, bonds, ETFs, alternative investments, cash, and private equity. Separate from cash held in your portfolio, Empower’s Cash account doesn’t require you to be an investing client and is protected by FDIC coverage up to $1.25 million. This account offers flexible money movement including direct deposit and payments features. 

M1 Finance: Best for Sophisticated Investors and Best for Low Costs

  • Account Minimum: $100 ($500 minimum for retirement accounts)
  • Fee: 0%

Best for Sophisticated Investors: Our pick for the platform best suited for sophisticated investors goes to M1 Finance because of the extensive portfolio customization options, including investor discretion to choose from over 60 different pre-built portfolios or build their own.

Best for Low Costs: M1 Finance also wins the Best for Low Costs category with no fees charged for trading or account management, putting more of your dollars to work by investing.

Pros and Cons


  • No fees for trading or account management

  • High level of portfolio control

  • Spending and borrowing options complement portfolio management

  • Variety of screening tools to fine-tune your portfolio

  • Expansive portfolio customization options


M1 Finance entered the robo-advisor space in 2015 and achieved $5 Billion in assets under management in 2021, highlighting continued user and asset growth since inception. M1 also has a premier Plus tier that was improved in 2021 by adding a unique credit card product to go alongside other spending and borrowing product options. 

While M1 stands out for its wide variety of portfolio customization options and investment vehicles to choose from, it also excels in cost containment with no fees for trading or account management. While there are other minor miscellaneous fees for specific account management requests, M1’s focus on driving down costs leaves investors with more money in their pockets.

On the downside, there are limited financial calculators and goal-setting options available on the platform. There is also no access to human investment consultants, if that is important to you. In lieu of human support, M1 Finance provides a great option for self-directed investors to automate some of the investment management processes without sacrificing portfolio flexibility and control.

The extensive portfolio customization features available through M1 are complemented with other account management elements such as a spend option, a credit card, and a smart transfers tool that helps allocate excess cash. Most importantly for this category, the robo-advisor’s commitment to cost containment and reduction keeps fees from eating into your returns.

Merrill Guided Investing: Best for Education

  • Account Minimum: $1,000 or $20,000 with an advisor.
  • Fee: Annual 0.45% of assets under management, assessed monthly. With advisor—0.85%. Discounts available for Bank of America Preferred Rewards participants.

Best for Education: Merrill Guided Investing receives our top choice in this category by leveraging its expertise to provide a deep educational library of videos, articles, tools, and a goal exploration process that is valuable to investors of all backgrounds.

Pros and Cons


Merrill’s Guided Investing platform was launched in 2017 to provide a stand-alone robo-advisor offering that built upon Merrill’s extensive investment history. Merrill added to this platform by creating a “Guided Investing with an Advisor” service in 2019 to pair a human element with investing.

Merrill Guided Investing takes the Best for Education category thanks to a superb educational catalog that can be tailored to investors of all experiences, backgrounds, and goals. The educational content is offered in a variety of formats, including videos, articles, and goal exploration. Merrill Guided Investing aims to elevate investor knowledge so you can get the most out of the platform’s tools and achieve your portfolio goals as well as your broader financial goals. 

The platform provides education around a variety of planning areas including retirement, saving for a home, travel, general investing, and several other goals. Investors can gain confidence in the likelihood of accomplishing their goals by using tools to simulate investment performance, savings strategies, and financial outcomes. 

The educational content, tools, and automated investing strategy are available through Merrill’s Guided Investing digital-only service for an annual fee of 0.45% and on Guided Investing with an Advisor tier for a higher annual fee of 0.85%. Both services allow investors to use ETFs and mutual funds to accomplish their goals.

E*TRADE Core Portfolios: Best for Mobile Experience

  • Account Minimum: $500
  • Fee: 0.3%

Best for Mobile Experience: Our pick for the top mobile platform is E*TRADE’s Core Portfolios, given the mobile app’s seamless experience and sleek design, including access to the full complement of Core Portfolios features available through your smartphone.

Pros & Cons


  • Quick, easy sign up process

  • Current E*TRADE users new to Core Portfolios receive expedited onboarding

  • Socially Responsible Investing options

  • Low fees and fund expense ratios


E*TRADE is a well-known industry leader in the discount brokerage space, launching their Core Portfolios robo-advisor offering in 2017. When E*TRADE’s platform was acquired by Morgan Stanley in 2020, an already robust offering became even deeper.

The Core Portfolios mobile experience leverages the expertise of an established brokerage industry expert to provide an easy-to-use automated investment platform. As a result, investors are empowered with the tools needed to manage their portfolios directly from their mobile devices in a way that stands out from the rest of the robo-advisor field.

E*TRADE’s Core Portfolio manages to bring a streamlined mobile experience by reducing goal setting, questionnaires, and time horizon options. This is an intentionally designed approach so you can quickly and simply manage your investments without extensive portfolio and goal customization. 

You’ll be able to choose a portfolio containing a diversified basket of ETFs. Auto-rebalancing is applied to help keep your portfolio on track, although no tax-loss harvesting is available and customers are unable to consolidate their outside accounts. Investment advisor support is also accessible to help answer questions for both existing and prospective customers. This all comes wrapped up in a very competitive 0.3% annual management fee.

Final Verdict

There are several strong robo-advisor offerings with strengths in different key areas to help manage your money. When considering which of these platforms might be the right fit, keep in mind your personal preferences, goals, and needs. One significant factor that wasn’t part of our rating methodology was investment returns. This was left out due to different portfolio risk levels and allocation strategies between robo-advisors. While many platforms follow passive investment strategies attempting to match the overall growth of the market, offerings that provide additional customizations let you invest in a more dynamic, personal way. 

It’s also helpful to consider platforms that allow for external account aggregation if your investments are held at more than one institution so you will have aligned tax optimization, investment strategies, and goal tracking. We found that Wealthfront offers the best overall experience balancing these options. Next, we’ll look at side-by-side comparisons of the companies we reviewed so you can see where each platform shines through.

Compare the Best Robo Advisors
Company Account Minimum  Fees  Key Features
Wealthfront Best Overall / Best Goal Planning $500 0.25% for most accounts, no trading commission or fees for withdrawals, minimums, or transfers. 0.42%–0.46% for 529 plans Sophisticated financial planning. Customized portfolios. Up to $1M FDIC insurance. Mobile app on par with desktop version.
Betterment Best Beginners / Best Cash Management $0, %10 to start investing 0.25% (annual) for investing plan or $4/month fee for balances under 20K, 0.40% (annual) for the premium plan Customizable portfolios. Create multiple goals. Scenario test goals. Sync outside accounts.
Interactive Advisors Best SRI / Best Portfolio Construction $100 to $50,000 0.08-1.5% per year, depending on advisor and portfolio chosen 50+ portfolio options.  Excellent security. Intuitive screeners. Targeted portfolio screening.
M1 Finance Best Low Costs / Best Sophisticated Investors $100 ($500 minimum for retirement accounts) 0% Low-cost, customizable portfolios. 60 pre-built portfolios. Borrow and spend options.
Merrill Guided Investing Best Education $1000 0.45% annually, of assets under management, assessed monthly. With advisor – 0.85% Discounts available for Bank of America Preferred Rewards participants Easy to navigate.  Superb goal planning tools and calculators. Preferred Rewards help customers reduce fees. Financial experts create and manage portfolios. Excellent customer service.
E*TRADE Best Mobile $500 0.30% Best for newer investors. No external account syncing. Socially responsible investing options.
Empower Best Portfolio Management $100,000 0.89% to 0.49% Free net worth tracking and retirement planning. Advisory clients can access a financial advisor. Tax-minimization strategies and tax-loss harvesting. Stocks and private equity available.

Everything You Need to Know About Robo-Advisor

How to Choose the Best Robo-Advisor 

Choosing the best robo-advisor is highly dependent on who you are and what you need. The first step in choosing the best robo-advisor is understanding your investment goals. Only after that can you compare platforms and choose the best robo-advisor to fit your financial needs.

Understand Your Investment Goals

Helping you to understand your investment goals and needs is one of the key roles a human advisor has traditionally played. Robo-advisors can take you through helpful prompts and provide tools to help you properly fill in the details. In the end, however, their understanding of your financial situation and future plans are based mostly off of what you input. Some robo-advisors do take the extra step of profiling you based on your age and income in order to compare your needs and goals with those of similar users. That being said, you have to do some of the work yourself to get the most out of a robo-advisor.

Every investor has different goals when it comes to buying a house, saving for a vacation, paying for college (for yourself or a dependent), and so on. Depending on your age, you may need to prioritize certain goals over others. The more definition you can give to your goals, the better a robo-advisor will be able to support you. 

If you are in your 20s, for example, you may have goals like buying a house and retirement on your list. The goal of retirement has a much longer timeline in your 20s and, given that there is most likely decades until you will be drawing on retirement funds, you can be more aggressive with the funds for that purpose. Saving for a house, however, is ideally a shorter term goal with capital preservation being a priority that will temper your risk tolerance.

With a timeline and a target final dollar amount, most robo-advisors will be able to recommend a portfolio with a risk/return profile to get you there. The best robo-advisors provide you with tools to test out different variables and scenarios, like what happens if you increase your contributions or if the market has a few years of bad returns or a prolonged recession, and help nudge you to take actions that will increase your chances of success.

Comparing Robo-Advisors

There are some general features that almost all investors value in a robo-advisor, such as easy account setup, solid goal planning, account services, portfolio management, security features, attentive customer service, comprehensive education, and low fees. Although cost is often the main focus, we found comprehensive goal planning tools to be one of the most important pieces of a robo-advisor. The best robo-advisors allow you to run scenarios on your goal planning, sync outside accounts for a more comprehensive financial picture, and prompt you to take actions that will improve your chances of success. Beyond that, choosing the best robo-advisor comes down to your specific financial situation.

Generally, a younger person saving for a single goal like retirement or buying a home will be able to make any robo-advisor work. Newer, younger investors will likely value robo-advisors with low account minimums, low fees, and basic capabilities. Continuing the example above of an investor in their 20s looking to save for a house (near-term, preservation of capital) and retirement (long-term, growth oriented), will probably begin looking for some universals like low fees and low account minimums. Some robo-advisors have tiers of fees where the fee goes up to give access to more features, so it is important to figure out whether you need the features of a higher tier or can make do with the basics so you can compare the options properly.

After that, this younger investor will want to look at how many of the low-cost platforms have tax-advantaged 401K/IRA accounts (or 403(b), rollovers or other account types that specifically apply). Similarly, a person saving for college would likely prioritize those robo-advisors that offer 529 plans. For those looking for basic account management services, however, no special account is required.  

As your life and finances become more complex, though, the ability to set multiple goals with different timelines may be more important than finding the cheapest robo-advisor. As your net worth grows and life moves forward, you may be willing to pay slightly higher fees for a platform that allows you to consolidate varied financial goals like building college funds for multiple children, saving for a variety of medium and long-term purchases, and so on, in a single, robust robo-advisor that provides cash management and ongoing tax optimization. In fact, if our hypothetical investor was in their 50s, for example, the goal of retirement and its robo-advisor requirements would shift more to include cash management and withdrawal planning and calculators that are less of a concern for investors who are in their 20s.

Robo-advisors are challenging to evaluate in a traditional investment sense because the portfolio performance isn’t a key differentiator as almost all of them seek to mimic market returns with optimal diversification (there are some exceptions like M1 Finance and Interactive Advisors). This means it largely comes down to the features you need and the quality of those features. The good news is that the robo-advisor space continues to grow, and even investors with complex finances will still find several robo-advisors to choose from to meet their investment needs.

Robo-Advisors vs. Financial Advisors

While some investors are more concerned with choosing the best robo-advisor, there are still many people deciding between a robo-advisor and a human financial advisor. Simply put, the benefits of a robo-advisor, at its most basic, is a portfolio designed to Modern Portfolio Theory (MPT) standards and some level of goal planning support for a very low management fee. In contrast, the main benefits of human financial advisors tend to fall on the relationship side more than the technology or financial efficiency side. 

Financial advisors can come in a number of forms, including fee-based, commission, and blended (a lower fee offset by commissions on some products). One strength that human advisors have is the ability to draw out important information over the course of a conversation, whereas a robo-advisor does everything assuming that your survey responses are absolutely accurate. Human advisors also tend to cover a wider range of topics outside of simple portfolio management. This can include taxation, budgeting, insurance, and even estate planning. Financial advisors can also help you stay the course on a financial plan when you are tempted to deviate, especially when market conditions get tough. Over time, a financial advisor seeks to build a relationship with you to better understand your financial needs, both spoken and unspoken.

There are some more key differences that are worth covering, but we should note that these are generalizations and may not be true of every financial advisor or robo-advisor.

How Portfolios are Constructed

While robo-advisors strictly adhere to MPT because it makes up the core of their algorithms, financial advisors have more flexibility. If a financial advisor has a clear picture of your finances, they aren’t held to MPT and may suggest concentrated exposure to certain asset classes and markets to offset concentrations in other places like savings bonds in banks, physical assets, real estate holding, and so on. A financial advisor is also able to select investments outside the ETF universe, which is where most robo-advisors invest. This ability to make direct investments in specific segments of the market can lead to outperformance, as well as underperformance versus the broader market.

The flip side of this freedom is that commission-based financial advisors may push you towards sub-optimal funds and investments that generate commission. A robo-advisor doesn’t receive a commission and so will solely consider the fee burden and portfolio fit when selecting investments. Fee-based financial advisors avoid this issue as well, but they also cost you money upfront. Finally, some commission-based advisors can appear to cost you nothing but end up with you having more expensive funds when cheaper, low-fee versions would have done the job. 

Performance and Portfolio Management

Because they have the ability to deviate from MPT, financial advisors have more variability in their performance than robo-advisors. As mentioned earlier, portfolio performance isn’t a very good differentiator for robo-advisors because they all seek to return roughly market rates through a diversified portfolio. A financial advisor can outperform or underperform the market, and will likely do a bit of both over time. 

A robo-advisor’s edge over a financial advisor is in clear investment decisions and rules-based portfolio management rather than performance. You may never beat the market, but you will have confidence that your portfolio is being regularly rebalanced to keep it optimized and may even be harvesting tax losses to offset gains on a regular basis.

High-Net-Worth Clients

Individuals with a large net worth have no end of options for their investment needs. Traditionally, these individuals have been the target clients for most human advisors. In return for financial advice, these investors usually pay a fee of 1% or more in assets under management. Although many robo-advisors are below half of this figure, high-net-worth clients are likely getting far more personalized advice beyond the immediate portfolio. Empower targets this market with a very robust robo-advisor, but also pairs it with a human financial advisor knowing that there is an expectation of a higher level of service as the assets under management increase.

For most people, especially those looking to invest small amounts like a few hundred dollars, starting with a low fee robo-advisor makes a lot of sense as seeing a fee-based financial advisor would chew up a significant portion of the overall portfolio value. Even if you dream of having a dedicated financial advisor, it is good to have the option of professional portfolio management through a robo-advisor while you are building up your portfolio value and finances to the point where you may benefit from (and afford) more comprehensive professional advice.

What Is a Robo-Advisor?

A robo-advisor is an investment platform that makes trades on an investor’s behalf using survey responses and algorithms. The algorithms that a robo-advisor uses to manage your portfolio are based on Modern Portfolio Theory (MPT), which seeks to select investments to maximize returns within an acceptable level of risk through diversification. The information you provide to a robo-advisor, including your age, your investment timeline, and some proxy for your risk appetite, is fed into the MPT-based algorithm to find the ideal portfolio within the asset types offered by the robo-advisor. 

Robo-advisors primarily differ in their complexity and their asset offerings, in addition to the primary differences in account minimums and cost. More advanced robo-advisors can handle multiple portfolios on your behalf, with each portfolio representing a different investment goal and timeline. The most advanced robo-advisors will also take your external accounts held at other institutions into consideration to optimize your holdings and increase the likelihood of reaching your goals. As for asset offerings, most robo-advisors create the majority of your portfolio using exchange-traded funds, but some offer actual direct asset purchases to accounts of a specific size. These direct-purchase assets can include shares, bonds, REITs, actively managed funds, and so on.

What Are the Pros and Cons of Using a Robo-Advisor?

The pros and cons of using a robo-advisor differ slightly depending on whether you are coming from having your money professionally managed or doing it yourself, so not all of the following may apply to you.


  • Robo-advisors are built on principles of sound financial management laid out in Modern Portfolio Theory and further research by economists like Eugene Fama and Robert Shiller
  • Automated portfolio management removes tedious tasks like rebalancing and checking to ensure proper asset allocation
  • Robo-advisors are cheaper in terms of cost than using a traditional advisor
  • Robust goal planning and analysis features at some robo-advisors can help investors clarify and reach their goals


  • Robo-advisors are not as skilled as human advisors in drawing out important information about your personal and financial situation
  • Robo-advisors are ultimately still a form of do-it-yourself investing in that you are ultimately responsible for giving the model all the relevant data and keeping to the planned deposit schedule
  • Although many robo-advisors work to optimize taxation, it is often portfolio specific and the service is more limited than what a human advisor may provide

How Much Do I Need to Invest?

There is a range of account minimums for robo-advisors. While there are some robo-advisors that have no minimum, like Betterment ($10 to start investing), SoFi Automated Investing, and Blooom, some of these allow you to open the account but won’t fully invest your money in the model portfolio until a threshold of cash is reached. Aside from the small number of robo-advisors that require $0 to open an account, account minimums range from $10 to $100,000. In general terms, you should try to have $100 to invest in even the no account minimum robo-advisors, as that will usually ensure the money goes into the market. From there, the key is contributing more investment dollars at regular intervals.

How Much Do Robo-Advisors Cost to Use?

Robo-advisors typically charge less than 0.50% of assets under management, which is far below the traditional asset management fees charged by human advisors. Premium offerings from the platforms that are split into basic and premium will be closer to that 0.50% line. Only Empower exceeds this line, but it is designed specifically for high net worth clients and diversifies and manages their portfolio with direct asset purchases rather than simply using ETFs as a proxy. This feature may well justify the higher fee for wealthy investors looking to automate their portfolios. 

Putting this in context, a traditional human advisor will generally be double the standard robo-advisor at 1% or more. In both cases, however, there is a similar limitation in that any advisor, robo or human, can only work with the information you give as to your personal situation and financial needs.

Do Robo-Advisors Usually Outperform the Market?

Although some of the robo-advisors we reviewed do offer some funds designed to outperform the market, the vast majority of robo-advisors are designed to match the overall returns of the market. Many of the ETFs that robo-advisors use to develop a balanced portfolio either are or have elements of index-tracking funds. Depending on the robo-advisor, your funds may also be diversified globally as well as by asset class. This means portions of the portfolio’s holdings could outperform or underperform your domestic stock market, when the idea is to have the portfolio keeping pace with the overall market rather than outperforming or underperforming it.


Our mission at Investopedia is to provide investors with reviews and ratings of robo-advisors that are comprehensive and unbiased. Our team of researchers and expert writers, led by Michael Sacchitello, spent months evaluating all aspects of a robo-advisor’s platform, including the account setup process, goal planning tools, account service options, portfolio construction offerings, portfolio management, mobile and desktop user experience, educational content, fees, and security. As part of this evaluation, we extract critical data points that are weighted by our quantitative model that produces a powerful star-scoring system.

With the individual investor in mind, we’ve designed a comprehensive ranking methodology to find the best overall robo-advisors and the best robo-advisors across nine key categories. Each advisor is then scored across multiple variables to rate performance in every applicable category. The score for the overall award is a weighted average of the categories.

Dotdash Meredith receives cash compensation from Wealthfront Advisers LLC (“Wealthfront Advisers”) for each new client that applies for a Wealthfront Automated Investing Account through our links. This creates an incentive that results in a material conflict of interest. Dotdash Meredith is not a Wealthfront Advisers client, and this is a paid endorsement. More information is available via our links to Wealthfront Advisers.


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