Best Robo-Advisor Companies (2024)

FAQs

Which robo-advisor has the best performance? ›

Robo-advisors, like Automated Investor, typically have lower fees than traditional wealth managers. The cost to use a robo-advisor generally ranges from 0.25% to 0.50% of your portfolio compared to 0.5% to 1.5% for traditional advisors.

While a robo-advisor can be efficient in managing your investing decisions, a human advisor may be best for more complex decisions like helping you choose the right student loan repayment plan or comparing compensation packages for a new job. Cost: If cost is a factor, robo-advisors typically win out here.

The generic cons of Robo Advisors are that they don't offer many options for investor flexibility. They tend to not follow traditional advisory services, since there is a lack of human interaction.

Whereas a financial planner can integrate your finances, taxes, and estate plans, robo-advisors lack this human touch and cannot take a holistic view of your financial life.

The Bottom Line. Wealthfront is the winner of Best Overall and a number of other categories in our 2024 Robo-Advisors Review. This makes Wealthfront a solid choice for any investor comfortable with an all-digital investment service. Wealthfront is also the choice for those without the $5,000 minimum required by Schwab.

While it's smart to be cautious when trusting others with your money, a robo-advisor may be just as safe as a human financial advisor. But investing always comes with the risk of losing money, and that's true whether you're investing on your own, hiring a financial advisor or using a robo-advisor.

Nonetheless, returns can vary widely depending on the robo-advisor and the portfolio. For example, as of December 31, 2022, the 5-year annualized trailing return for robo-advisors with portfolios with a 60/40 allocation ranged from 2.84% to 5.12%, according to The Robo Report by Condor Capital.

According to Investopedia's Affluent Millennial Investing Survey, while 20% of respondents use robo-advisors, the majority still report a preference for human financial advisors.

Do robo-advisors outperform the S&P 500? ›

But depending on the asset class mix and the particular index funds selected, a robo-advisor may underperform or outperform a broad equity index like the S&P 500.

A robo-advisor can help ease the burden of managing your portfolio as you transition to retirement—and help you figure out how to tap your assets in tax-smart ways.

Robo advisors fall short of qualified human advisors in several ways. Among most platforms, the main service offered is portfolio management, which is a small part of what a qualified human advisor does. Here are the additional roles that many qualified human advisors take on.

As with any form of investing, there's always a risk of losing money when using a robo-advisor. Markets can be unpredictable, and no form of investing is immune to potential losses.

Robo-advisors provide customized advice to help you optimize your investments, whereas self-directed brokerage accounts give you full control over your portfolio. People looking for low-cost professional advice or low-involvement investing success may benefit from the services of a robo-advisor.

This will vary significantly depending on the risk profile of the portfolio, broader market conditions, and the specific robo-advisor used. Some robo-advisor portfolios may outperform the S&P 500 in certain years or under specific conditions, while in others, they underperform.

According to our research, Wealthfront is the best overall robo-advisor due to its vast customization options, fee-free stock investing, low-interest rate borrowing, dynamic tax-loss harvesting, and other key features.

But according to the Robo Report, the five-year returns (2017 to 2022) from most robo-advisors range from 2% to 5% per year. And Wealthfront, one of the best robo-advisors available, also states that customers can expect about a 4% to 6% return per year, depending on their risk tolerance.

Both companies are among the winners in our list of the best robo-advisors of 2023, with Wealthfront winning best overall, best for goal planning, best for portfolio construction, and best for portfolio management, while Betterment is best for beginners and best for cash management.