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Want to get your feet wet in the beautiful and eco-conscious world of socially responsible ESG investing? You’re not alone. Impact investing was only available for big-money investors willing to invest large amounts back in the day.
But we are now in the realm of environmentally-friendly living, and Non-biodegradable synthetic plastics are now commonplace in the Earth’s most beautiful oceans. Despite what naysayers may say, climate change is here to stay. The blazing hot summers and irregular frigid winter are, sad to say, just the tip of the (disappearing) iceberg.
We all need to be more responsible for our actions, including our investing activities. The best socially responsible Robo Advisors will help you be a more eco-friendly investor without the high risks, enormous fees, and worrying about how to pick suitable mutual funds and rebalancing your portfolio. Want to invest in socially conscious companies in the world of alternative energy, disease eradication, or healthy living while taking advantage of automated investing? Here are the best robo advisors for ESG & socially responsible investing:
M1 Finance started in 2014 and quickly became the Robo Advisor of choice for both new and seasoned investors. M1 Finance has zero fees for pretty much everything and makes their money from optional account extras like a “Plus” membership and interest rates on borrowed money (and even those are low.)
You’ll love the “pie” investment templates that only M1 Finance offers. Each slice of the pie represents your various investments. You can choose from many pre-built pies, or you can customize your own. The pies make it easy to view the investment allocations with a single glance. The service also comes with a great smartphone app so you can check the status and change the allocations of your investments on the go.
M1 Finance also gives you access to all the usual account types, including IRAs and trusts, and most importantly, easy access to SRI-based portfolios. M1 Finance gives socially responsible investors a way to easily and quickly build a portfolio around what matters.
Wealthfront is one of the oldest and biggest traditional robo advisors on the market. They’re also one of the best performing and well-respected.
In mid-2021, Wealthfront began offering SRI portfolios made up of expertly-selected ETFs for their customers. According to their website:
“At Wealthfront, we give you access to a range of carefully vetted ETFs that focus on different aspects of social responsibility. These ETFs represent asset classes like US stocks, bonds, foreign stocks, and emerging market stocks. You can build an entire portfolio with these SRI ETFs and decide how much to allocate to each one by clicking the Edit portfolio button on your Investment Account dashboard.”
On top of this, Wealthfront offers excellent financial tools, planning, and a dashboard to connect to your other investment and financial accounts to keep up to date on your financial goals and retirement.
Wealthsimple is fully automated and easy to use. The Robo Advisor comes with a $0 account minimum and will offer free portfolio rebalancing and tax loss harvesting for all accounts.
If you sign up to Wealthsimple using our link, they will manage your first $10,000 investment for free for one year. There’s no catch; sign up using our link, and your first $10,000 investment will be managed free of charge!
Wealthsimple is a traditional Robo Advisor. It offers the usual SEP IRA, traditional IRA, Roth IRA, and Rollover IRA accounts. But it also offers halal-based investing opportunities along with socially conscious or green stocks. The Wealthsimple Basic service will charge zero advisory fees for the first year and only costs you 0.50% for accounts below $100,000.
Although Wealthsimple is not intended for hands-on investors, it remains a solid choice in eco-friendly investing.
Personal Capital is one of the best hybrid robo advisors offering SRI services. The company’s been offering socially responsible investment options since 2012. And now, Personal Capital is taking it a step further by partnering with Sustainalytics, a global leader in corporate governance research and rating history. This partnership is creating new evaluation metrics to determine the social responsibility of a company accurately.
The three main pillars are ESG which stands for Environmental, Social, and Governance. This new methodology measures and assesses the ESG issues that are material to each company. With this approach, Personal Capital’s Socially Responsible Personal Strategy does a better job of seeking out companies that are doing a better job managing environmental, social, and governance issues (ESG).
Personal Capital offers an amazing free service inclusive of a fee analyzer, education planner, retirement planner, budgeting/cash flow, and investment checkup. The paid service requires a $25,000 minimum deposit, but you also get a dedicated financial advisor along with automatic rebalancing and tax loss harvesting.
More Green Robo Advisors for Impact Investing
In addition to our favorites above, there are a number of other Robo Advisors that offer socially-responsible impact investing options.
EarthFolio is a smart and low-cost option in ESG automated investing. This Robo Advisor is unique because it allows you to invest exclusively in companies with strong ESG or Environment, Social, and Governance practices.
This includes clean energy, conservation, equal employment, diversity in hiring, financial transparency, and board independence. It is free to open an EarthFolio account, and the service charges a modest annual fee of 0.50%, although the service does have a relatively high $25,000 minimum investment.
EarthFolio has been investing exclusively in the ESG investing space for nearly twenty years and has the distinction of being the first advisory firm to offer ESG robo services. They have a wide lineup of fully diversified ESG portfolios, including a line of fossil-free portfolios that exclude coal, petroleum, and natural gas (a rarity even within ESG competitors).
Polaris Portfolios is a fully automated ESG Robo Advisor, making it an excellent choice for hands-off investors. It does, however, require a higher minimum deposit and comes with slightly higher management fees as well. But the service will charge zero trading fees and transaction fees, and you can open multiple investment accounts.
Polaris also offers unlimited email support to offer added peace of mind. But Polaris is also known for offering values-based portfolios. This will give you the chance to put your money on green companies and socially responsible endeavors that focus on sustainability and positive social impact.
Even though Polaris isn’t the best choice for small investors, the service is an easy way to experience the finer points of responsible investing.
Betterment has recently unveiled socially responsible investing choices that clients can easily select and add to their existing portfolios. Betterment’s SRI portfolio comprises ETFs from iShares, with more SRI funds to be integrated soon.
Betterment claims that socially responsible investing is an $8 trillion category as more and more clients are demanding the availability of SRI approaches in their investment activities.
Betterment is already one of the best robo advisors that offers superior flexibility with no minimum deposit.