The popularity of Robo Advisors is blowing up. During the olden days, you need to pay an expensive financial advisor for investment allocation/advice and portfolio management. On most occasions, the service only comes as part of a larger bundle of financial services.
Robo Advisors make it easier for the average Joe to manage investment portfolios, and a majority of services even offer free allocation advice without charging management fees.
Robo Advisors only cost between a quarter and a third of what human advisors will typically charge for the same service. They can come in the form of management or advisory fees, and may differ significantly from one service to the next.
Here are the best Robo Advisors with the lowest fees:
M1 Finance is a free robo advisor. Yes, it’s 100 percent free and requires a $0 minimum deposit. But it’s not perfect. The service does not include tax-loss harvesting and your account needs to have at least $100 to begin trading. However, this is not a bad thing. The $100 minimum deposit is one of the lowest in the world of automated investing. The service also charges $0 trading fees.
And even though M1 Finance has no option to invest in mutual funds, the service offers taxable, joint, and Roth IRA accounts. It also offers SEP IRA, Rollover IRA, and Traditional IRA accounts. What makes M1 Finance unique is the pie graph interface. Your portfolio is presented in slices of pie to easily determine the allocation for each investment. You can choose from pre-built pies or create your own! This is a fully automated service that maintains your allocations and rebalances the portfolio as needed.
We really like the brilliant M1 Finance smartphone app. This lets you check the status of your portfolio and make the necessary adjustments while you’re on the move.
Wealthfront is not the most flexible in terms of active trading and impact investing. However, Wealthfront remains one of the biggest and most established robo advisors today. It doesn’t charge any fees on account balances with less than $5,000 (using our link), and the 0.25% annual fee is among the lowest you can find.
You can start investing in Wealthfront for a low minimum deposit of $500. The service is fully automated and easy to use. After signing up and making an initial deposit, the service will manage the portfolio and automatically rebalance, reinvest, and apply tax-loss harvesting to the appropriate accounts. Wealthfront will activate direct indexing and the Risk Parity feature if your account balance is over $100,000. This feature includes daily and stock-level tax-loss harvesting to consistently maintain a higher rate of return in your investments.
As if that’s not enough, Wealthfront also comes with a portfolio line of credit for taxable accounts worth $25,000 or more and has a low fee between 4.70% and 5.95%. With low minimum deposits, low annual fees, and a full suite of features, Wealthfront is ideal for both small and big investors.
Similar to M1 Finance, Schwab Intelligent Portfolios is a free robo advisor that charges zero fees, commissions, or service charges. However, the minimum deposit is quite steep at $5,000. But the service is one of the most flexible among robo advisors with the lowest fees.
Schwab Intelligent Portfolios is a fully-automated robo advisor with a human touch. The customized portfolio management utilizes a hands-free approach to investing, but the service offers professional human advice as well. Think of it as a hybrid robo advisor and you won’t be far off. Schwab offers traditional taxable accounts and IRAs. Each portfolio is composed of up to 20 different ETFs representing 20 different asset classes and 11 fund families.
After signing up with Schwab, all you have to do is create a customized portfolio and you’re done. The service will do the rest and will apply daily rebalancing of your account. And if your balance is over $50,000 Schwab will activate tax-loss harvesting as well.
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.
Different Types of Management Fees
The management fees of Robo Advisors can be levied in a variety of ways. A big majority of robo advisors charge management fees based on a percentage of your investment account, and the fees will adjust depending on the amount of your account.
There are Robo Advisors that charge a monthly fee, and the amount will also change depending on the size of your account balance. Yet there are services that offer basic advice and portfolio management with no management fees, but they will usually charge fees in order to obtain additional features and account services – some of which are standard on other Robo Advisors.
Typical Range of Fees
In general, the range of fees charged by the top Robo Advisors is actually quite wide, no matter which type of fee structure they employ.
For robo advisors that levy a set fee, it can typically range from $10 or less as a one-time payment, to a monthly charge of anything between $1 and $300 depending on the size of your investor account. General percentage management fees are below 1% and typically range from 0.15% to a top-end charge of around 0.9%.
What Your Get for Your Money
Robo advisors offer automated portfolio management services such as asset allocation advice, portfolio rebalancing, dividend reinvestment, and tax loss harvesting.
Not all of those services are always available. The services mentioned can either be lacking or can only be provided if you pay an added charge. It is important to always consider what you get for your money in terms of services before selecting the best Robo Advisor for you.