Welcome to our 2022 Robo Advisor comparison guide! There is no doubt that Robo Advisors are becoming more popular each year. Contrary to popular belief, Robo advisors are not only for beginners or small investors. Even seasoned investors are now using Robo Advisors to handle their investments.
Financial analysts are projecting that more people will be using Robo Advisors as more financial institutions and big banks are catching on and introducing their own versions of the service. Want proof? The total assets under management (AUM) by Robo Advisors have increased 68% annually, and total assets under the guidance of Robo Advisors are forecasted to reach $2.5 Trillion by 2023.
By the end of 2020, experts estimate that robo advisors will be managing over $1.4 Trillion AUM, and by 2023, estimates suggest they’ll be handling a staggering $2.5 Trillion.
Robo Advisors are not just a popular app on your smartphone; they can make a significant return on your investments. While some people tend to shy away from using an automated service because they better trust a human’s judgement, robo advisors have proven their value by consistently returning an equal or higher return compared to hiring an expensive human advisor.
If you want an in-depth report on the many individual Robo Advisor services online, you should consult our expert Robo Advisor reviews.
With new robo advisors popping up almost every month, we analyze and compare only the best ones in our detailed robo advisor comparison guide here. This will help you decide which robo advisor is the perfect fit for you, without having to sort through all the fluff.
We’ll start with a comparison of the minimum deposits required by each robo advisor. Some, as you can see, are low enough to test the waters and throw in a few hundred dollars to see if you like the service before investing more. Others, like Vanguard for example, require you to deposit a minimum of $50,000. Personal Capital’s Wealth Management tools require a minimum $100,000 – definitely for well-to-do investors – although their Financial Tools remain free for any account size.
Minimum Deposit Comparison
Betterment, M1 Finance, Ellevest, and Wealthsimple have no minimum deposit amount.
Wealthfront, Polaris Portfolios and Titan Invest have an impressively low minimum deposit of $500.
Schwab requires a minimum deposit of $5,000.
FutureAdvisor has a minimum balance of $10,000, but this applies to existing investment accounts.
Zack’s Advantage sits on the higher end at $25,000.
Vanguard Personal Advisor Services applies a more restrictive $50,000 minimum deposit.
Based on the comparison, M1 Finance, Betterment, Ellevest and Wealthsimple are perfect for small investors since there is no minimum deposit required to use the service. The same can be said for Wealthfront, Polaris Portfolios and Titan Invest since you can start using the service with a minimum deposit of $500. And when it comes down to it, anything under $500 and you’re not going to see much benefit there anyway.
What we call ‘medium-sized’ investors should look into the services of Schwab since they have a $5,000 minimum. FutureAdvisor‘s platform requires a $10,000 account balance (keeping in mind you don’t have to deposit $10,000, only have $10,000 worth of existing investments.)
Zack’s Advantage sits at a relatively high $25,000, while Vanguard is for bigger investors with more than $50,000 to invest. Personal Capital requires a $100,000 minimum deposit for the Wealth Management service but has a slew of free financial tools for any account size that are very much worth utilizing.
Annual Fees Comparison
Fees – the all-mighty decider. Of course, each robo advisor’s annual fees play a huge role in an investor’s decision to invest money with them. After all, that is one of the biggest benefits of robo advisors when compared to human financial advisors – drastically reduced fees.
While it may seem simple to tell you what a robo advisor’s fees are, it’s actually not so easy to show you what they all are compared to each other! For this comparison then, we’re going to show you how much each robo advisor’s fees would be at various investment levels, starting with $500, moving up to $5,000, $10,000, $50,000, then finally $100,000 and over.
These numbers were chosen mostly because these are the typical thresholds that the robos change their fees, if they do, plus they represent a standard variety in investment amounts. If you’re investing $75,000, you’ll probably pay about the same annual fee percentage as someone investing $50,000, for example. Similarly, if you’re investing $500,000, you’re likely paying the same fee percentage as someone investing $100,000.
If a robo advisor for a certain amount isn’t listed, they simply aren’t available for that investment amount, most likely due to the minimum deposit not being met.
Another thing to keep in mind is that just because a fee is higher doesn’t mean you shouldn’t consider the service. Some robo advisors offer extra features for their fees or have a different investment strategy you might align better with. Having said that, it doesn’t mean you should invest with them either. Make sure you choose the best robo advisor for your needs. This comparison only serves as a reference.
Based on our Robo Advisor fees comparison, it is easy to see that management fees will vary wildly depending on the service and investment amount.
In general, you can get reduced fees for both lower investment amounts (using our links) and some robo advisors also lower their fees over a certain investment amount, in addition to offering advanced features and options.
If you’re dipping your toes into robo advisor water, so to speak, you can get a number of free services up to about $10,000, or you can go with M1 Finance or Schwab which never cost anything at any amount. Personal Capital’s excellent Financial Tools are also completely free.
M1 Finance: Always free
Schwab Intelligent Portfolios: Always free
Wealthfront: Free under $5,000 (with our link)
Personal Capital: Financial tools & dashboard is free
Wealthsimple: Free under $10,000 (with our link)
Wealthsimple, Wealthfront, and Betterment are all good examples of affordable robo advisors that take a set-it-and-forget-it approach and are especially good for beginners or for investors looking to be hands-off.
Whether you prefer automated investing or active trading, it’s important to compare the account features of the most popular Robo Advisors online. Here is our comparison of the various account features that robo advisors have to offer.
It is in regard to tax-loss harvesting where the most notable comparisons can be made between the top robo financial advisors.
Wealthfront,FutureAdvisor, and Zacks Advantage offers tax-loss harvesting to all investors using their services. This means that if you fulfill their respective deposit minimums, you will automatically benefit from the feature for all your taxable accounts.
Wealthfront adds to this by offering Direct Indexing for accounts worth more than $100,000, which essentially amounts to a more optimized version of tax-loss harvesting.
Vanguard does not offer tax-loss harvesting, but they offer client-by-client tax-planning strategies as part of their ethos of combining automated investing and personal advice. M1 Finance also doesn’t include tax-loss harvesting, but they do offer tax savings strategies for their accounts.
Meanwhile, both Betterment and Schwab Intelligent Portfolios set a threshold balance amount of $50,000 before they begin providing their tax-loss harvesting services.
We hope that our 2021 Robo Advisor Comparison Guide gives you an idea on what investing service is perfect for you. Get an in-depth look at the top Robo Advisors online by reading our comprehensive Robo Advisor reviews and let us know if there’s anything you think we should add to this guide.