Best Robo-Advisors for April 2024

<p>Investopedia / Joules Garcia</p> — Investopedia / Joules Garcia

Fact checked by Matthew M KlammerReviewed by Samantha Silberstein

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. We researched 21 digital wealth management platforms and evaluated them on 59 criteria, including cost, account services, goal planning tools, and more. We will cover the top robo-advisors in the automated investing industry, for you to decide which robo-advisor is best for you.

Best Robo-Advisors

Best Overall, Best for Goal Planning, Best for Portfolio Construction, Best for Portfolio Management: Wealthfront
Best for Beginners, Best for Cash Management, Best for Tax-Loss Harvesting, Best for Crypto Portfolio Selection: Betterment
Best for Low Costs: SoFi Automated Investing
Best for Sophisticated Investors: M1 Finance
Best for Those Who Struggle to Save: Acorns
Best for Women Investors: Ellevest
Best for Mobile: E*TRADE Core Portfolios
Best for Education: Merrill Guided Investing

Wealthfront: Best Overall, Best for Goal Planning, Best for Portfolio Construction, Best for Portfolio Management

Why We Chose It

Best Overall

Wealthfront has an investment and money management product for any type of investor. With low fees and a low required minimum investment of $500, plus customizable automated portfolios, individual stock investing, high-yield cash, superb digital financial planning, automated tax-loss harvesting, and lending capabilities, Wealthfront deserves the best overall robo-advisor award.

Best for Portfolio Management

Wealthfront clients and others can link their investment accounts or manually input them for a 360-degree view and analysis of their finances. Programmed to answer up to 10,000 questions, the Path digital financial planner is the closest online tool to a human financial planner.

Best for Goal Planning

Wealthfront users can integrate their robo-advisor account with their external accounts through Path for high-level goal planning. The calculators that are embedded within the Path digital financial planner help with retirement, homeownership, and college planning, along with the finances involved in taking a break from work.

Best for Portfolio Construction

Portfolios are constructed based on widely accepted investment management research such as modern portfolio theory (MPT) by Harry Markowitz. The 17 asset classes selected for the portfolios cover stocks, bonds, and inflation assets, to yield among the best constructed portfolios in the robo-advisory category.

Pros & Cons

Pros

Superb Core and ESG portfolios with vast customization options
Comprehensive account types including 529 plans for college savings
Direct indexing with individual stocks for accounts over $100,00
Best-in-class Path digital financial planner

Cons

No human financial advisor access
No online chat
Phone access isn’t straightforward

Overview

In 2008, technology entrepreneurs Dan Carroll and Andy Rachleff co-founded the popular robo-advisor service Wealthfront. Since its inception, Wealthfront has become the head of the robo-advisor innovation class. From a basic algorithm-driven digital investment manager, the company has exploded to include hundreds of ETFs to add to the basic Core and ESG robo-advisory portfolios. Users can also create their own ETF portfolios for Wealthfront to manage. With the addition of an automated bond portfolio and fee-free stock trading, most investors can meet their financial needs with Wealthfront.

At Wealthfront’s core are the automated investment portfolios. After responding to a few questions, you’ll receive a tailored investment portfolio spanning 17 asset classes to fit your goals, time horizon, and risk level. From this risk-adjusted portfolio, you can view other options with greater or lesser risk profiles (i.e., a changed ratio of riskier stocks to more conservative bonds). The portfolios are rebalanced back to your preferred asset mix. The tax-loss harvesting feature keeps taxable accounts free of unnecessary tax payments. Add in hundreds of ETFs such as sustainable investing, tech, value, growth, and crypto funds, and users can customize their holdings for an ideal investment fit.

Additional Wealthfront features include:

Fee-free high-yield cash account and debit card offered through partner banks
Automated bond portfolio for steady cash flow
Fee-free stock investing with 35-plus themed stock collections and research
Multiple account types for investing, retirement, trusts, and 529 college planning
Low interest rate borrowing
Impressive Path digital financial advisor programmed to answer more than 10,000 queries
Daily tax-loss harvesting

Founded in 2008, Wealthfront is headquartered in Palo Alto, California, and serves over 700,000 clients.

Betterment: Best for Beginners, Best for Cash Management, Best for Tax-Loss Harvesting, Best for Crypto Portfolio Selection

Paid non-client of Betterment. Views may not be representative, see more reviews at the App Store and Google Play Store. Learn More about this relationship.

Why We Chose It

Best for Beginners

Beginning investors can start investing with Betterment and create multiple goals on its intuitive platform with just $10. The vast portfolio choices and available crypto investing provide broad investment choices.

Best for Cash Management

Automatic sweep functionality and access to both a high-yield cash reserve and checking account through partner banks distinguished Betterment from competitors. Reimbursement for ATM fees is also a standout feature.

Best for Tax-Loss Harvesting

Betterment integrates client transaction and asset rebalancing with tax-loss harvesting to ensure optimal after tax returns. To avoid the wash sale rule, Betterment maintains a list of comparable funds for each asset class to uphold seamless diversification.

Best for Crypto Portfolio Selection

Betterment’s acquisition of Makara gave the robo-advisor access to a fully functioning cryptocurrency platform. The managed crypto portfolios provide investors with three secure, diversified crypto portfolios including Bitcoin/Ethereum, a broadly diversified Universe, and a Sustainable crypto option.

Pros & Cons

Pros

Easy setup and tracking of multiple goals
Multiple portfolio choices including smart beta, three SRI options, income, value tilt, crypto, and cash accounts
$0 account minimum and $10 to begin investing
Low-fee financial advice packages for digital customers

Cons

No borrowing or margin
Premium plan requires $100,000
No REIT exposure

Overview

Betterment was founded in 2008 by Eli Broverman and Jon Stein in New York, New York. The company serves more than 800,000 customers and has grown to become among the largest standalone robo-advisors. Betterment is the top robo-advisor for beginners, cash management, tax-loss harvesting, and crypto. The 2022 acquisition of Makara provides Betterment with a foothold in the cryptocurrency investment arena.

Beginners will appreciate the brief questionnaire that guides users to clarify their investment goals, time horizon, and risk tolerance level. Based on the reponses, you’re presented with a portfolio of investments that fit your needs. Clients can choose from among 12 portfolios in a range of asset allocation choices.

Portfolio choices include:

Core: Built for long-term investing and low costs using stocks and bond investments from around the world
Innovative Technology: Focuses on high-growth tech companies like clean energy, semiconductors, and robots
Goldman Sachs Smart Beta: Seeks to outperform the market with a factor investment approach
Broad Impact, Climate Impact, Social Impact: Three SRI portfolios covering distinct corners of sustainable investing
Blackrock Target Income: A 100% bond portfolio for cash flow and diversification
Value Tilt: Diversified investment portfolio with a focus on undervalued U.S. companies
Universe, Sustainable, Bitcoin/Ethereum: Three crypto portfolios with distinct slices of the Bitcoin universe
Cash Reserve: 100% high-yield cash investments with no management fees and up to $2 million FDIC insurance through program banks ($4 million for joint accounts)

Portfolio management is your typical robo-advisory fare, with regular rebalancing and tax-loss harvesting. Those with a $100,000 account can opt into the Premium version for a 0.40% management fee and gain access to unlimited video visits with Certified Financial Planners. This additional fee is applied to assets in 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 an annual fee of 1% plus trading expenses.

Betterment’s fee-free cash management offer is near the top of the pack with high-yield cash and checking accounts, both through partner banks. The $2 million FDIC insurance through partner banks, unlimited withdrawals, and no minimum balance add to the accounts’ allure. The checking account and Visa debit card carry $250,000 FDIC insurance through partner banks, along with reimbursements for ATM and foreign transaction fees.

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.

SoFi Automated Investing: Best for Low Costs

Why We Chose It

Best for Low Costs

SoFi Automated Investing doesn’t charge an investment management fee. Investors can begin investing with a $1 required minimum investment.

Pros & Cons

Pros

All clients can access 30-minute video meetings with fee-free financial planners
Low $1 minimum to begin investing
Fee-free investment management

Cons

No tax-loss harvesting available
No portfolio customization options are available
Fewer available account types than other robo-advisors

Overview

Social Finance, Inc., was founded in 2011 by four Stanford University business school students using an alumni-funded lending model. In 2012, SoFi was the first company to provide student loan refinancing. Since then, the company has become a complete financial powerhouse, with banking, lending, investing, credit card, insurance, and travel services. SoFi became a publicly traded company on the NASDAQ stock exchange on June 1, 2021.

SoFi Automated Investing won our Best for Low Costs category with fee-free investment management as well as no-cost 30-minute video meetings with financial advisors. New investors can open an account with $1 and receive a diversified investment portfolio in line with their goals and risk tolerance level. Member benefits include community events and access to a broad range of financial solutions.

M1 Finance: Best for Sophisticated Investors

Why We Chose It

Best for Sophisticated Investors

M1 Finance is a one-of-a-kind investment portal suitable for strategic investors who want access to customized expert theme-focused strategy portfolios, as well as the ability to choose their own stocks and ETFs. High-yield cash accounts and borrowing round out this Best for Sophisticated Investors category.

Editor’s Note

M1 is now offering members who sign up for its M1 Plus service three free months of access. At the end of the trial period, members who sign up will be charged $3 per month, which was recently slashed from $95 per year.

Pros & Cons

Pros

Opportunity to invest in numerous customized Expert Pies or portfolios
Thousands of ETFs and stocks for self-directed investors
Fee-free plan
High-yield cash account
Low interest rate margin available

Cons

No goals or risk tolerance quiz
Platform requires some degree of investment understanding
No financial advisors available
No tax-loss harvesting

Overview

M1 Finance was founded by Brian Barnes in 2015 and is headquartered in Chicago. The company distinctly differs from the general pool of robo-advisors because it awards users more discretion in their portfolio selection than many other platforms. Where M1 intersects with other automated investment platforms is in rebalancing. Similar to Wealthfront, M1 offers pre-made, expertly designed portfolios, called Pies, and the self-directed stock and ETF assets can be rebalanced back to the user’s preferred asset allocation.

The M1 Expert Pies, or Model Portfolios, each including seven to 10 funds, are pre-designed investment portfolios based upon themes. They are:

General Investing: Most similar to a typical robo-advisory portfolio; seven diversified risk-adjusted stock and bond ETF portfolios ranging from ultra-conservative to ultra-aggressive
Plan for Retirement: Similar to a target date fund; 10 risk-adjusted stock/bond ETF portfolios for investors expected to retire between 2020 and 2035
Responsible Investing: Several Pies devoted to specific ESG causes
Income Earners: Six Pies offering dividend yields between 1.925% and 3.95%; portfolios include stock and/or bond ETFs
Hedge Fund Followers: Eight Pies that track the investment strategies of distinct hedge fund managers like Icahn Capital, Tiger Global Management, and Berkshire Hathaway
Just Stocks and Bonds: Nine Pies which each hold two Vanguard ETFs, an All-World Stock ETF, and a Total Bond ETF; each Pie varies in its asset allocation from 10% bonds and 90% stocks to 90% stocks and 10% bonds, for the most aggressive investors
Other Strategies: Seven Pies including value, growth, cannabis, and an Ark Innovation ETF portfolio

For self-directed investors, there are thousands of ETFs and stocks. Three crypto coins—Bitcoin, Ethereum, and Litecoin—are also available. Additional features include a high-yield cash offer and M1 Borrow lending.

Sophisticated investors who want more benefits from M1 Finance can sign up for its premium service for $3 a month. These members will have access to additional investing tools, lower rates for margin loans, and more cash-back rewards with M1’s credit card. Investors who need to run a cost analysis to determine if the premium version of M1 Finance is worth the fee can get the first three months free. Rest assured, investors can cancel the premium service at any time.

M1 Finance combines self-directed brokerage features with pre-built portfolios and automated portfolio management capabilities. M1 Finance does not provide advisory services and therefore is not considered a traditional robo-advisor.

Acorns: Best for Those Who Struggle to Save

Why We Chose It

Best for Those Who Struggle to Save

Those unaccustomed to saving will appreciate Acorns’ “round-up” feature, which automatically diverts spare change into investment dollars. When spending from linked debit and credit cards, the difference between the purchase amount and the next whole dollar is invested for the future.

Pros & Cons

Pros

Elegant solution to get young people to begin saving and investing
Multiplier feature enables faster investment growth
Low-fee, diversified investment portfolio options

Cons

For small accounts, fees can be a large percent of account value
Without added saving and investing, the round-up feature will take a long time to build a meaningful investment amount
Limited account types

Overview

Acorns was founded in 2012 by four colleagues, including the father-son team of Jeff Cruttenden and Walter Cruttenden, in Irvine, California. The company fills the need for small investors to save and invest by rounding up their spending and diverting the difference into an investment account. Presently, $3 billion has been invested through round-ups of spare change.

The micro-saving app asks users several goals-based questions and recommends an appropriate diversified investment portfolio. The app is linked to one or more debit or credit cards. When you spend with a linked card, the difference between the purchase and the next whole dollar amount is deducted from your linked checking account and invested in your Acorns Invest account.

For faster growth, users can multiply their savings and invest with the Round-Ups Multiplier. The multiplier will double, triple, or 10x the amount of the round-up. Acorns users need to realize that when solely using the standard round-up feature, it will take a very long time to build a meaningful investment portfolio. Since investment dollars originate from the user’s checking account, you need to monitor the account closely to avoid overdrafts, as overdraft fees could be incurred if you are not careful.

Ellevest: Best for Women Investors

Why We Chose It

Best for Women Investors

Ellevest was designed for women investors to provide financial management aligned with their specific career and life situations. Access to tailored investment portfolios, low-cost subscription pricing, and discounted financial advisor access substantiates Ellevest’s win for the best robo-advisor for women.

Pros & Cons

Pros

Portfolio selection tailored to women’s needs
Low subscription pricing
Discounted pricing for financial advisor access

Cons

No tax-loss harvesting
Limited portfolio customization
No lending

Overview

Co-founded by Sallie Krawcheck in 2014, Ellevest is committed to evening the investment playing field for women. Ellevest crafts investment portfolios to address these issues: Women earn less than men, live longer than men, and have frequent breaks in their employment to care for children.

The Ellevest digital plan is personalized with 21 asset classes to fit your goals, timeline, and risk capacity. Its recommended portfolios provide a 70% or better likelihood of achievement. All digital investors can access financial advisor meetings for discounted fees. More extensive services are available through the Private Wealth Management service, for those with more than $1 million.

The Ellevest platform offers limited customization, and no cash management, lending, or add-on products or services like those offered by select other robo-advisory platforms. This isn’t necessarily a detriment for those seeking low-cost, well-managed, goal-based investment management.

E*TRADE Core Portfolios: Best for Mobile

Why We Chose It

Best for Mobile

E*TRADE Core Portfolios, a member of the prestigious Morgan Stanley family of investment products, provides a solid robo-advisor platform with a user-friendly mobile app. Clients have access to all that the platform offers in the palm of their hand.

Pros & Cons

Pros

Multiple investment strategies including core, ESG, and smart beta
Mobile app enables account opening and transfers and resembles the desktop
Access to the broad Morgan Stanley lineup of investment and financial management services

Cons

Competitive robo-advisors available at lower cost
No live chat available
Relatively limited goal setting in the portfolio creation process

Overview

The E*TRADE company was acquired by Morgan Stanley in October 2020, providing a vast array of investment services for self-directed investors seeking financial planner or robo-advisory advice. Similar to most robo-advisors, the E*TRADE Core Portfolios’ investment process begins with a questionnaire to assess your objectives, including goals, liquidity needs, time horizon, and risk tolerance. Based on your responses, you’re presented with a core investment portfolio to fit your criteria.

Investment portfolio choices include:

Core Portfolio
Socially responsible
Smart beta

The E*TRADE mobile app includes most features of the Core Portfolios desktop version and is easy to navigate. Users can open an account on the app and seamlessly transfer money into or out of Core Portfolios. The E*TRADE integration provides checking, bill payment, and cash management. You can toggle between your Core Portfolios and self-directed trading account as well.

Additional features:

Phone support from a team of Core Portfolios specialists available Monday through Friday
Portfolio choices selected by the experienced E*TRADE Capital Management team
Tax-optimized portfolios and tax-loss harvesting now available for those with taxable accounts
Extensive financial and life planning guidance on the E*TRADE Morgan Stanley platform related to education, family finances, retirement, elder care, budgeting, and women and money

E*Trade, headquartered in Arlington, Virginia, was founded in 1982.

Merrill Guided Investing: Best for Education

Why We Chose It

Best for Education

Merrill Guided Investing benefits from integration with the Merrill Lynch and Bank of America brand and resources. The heft of this iconic company provides expansive financial education for beginners all the way through advanced investors, along with a solid robo-advisory offer.

Pros & Cons

Pros

24/7 customer service
Superior educational resources, calculators, and tools for a wide range of investors
Integration with Bank of America and Merrill Edge financial products, providing a one-stop shop financial portal
Expansive educational tools, videos, webinars, and courses

Cons

Fees are higher than some competitors
No tax-loss harvesting
No financial advisor access for online-only offer

Overview

Sign up for Merrill Guided Investing and you’re partnering with a member of the iconic wealth management division of Bank of America. Headquartered in New York, New York, Merrill Lynch & Co. was founded in 1914 by Charles E. Merrill and was acquired by Bank of America in 2009, according to Reuters. Formerly catering to the wealthiest Americans and investment banking activities, the company now strives to serve a wider range of clients.

Merrill Guided Investing benefits from the company’s deep well of investment management expertise and educational tools. The robo-advisor is unique with a mix of technology-based investment management and oversight by Merrill investment professionals, spearheaded by the company’s Chief Investment Office. Investment portfolios are created to reflect your goals, timeline, and risk tolerance. They also include access to sustainable ESG offers.

The investment portfolios deviate from the standard passively managed robo-advisory offerings. They are constructed and managed using strategic and tactical asset allocations, which vary based on the user’s specific goals, risk tolerance, financial situation, timeline, and expected returns, as well as current and predicted market conditions.

The standout educational offerings include webinars, Morningstar Investing Classroom, and investor education videos. Sample webinar categories include Investor Psychology, Thematic Investing with ETFs, and Sustainable Investing. The partnership with Morningstar includes scores of free courses across investment topics such as stocks, mutual funds, bonds, ETFs, and portfolio creation. Videos span platform-specific and investment objectives. Rounding out the Learn Portal are tools and calculators for retirement, investing, college planning, and personal finance.

The Bottom Line

Choosing the best robo-advisor for your personal goals, financial situation, and risk tolerance depends on many factors. When making this choice, among the most important considerations are the level of customization you need, the different account types that are available, whether access to financial planners is important to you, and whether you require integrated banking or brokerage services. Investment minimums and monthly maintenance fees are also critical considerations. Use this list of the best robo-advisors as a starting point to evaluate each platform. Then continue your research by exploring our in-depth reviews of all of the major robo-advisors.

All robo-advisors enable online account setup, but that’s where the similarities often end. Many digital wealth management platforms follow passive investment strategies attempting to match the overall growth of the market; however, different portfolio risk levels, allocation strategies, and customization methods often lead to varying portfolio performance.

Company	Account Minimum	Fees	Key Features
Wealthfront Best Overall / Best for Goal Planning / Best for Portfolio Management / Best for Portfolio Construction	$500	0.25% for most accounts, no trading commission or fees for withdrawals, minimums, or transfers; between 0.42% and 0.46% for 529 plans	Sophisticated digitalfinancial planning, customized portfolios, up to $8 million FDIC insurance, mobile app on par with desktop version
Betterment Best for Beginners / Best for Cash Management / Best for Tax-Loss Harvesting / Best for Crypto Portfolio Selection	$0, $10 to start investing	0.25% (annual) for investing plan accounts with at least $20,000 or at least $250 per month in recurring account deposits; otherwise, $4/month	Robust cash management features, create multiple goals, scenario test goals, low-cost financial advisor planning
SoFi Automated Investing Best for Low Costs	$1	$0	No-fee investing; $1 investment minimum; available lending; cash management tools; access to Certified Financial Planners, social events, discounts, and other perks
M1 Finance Best for Sophisticated Investors	$100 ($500 minimum for retirement accounts)	0%, $36/year for M1 Plus	Low-cost, customizable portfolios; huge list of prebuilt portfolios; borrow and spend options
Acorns Best for Those Who Struggle to Save	$0	$3-$5/month	Powerful micro-saving features, low fee, diversified investment portfolio options
Ellevest Best for Women Investors	$0 for Ellevest Digital Plan or $1,000,000 for Ellevest Private Wealth Management	$12 monthly subscription fee for the Ellevest Digital Plan; fees vary for Ellevest Private Wealth	Women-focused investment portfolios, low-cost subscription pricing, discounted financial advisory
*ETRADE** Best for Mobile	$500	0.30%	Best for mobile-first investors, socially responsible investing options
Merrill Guided Investing Best for Education	$1,000	0.45% of assets under management; 0.85% with advisor; 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

Why You Should Trust Us

Investopedia collected 1,239 data points from 21 robo-advisor companies to identify the most important factors to investors. We used this data to review each digital wealth management platform for fees, portfolio management services, goal planning tools, and other key features to provide unbiased, comprehensive reviews to ensure our readers make the right decision for their investing needs.

How to Choose the Best Robo-Advisor

Choosing the best robo-advisor is highly dependent on your financial situation. However, there are certain steps you can take to ensure you select the correct robo-advisor for your financial needs.

Step 1: Understand your financial goals. Are you focused on retirement, or are you planning to spend on a big purchase such as a house or car? Understanding what you are aiming for will help you choose the best robo-advisor.
Step 2. Understand the features that matter to you. If you need financial advice, seek out a hybrid robo-advisor with financial advisor access. Those seeking customization will prioritize that feature. Customer service access, fees, and cash management are other factors that might be considered.
Step 3: Confirm how much you are willing to invest. Most robo-advisors will require a minimum funding amount; some are higher than others. For example, Charles Schwab requires a minimum of $5,000 to open a robo-advisor account. However, Wealthfront requires as little as $500 to get started. The amount you are willing to invest could be another determining factor in which robo-advisor you choose.

Understand Your Investment Goals

Human advisors have traditionally worked to help people understand their investment goals and needs. Similarly, 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 is based mostly on what you input. In general, to get the most out of a robo-advisor, you need to do most of the work yourself, without the guidance of a human advisor.

Every investor has different goals when it comes to buying a house, saving for retirement, 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 saving for retirement on your list. Retirement is likely much further away when you are in your 20s and, given that it will most likely be 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.

How to Compare Robo-Advisors

There are some general features that almost all investors value in a robo-advisor; depending on your experience level and account size, some features will be more important than others. Robo-advisor features that investors should evaluate are:

Goal planning
Platform fees
Range of features and customization
Account services
Portfolio management
Attentive customer service
Comprehensive education

Although cost is often the main focus, we found comprehensive goal-planning tools to be one of the most essential features 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 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)—this investor 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 401(k) or 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 or custodial accounts. 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 portfolio performance isn’t a key differentiator; almost all of them seek to mimic market returns with optimal diversification. 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, are 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 come in a number of forms, including fee-based, commissioned, 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 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 on the course of 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. Robo-advisors which offer financial advisors combine both services, typically for lower than average fees. Unfortunately, some of these hybrids require higher investment balances, although not all do.

How Robo-Advisor 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 holdings, 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 commissions. 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 higher AUM management fees can detract from returns. 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 typically 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 lower fees along with 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 taxable gains on a regular basis.

Robo-Advisor Cash Management Accounts

As market interest rates rise, high-yield cash accounts grow in appeal. As the investment management landscape has grown increasingly competitive, many robo-advisors have made fee-free high-yield cash accounts available through their existing suite of offerings. These offers are typically provided through the firm’s association with one or more partner banks. By using multiple banks, some robo-advisors can offer more than the standard $250,000 FDIC insurance. Most of the high-yield cash accounts offer comparable returns and adjust quickly as the Fed raises or lowers rates.

Best Robo-Advisors for Uninvested Cash

Wealthfront

The fee-free Wealthfront Cash Account offers three account types, individual, joint, and trust. To open an account, all you need is $1. The interest rate fluctuates with market interest rates and currently pays 5.00% on the entire balance (5.50% when you refer a friend). Through partner banks, each account receives up to $8 million in FDIC insurance ($16 million for joint accounts).

Features include:

Receive funds from paycheck two days in advance with direct deposit
App-based check deposits
Bill pay
Debit card with access to 19,000 no-fee ATMs
Active fraud monitoring

Titan

Titan Smart Cash distinguishes itself from the rest of the robo-advisors’ high-yield cash accounts. In the current environment of changing interest rates, it’s tough to know if you’re receiving the best available return on your cash. Titan Smart Cash solves this problem by searching daily across the available high-yield Treasury and cash options to find the best rate for you. Titan considers your tax rate as well to make certain that you’re receiving the best after-tax yield, up to a 5.29% maximum.

Features include:

Yields shown are net of fees; regular advisory fee applies
SIPC insured up to $250,000 for cash balance
Withdrawals are completed within three to four days
Predominantly invested in the safest Treasury funds
Earning the highest yields might require higher minimum investment amounts

Betterment

Betterment offers two cash management products, Checking and Cash Reserve, through partner banks. Betterment Cash Reserve is the high-yield cash offer, currently paying a 4.75% variable annual percentage yield (APY).

Features include:

Up to $2 million FDIC insurance through program banks† ($4 million for joint accounts)
Unlimited withdrawals
No minimum balance requirement, and just $10 to begin earning interest
Automated tools to enable multiple saving goals

What Is a Robo-Advisor?

A robo-advisor is an investment platform that manages investments 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 from each other 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. 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 Benefits of Using a Robo-Advisor?

Whether you are a savvy investment and money management person or not, there are benefits to using robo-advisors. In general, robo-advisor fees are lower than those of traditional financial managers who typically charge north of 1% to manage your assets. Most robo-advisory investment portfolios contain low-fee ETFs from diverse sections of the investment markets such as stocks and bonds. The investment portfolio that you select is generally created to fit your time horizon, risk tolerance, and future goals.

Due to robo-advisors’ structure and cost, investing with a robo-advisor can improve your investment discipline and prevent you from making impulsive investment decisions, such as selling after a market decline. You’ll also save money on fees and individual investments when investing with a robo-advisor vs. a financial advisor. Many robo-advisors also offer additional features such as access to human financial advisors, cash management, margin lending, and high-yield cash accounts.

Are Robo-Advisors Safe?

Robo-advisor security is comparable with bank-level security. That means your account is protected with professional security protocols, two-factor identification, and limited access by company employees to your personal information. Some robo-advisor cash accounts are protected by the same FDIC insurance that banks use, while your investment accounts typically carry SIPC insurance, which protects you if the robo-advisor goes bankrupt.

When investing in financial stock and bond markets, your investment values will go up and down. There is no insurance to protect from normal market volatility.

How Much Do You Need to Invest?

Every robo-advisor has an investment minimum. The amounts needed to begin investing vary from $10 up to $100,000. Some also offer unlimited access to human financial advisors. The most common minimums are $100 and $500. But Charles Schwab charges a $5,000 minimum for its fee-free Intelligent Portfolios platform. If you’re short on cash, then look for a robo-advisor with a low required minimum investment amount.

Even if you don’t have a lot to invest today, it’s smart to begin investing early. As your income grows, you can increase transfers into your account and boost your long-term wealth.

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.

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.

Which Robo-Advisor Has the Best Returns?

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 due to variations in the performance of distinct market sectors, such as international stocks or fixed-income assets.

Why Would You Use a Robo-Advisor Instead of a Financial Advisor?

Robo-advisors offered by a reputable financial institution are a cost-effective way for investors to grow their capital through an automated investing service without having high service fees eating away at their profits. The fees and entry requirements associated with these digital wealth management platforms are generally much less than those of a human financial advisor. Investors with little capital may be unable to justify the cost of a human financial advisor, let alone afford the service.

How Do Robo-Advisors Help With Taxes?

Investors with taxable brokerage accounts will find that many robo-advisors offer tax-loss harvesting. This is a service that strives to sell losing assets to offset taxable gains in profitable investments. This activity is known to reduce your overall tax bill, allowing you to reinvest or keep more of your assets.

Robo-advisors that lack tax-loss harvesting typically offer tax-minimization services. This is a practice of selecting assets for a taxable account which will minimize taxes. This might include selecting municipal bond funds, which deliver tax-exempt interest payments, in lieu of taxable bond funds.

By automating tax-loss harvesting or tax-minimization investing strategies, investors benefit and keep more of their investment returns.

Companies We Reviewed

We researched and reviewed 18 robo-advisor platforms to find the 8 companies you see included on the list above. Below is the full list of companies we researched, along with links to individual company reviews to help you learn more before making a decision:

Titan, Interactive Advisors, Sofi Automated Investing, Ally Invest Robo Portfolios, Schwab Intelligent Portfolios, Fidelity Go, Wells Fargo Intuitive Investor, J.P. Morgan Automated Investing, Ellevest, Vanguard Digital Advisor, Wealthfront, Betterment, M1 Finance, Merrill Guided Investing, Sigfig, Stash, E*TRADE Core Portfolios, Axos Managed Portfolios, Acorns, Empower, Vanguard Personal Advisors, J.P. Morgan Personal Advisors

How We Picked the Best Robo-Advisors

Providing readers with unbiased, comprehensive reviews of digital wealth management companies, more commonly known as robo-advisors, is a top priority of Investopedia. We used our 2023 consumer survey to guide the research and weightings for our 2024 robo-advisor awards. To collect the data, we sent a digital survey with 64 questions to each of the 21 companies we included in our rubric. Additionally, our team of researchers verified the survey responses and collected any missing data points through online research and conversations with each company directly. The data collection process spanned from Jan. 8, to Feb. 9, 2024.

We then developed a quantitative model that scored each company to rate its performance across nine major categories and 59 criteria to find the best robo-advisors. The score for each company’s overall star rating is a weighted average of the criteria:

Account Services – 10.00%
Account Setup – 5.00%
Customer Service – 5.00%
Fees – 15.00%
Goal Planning – 21.00%
Portfolio Contents – 17.00%
Portfolio Management – 17.00%
Security & Education – 5.00%
User Experience – 5.00%

Additionally, during our 2023 research, many of the companies we reviewed granted our team of expert writers and editors access to live accounts so they could perform hands-on testing.

Through this all-encompassing data collection and review process, Investopedia has provided you with an unbiased and thorough review of the top robo-advisors.

The above material and content should not be considered to be a recommendation. Investing in digital assets is highly speculative and volatile, and only suitable for investors who are able to bear the risk of potential loss and experience sharp drawdowns. Digital assets are not legal tender and are not backed by the U.S. government. Digital assets are not subject to FDIC insurance or SIPC protections.

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.

Guide to Robo-Advisors

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