8 Best Robo-Advisors in 2021

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The best robo-advisors are popular because of their inexpensive, hands-off, low-risk approach to investing.

As more robo-advisors (and investment options of all kinds) come into existence, it’s harder to figure out what to use.

In this article, I’ll help you distinguish between the best robo-advisors. And I’ll explain the pros and cons of robo-advisors compared to other types of investment companies.


Best Robo-Advisors in 2021

Robo-advisors offer automated investment advice that’s more affordable than paying a human financial advisor.

“I love the idea of robo-advisors,” money expert Clark Howard says. “There are many people who don’t need comprehensive financial planning, who just need simple guidance on building and managing a portfolio. Robo-investing gets people the right investment mix at a very low cost.”

For this article, I reviewed more than two dozen companies to find the best robo-advisors in 2021. I prioritized cost among the criteria I used to rate these companies. There are plenty of good robo-advisors that charge annual advisory fees of less than 0.40%.

All of the companies on my list offer portfolio rebalancing and are properly regulated and insured.

Other factors I considered include:

  • Additional expenses
  • Tax-loss harvesting
  • Account minimums
  • Ease of use
  • Annualized return
  • Product offering

Until the last decade, retail investors paid costly fees to get financial advice from a person or paid commissions to a discount broker to make their trades.

New technology, often called fintech, has disrupted those options. You can now make free trades through investment and trading apps such as Robinhood. You can still pay for advice and assistance from a human professional. But robo-advice is a fast-growing, relatively new investment category that gives individuals a third choice: advice from an algorithm that’s equivalent to — but cheaper than — what you’d get from a human professional.


Table of Contents


Best Robo-Advisors

CompanyBest ForWhy It Makes Our List
Axos InvestNo frillsCombination of strong performance, low fees and customization.
BettermentBeginnersInexpensive while offering strong, easy-to-use, goal-based tools.
Fidelity GoStock loversCorrelated to large-cap U.S. stocks. Provides access to Fidelity's services.
SigFigPerformanceArguably the best returns among robo-advisors. Good retirement planning.
SoFiLow feesFewest fees and free access to financial planners.
TD AmeritradeTraditional investorsExcellent financial planning includes rare in-person help.
VanguardHuman helpCharges robo-advisor fees while offering elements of full-service advisors.
WealthfrontPlanning toolsFinancial planning tools and tax-loss harvesting among the industry's best.

Axos Invest: Best for No Frills

Axos Invest gets left off some best lists, but it's a no-frills robo-advisor with strong annualized return and low fees.

Advisory
Fees

Weighted
Average
Expense Ratio

Minimum
Deposit

Tax-Loss
Harvesting

30-Month
Annualized
Return

0.24%

0.09%

$500

Yes

4.38%

The Details: Axos Invest doesn’t get mentioned on “best robo-advisor” lists nearly as often as the other companies in this article.

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To be fair, it does not offer access to human help. Its financial planning tools aren’t as comprehensive and integrated as some of the other names on this list.

However, Axos Invest consistently ranks among the top robo-advisors in terms of the performance of its portfolios. Backend Benchmarking’s Robo Rankings found that Axos Invest offers “superior returns when adjusting for the risk of the portfolio.” That’s while offering a competitive 0.24% annual fee with few additional expenses and a relatively small $500 minimum investment requirement.

Backend Benchmarking’s ratings go into greater detail than I will in this article, but I used the Robo Rankings’ 2.5-year annualized returns in the company charts you see in this article. I have found that Backend Benchmarking is one of the best sources around if you want expert-level data on the most prominent robo-advisors.

Sometimes a simple but targeted approach makes a bigger impact. In addition to the typical questions you’d expect to get from a robo-advisor, Axos Invest dives into your mortgage, student loans and budgeting. It then suggests areas of your financial life that you may want to improve.

Axos Invest offers well-diversified portfolios that allow for more customization than many robo-advisors. That means you can invest only in socially-conscious companies or only companies with women in leadership. Or you might just want to maximize your overall finances with smart tax-loss harvesting. Axos Invest can be a good solution to customize your investing.

Betterment: Best for Beginners

Betterment is the best robo-advisor for beginners who want a company to manage their investment portfolio.

Advisory
Fees

Weighted
Average
Expense Ratio

Minimum
Deposit

Tax-Loss
Harvesting

30-Month
Annualized
Return

0.25%-0.40%

0.09%

$0 (Digital)
$100,000 (Premium)

Yes

1.80%

The Details: Betterment is ideal for beginning investors. There’s no minimum to open an account. There’s a flat 0.25% annual advisory fee on the money you allow Betterment to manage, which is below average for a robo-advisor.

Betterment’s standard investing package also offers consultations with Certified Financial Planners (CFPs). You have to pay, and the sessions can get expensive (starting at $299). But few robo-advisors offer any access to humans through their basic packages. The fact that Betterment requires its advisors to be CFPs is also somewhat unusual.

The standard package allows customers to build individual portfolios for separate goals, and Clark is an advocate for creating different “buckets” for different financial purposes. He recommends it for savings accounts.

Betterment offers financial tools that are easy to understand. Its financial planning calculators and tools allow you to see how things such as a change in your timeline, a change in your recurring deposit amount or a one-time deposit can impact reaching your goal.

The company also helps beginners understand risk. It uses a modifiable sliding scale tool which demonstrates how higher risk means more volatility but also a better chance that you’ll meet your goal.

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Betterment, a robo-advisor pioneer, also offers a cash management account that pays 0.40% APY on your uninvested cash as of January 2021.

Betterment’s premium plan provides unlimited phone access to CFPs for a 0.40% fee and a $100,000 account minimum.

Fidelity Go: Best for Stock Lovers

If you like the idea of a robo-advisor but want most of your capital invested in large-cap domestic stocks, Fidelity meets your criteria.

Advisory
Fees

Weighted
Average
Expense Ratio

Minimum
Deposit

Tax-Loss
Harvesting

30-Month
Annualized
Return

$0-0.50%

0.00%

$0

No

3.88%

The Details: According to Backend Benchmarking and its detailed report on robo-advisors in the third quarter of 2020, Fidelity Go was the top equity performer among prominent robo-advisors over a four-year period: It produced an annualized return of 10.32% on its stock holdings.

Fidelity Go is heavily slanted toward stock in large-cap United States companies, producing good returns in the platform’s relatively short history. That has helped take attention off its weaker performance in the fixed-income allocation of its portfolios, which focuses primarily on bonds.

Fidelity Go doesn’t charge an annual fee for the first $9,999 you invest. The fee increases to $3 per month for portfolios between $10,000 and $49,999 and to 0.35% for portfolios of $50,000+. It’s the only robo-advisor I reviewed with no underlying expense ratios. So the annual fees are an all-in cost.

In addition to being one of the cheapest robo-advisors, it requires $0 to open an account and just $10 to start investing.

If you’re reluctant to hand your financial future over to a robot, you’ll appreciate the fact that a team of humans handles the day-to-day investment and trading decisions for Fidelity Go.

If you invest, you’ll get access to Fidelity’s well-regarded financial planning tools, educational resources and customer service.

You can get a human advisor through the Personalized Planning & Advice platform; it charges 0.50% annually and requires at least $25,000 on deposit.

SigFig: Best for Performance

SigFig is the best robo-advisor if you care about annualized return above all other investment features.

Advisory
Fees

Weighted
Average
Expense Ratio

Minimum
Deposit

Tax-Loss
Harvesting

30-Month
Annualized
Return

$0-0.25%

0.07%

$2,000

Yes

4.71%

The Details: SigFig’s 30-month annualized return of 4.71% is the best in the industry as measured by Backend Benchmarking’s Robo Rankings. SigFig’s returns look even more impressive when you consider more complicated factors such as risk-adjusted performance.

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SigFig launched in 2006 as Wikinvest, a Wikipedia-style free portfolio tracking service. After building 400,000 users, it converted to a robo-advisor under the new name in 2012.

SigFig requires a $2,000 account minimum but does not charge an annual management fee on the first $10,000 you invest — and charges only 0.25% above $10,000.

If you invest at least $10,000, you’ll get unlimited free 15-minute consultations with financial advisors. They aren’t required to be Certified Financial Planners, and you do have to make appointments. But it’s unusual to get free access to human advice at that modest level of investment amount and fees.

SigFig’s retirement-based tools are especially strong. And the platform will even flag issues such as high fees or poor diversification if you let it analyze your external investment accounts.

SoFi: Best for Low Fees

SoFi is the best robo-advisor for low fees.

Advisory
Fees

Weighted
Average
Expense Ratio

Minimum
Deposit

Tax-Loss
Harvesting

30-Month
Annualized
Return

0.00%

0.04%

$1

No

4.03%

The Details: SoFi charges the lowest fees of any robo-advisor I reviewed. That includes $0 in annual advisor fees and a minuscule average weighted expense ratio. With a minimum deposit of just $1, SoFi is one of the most accessible robo-advisors for new investors.

A good portion of your SoFi portfolio will probably consist of low-cost Vanguard mutual funds. Those funds have been a part of many respected passive investment strategies. The rudimentary nature of the portfolios may or may not optimize long-term performance. But they definitely contribute to the low fees.

SoFi started as a company that offered student loans at universities with affluent alumni bases. The company has expanded to offer saving, planning and investing in an attempt to build long-term financial relationships with those students.

Customers get unlimited free access to Certified Financial Planners via video call or chat. If you invest at least $20 per month, you’ll get free career coaching, access to members-only events and discounted rates on SoFi loans.

The company has created its own exchange-traded funds (ETFs), which are currently set to charge 0.19% expense ratios after a promotional period ends in June 2021.

TD Ameritrade: Best for Traditional Investors

TD Ameritrade offers a robo-advisor that feels like a traditional investment brokerage.

Advisory
Fees

Weighted
Average
Expense Ratio

Minimum
Deposit

Tax-Loss
Harvesting

30-Month
Annualized
Return

0.30-0.90%

0.05%

$500 (Essential)
$25,000 (Selective)
$250,000 (Personalized)

Yes%

3.62%

The Details: Schwab acquired TD Ameritrade in a deal that closed in October 2020. Schwab is still in the process of merging the two companies. It’s unclear as of this writing how Schwab will integrate TD Ameritrade’s robo-advisor options.

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For now, TD Ameritrade remains one of the best robo-advisors. Its “Essential Portfolios” option requires a $5,000 account minimum. But its 0.30% annual fee, paired with some of the lowest additional management costs in the industry, are strong points.

In its current form, TD Ameritrade lets all of its customers talk with financial consultants at no additional cost. These consultants are available on the phone or even in person at local branches. They can create a comprehensive financial plan for you that goes beyond investing.

It’s rare for a robo-advisor to offer the type of financial planning that TD Ameritrade does to all of its investors.

TD Ameritrade offers “Selective Portfolios” (min. $25,000) and “Personalized Portfolios” (min. $250,000) with additional features that veer toward full-service advice.

The company uses a third-party company, Morningstar, to construct its robo-advisor portfolios. Morningstar is one of the most respected and sought-after names in investing.

Pitting TD Ameritrade’s robo-advisor options against some of the newer companies creates a clear difference between “traditional” firms that focus on long-term performance and provide human advice and the newer companies with all the digital bells and whistles. If you still appreciate the analog world, TD Ameritrade is a nice option.

Vanguard: Best for Human Help

Vanguard is a hybrid that combines features of a robo-advisor and full-service advisors.

Advisory
Fees

Weighted
Average
Expense Ratio

Minimum
Deposit

Tax-Loss
Harvesting

30-Month
Annualized
Return

Up to 0.30%

0.07%

$50,000

No

3.42%

The Details: The options for retail investors are evolving fast. They’re even starting to blend together. Vanguard’s “Personal Advisor Services” is a great example. If you have at least $50,000 to invest, you can get live, high-quality advice from a human financial planner, and you’ll pay an annual advisory fee of just 0.30%.

Vanguard’s financial tools aren’t as intuitive as some of the other companies on this list. But if you’re interested in personalized advice from a real person while enjoying costs that are competitive by robo-advisor standards, Personal Advisor Services is a great option.

Vanguard’s human advisors don’t work on commission. They don’t offer as many options as full-service advisors do. But they can help personalize your asset allocation, they take the time to explain it to you and they’re open to your input.

Vanguard has a reputation for low-cost, well-diversified index funds. Not surprisingly, its Personal Advisor Services offers respected, transparent investment plans.

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Wealthfront: Best for Planning Tools

Wealthfront's financial planning tools are so good, you may want to try them even if you don't use the robo-advisor service.

Advisory
Fees

Weighted
Average
Expense Ratio

Minimum
Deposit

Tax-Loss
Harvesting

30-Month
Annualized
Return

0.25%

0.11%

$500

Yes

2.77%

The Details: Wealthfront is an attractive choice because you need just $500 to get started. It also offers competitive rates. In the past, it has offered promotions to new customers or customers who make referrals, waiving the annual advisory charge for accounts up to $5,000 or $10,000.

Wealthfront is a good version of what fintech wants to be. It makes use of technology to offer well-executed tax-loss harvesting, a relatively low-risk profile, solid investment returns and user-friendly, customizable tools that help you understand how to achieve your financial goals.

Even if you’re not going to invest with Wealthfront’s robo-advisor, you can take advantage of its widely-praised free tools. The company offers models for five different goals: saving for retirement, college, a house, a large one-time expense and extended time off work to travel. It also offers a separate model to handle income windfalls.

Wealthfront is still actively improving its “Self-Driving Money” feature. It’s designed to take your paycheck and automatically split it between paying bills, various forms of saving and investing, all optimized to your goals.

Like Betterment, Wealthfront offers a cash management account. It offers 0.35% APY as of January 2021.


Other Robo-Advisor Options

Here are some other robo-advisor companies that stand out for specific reasons.

CompanyWhy It Stands OutAccount Features
BlooomSpecializes in retirement plans• Analyzes workplace retirement plans, Fidelity / Vanguard IRAs.
• Recommends optimal portfolio diversification
• Flat fees between $45 and $250/year
• Free 401(k) plan analysis
EllevestTargeted to women• Considers pay gaps, career breaks, longer lifespans.
• Offers socially-conscious investing.
• Focuses on financial goals rather than beating the market.
• Tiered pricing allows for customization.
Personal CapitalRobo/full-service hybird for the wealthy• $100K minimum deposit required.
• 0.89% advisory fee reduced for accounts with $1 million+.
• $200K+ gets access to two dedicated financial advisors.
• Offers arguably the best overall suite of financial tools.
Titan InvestMore risk/reward• Picks individual stocks.
• Leans heavily toward large-cap growth stocks.
• Earned 24.6% ROI Q1-3Q/20 vs. 5.6% for S&P 500.
• Referrals reduce expensive 1% advisory fee by 0.25%.

What Is a Robo-Advisor and How Does It Work?

A robo-advisor is a digital platform that automatically invests your money into diversified portfolios of stocks and bonds that are customized to your needs.

Robo-advisors are significantly cheaper than full-service human financial advisors. Technology plays a large role, helping reduce overhead costs and allowing companies to pass along that savings to customers.

Typically, to apply for an account, you fill out a questionnaire to assess your financial goals and timelines, risk tolerance and your age. Based on your answers, the robo-advisor usually purchases low-cost exchange-traded funds (ETFs) that lean toward more stocks (higher risk) or bonds (lower risk).

The best robo-advisors offer low fees, an easy sign-up process, strong goal planning, professional portfolio management, good security and accessible customer service.

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The first robo-advisor, Betterment, launched in 2008. It started taking clients in 2010 during the Great Recession, originally as a way to help investors rebalance assets of their target-date funds. Financial advisors have had access to automated portfolio allocation tools for a long time. Robo-advisors make those tools available to retail investors like you and me.

In the last 10-15 years, these companies have gotten more sophisticated and have added complex features such as tax-loss harvesting and automated portfolio rebalancing.


How Should You Choose a Robo-Advisor?

No matter how and where you choose to invest, your overall cost is the most important factor to consider.

“What separates robo-advisors is the cost of advice combined with the cost of the funds and investments,” Clark says. “Many high-cost outfits now tout robo-advisory and end up harming your financial future instead of helping it. Over time, low cost is everything in building financial security or wealth.”

Every dollar you pay in fees comes out of your bottom line. Considering the abundance of self-directed investment apps that charge $0 for trades, it’s important that you look closely at the cost of the robo-advisor you’re considering.

Most robo-advisors charge flat fees between 0.00% and 0.50% of your deposited balance. The best robo-advisors may also offer features such as tax-loss harvesting and automatic portfolio rebalancing, both of which can make a significant impact on your return on investment (ROI) over time.

It’s also important to understand the products that each robo-advisor offers. Typical products include ETFs, 401(k)s and IRAs. You should also consider how easy it is to use the website or app and get help from customer service.


What Are the Advantages of a Robo-Advisor?

Here are some of the good things you’ll get if you invest with one of these companies.

  • Combination of low fees and professional help. Robo-advisors are one of three major ways you can go about investing today; full-service and self-directed are the others. Robo-advisors solve the basic problems of the others: the steep fees of human advisors (full-service) and the need for investing skills (self-directed).
  • Ideal for hands-off investing. If you don’t have the time, the desire to learn or the stomach for handling your own investing, the robo-advisors are an attractive option. They offer passive investment mechanisms that are relatively inexpensive.
  • Numerous advantages over human advisors. There’s the potential to earn higher returns because you’re paying less in fees what could be equivalent service. And robo-advisors are accessible 24/7 with an internet connection. They also require minimal capital requirements to start an account. It’s easy to sign up and add to your position.
  • Sophisticated, somewhat personalized strategy. Most robo-advisors offer several different plans. They decide which plan to recommend to you based on your background, goals, assets and risk tolerance. In many cases, the plans are designed by world-class investment management companies. The plans are typically well-diversified and conservative.

What Are the Disadvantages of a Robo-Advisor?

Here are some of the downsides of investing in one of these companies.

  • Fees. There are a lot of apps that offer free stock trades now, so you can save the management fee of a robo-advisor if you’re willing to do your own research.
  • Severely limited options. You can’t choose which ETFs or mutual funds to invest in beyond the few choices the robo-advisor offers. You can’t buy individual stocks or bonds.
  • Limited ROI. By investing through a robo-advisor, you’re usually limiting your risk, but you’re also curbing some of your potential return, especially in strong bull markets like we’ve experienced almost every year since the subprime mortgage crisis in 2008. You have almost no chance at yielding an outsized return, but your portfolio should be extremely stable relative to other ways to invest in the stock market.

Frequently Asked Questions About Robo-Advisors

What Is Tax-Loss Harvesting?

Tax-loss harvesting is a strategy that some robo-advisers use to help customers lower their tax bills. It involves selling an asset (such as a stock) at a loss.

If that sounds confusing, let’s back up a step. An investment account that isn’t a 401(k) or an IRA is called a taxable account. It’s subject to capital gains taxes.

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In other words, if you bought one share of a stock at $1 and sold it at $2, you made a $1 profit. Inside of a taxable account, you’d need to pay a capital gains tax on that $1 profit.

If you held the stock for more than one year before selling it, you’d pay a long-term capital gains tax (0%, 15% or 20%, depending on your taxable income and filing status). If you held the stock for less than one year, you’d pay a short-term capital gains tax equal to your federal income tax rate.

Tax-loss harvesting involves selling equities that have lost money to offset capital gains. This sort of strategy can potentially offset up to $3,000 of ordinary income as well.

Tax-loss harvesting can be expensive and complicated. A robo-advisor that offers it can help increase your bottom line.

What Are Full-Service Advisors and Self-Directed Investment Platforms, and How Do They Compare?

A full-service advisor is a professional human money manager. Their services tend to be considerably more expensive than robo-advisors. However, they can offer more personalized investment plans. Full-service advisors also deal in services not offered by robo-advisors such as estate planning and overall tax planning.

If you have a large number of assets, a full-service advisor may meet your needs better. But if you’re an average investor, the fees probably aren’t worth paying.

A self-directed investment platform or app exists to facilitate your buy and sell orders. Sometimes these companies offer significant resources in terms of research and tools. But they don’t offer advice. It’s up to you to determine which equities to buy or sell. Many self-directed trading apps now offer $0 trades.

Managing your own investments can be stressful. It definitely requires more effort than using a robo-advisor. But self-directed investment platforms also don’t take a percentage of your portfolio.

Are Robo-Advisors Safe?

Yes, in the sense that they’re regulated by the SEC as Registered Investment Advisors just like human financial advisors. Robo-advisor accounts are also insured by the SIPC. That gives you up to $500,000 of coverage if something happens to the company through which you’re investing.

One of the biggest dangers of investing is allowing your emotions to get too involved. It’s incredibly challenging to time the market. Investing passively through a robo-advisor may make it less tempting to sell in a panic if your investments have a bad day, week, month or year.

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It’s still technically possible to panic sell with a robo-advisor. But because it’s a more passive, well-diversified way to invest, it could help you avoid that trap.

Do Robo-Advisors Beat the Market?

The answer depends on the year and on the specific company. However, the answer often is “no.”

Robo-advisors tend to offer well-diversified portfolios. They often use index funds that track the broad stock market or track indexes such as the S&P 500. Robo-advisors are not likely to put your entire portfolio into the stock market.

In bull markets, bonds tend to underperform stocks. Considering that a) you’re paying fees, b) your robo-advisor is more or less tracking the stock market and c) it diversifies your portfolio into things like bonds, your portfolio will probably underperform the S&P 500 over time.

However, robo-advisors thrived during the COVID-19 volatility in the first half of 2020. So they tend to offer stability during uncertain times or during periods when the stock market isn’t performing well.

It’s worth noting that beating the market shouldn’t necessarily be your goal. Generating a return that matches (or even slightly lags behind) the average S&P 500 return will still put you on a nice trajectory over time.

What Is a Proprietary Fund and Why Do Some Investors Dislike Them?

Robo-advisors typically rely on low-cost ETFs and mutual funds in addition to bonds. The robo-advisors usually charge an annual fee to manage your portfolio. But the ETFs and funds also carry fees, which the robo-advisor passes along to you.

Some robo-advisor companies create their own proprietary funds and add them to your portfolio. In those instances, you’re paying your robo-advisor an annual management fee and a fund management fee. Customers tend to get upset (understandably so) when those funds underperform. Also, in order to start including them in portfolios, some robo-advisors have sold off other positions and created additional tax burdens.

Fidelity Go and SoFi, two companies that made my list of the best robo-advisors, include their own proprietary funds in their investment plans. If you’re concerned about potential conflicts of interest, your should review the way the company plans to invest your money.


Final Thoughts

Choosing to use a robo-advisor requires some value judgments on your part. Are you willing to cut into your ROI by paying fees in exchange for less risk and less hassle?

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If you decide that a robo-advisor is right for you, make sure to look for a company that will help you meet your financial goals while charging you the least amount of fees.

One reason I’ve created this list is to show you some options you may not have heard of. The robo-advisors that are the best at marketing and branding aren’t necessarily the ones that are the best for customers.


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