Robo-advisors provide automated, low-cost investment management using algorithms to build and maintain diversified portfolios. This guide compares the best robo-advisors to help you choose the right one for your goals.
Robo-Advisor Quick Facts 2025
- Average fee: 0.25% - 0.50% of assets annually
- Minimum investment: $0 - $5,000 (varies)
- Best for: Hands-off investors, beginners
- Services: Automatic rebalancing, tax-loss harvesting
- Returns: Similar to market, minus low fees
Top Robo-Advisors Compared
| Robo-Advisor | Annual Fee | Minimum | Best For | Rating |
|---|---|---|---|---|
| Betterment | 0.25% | $0 | Overall best | |
| Wealthfront | 0.25% | $500 | Tax strategies | |
| Schwab Intelligent | $0 | $5,000 | No fee | |
| Vanguard Digital | 0.20% | $3,000 | Low cost | |
| SoFi Automated | $0 | $1 | Beginners | |
| M1 Finance | $0 | $100 | Customization |
Detailed Reviews
BEST OVERALL
Betterment
- Fee: 0.25% annually (Premium: 0.40% with CFP access)
- Minimum: $0
- Features: Tax-loss harvesting, goal-based investing, socially responsible options
- Accounts: Taxable, IRA, 401(k), trust, joint
- Pros: No minimum, excellent tools, cash management
- Cons: Premium tier required for human advisor access
BEST TAX FEATURES
Wealthfront
- Fee: 0.25% annually
- Minimum: $500
- Features: Direct indexing ($100K+), tax-loss harvesting, Stock-level TLH
- Accounts: Taxable, IRA, 529, trust
- Pros: Advanced tax optimization, Path planning tool
- Cons: $500 minimum, no human advisors
NO FEE
Schwab Intelligent Portfolios
- Fee: $0 (no advisory fee)
- Minimum: $5,000 ($25,000 for Premium with CFP)
- Features: Automatic rebalancing, tax-loss harvesting
- Accounts: Taxable, IRA, trust
- Pros: No management fee, Schwab backing
- Cons: Higher minimum, cash allocation (no interest)
How Robo-Advisors Work
- Risk assessment: Answer questionnaire about goals, timeline, risk tolerance
- Portfolio creation: Algorithm builds diversified portfolio of ETFs
- Automatic investing: Deposits automatically invested across holdings
- Rebalancing: Portfolio automatically adjusted to maintain target allocation
- Tax optimization: Tax-loss harvesting reduces tax burden
Key Features to Compare
| Feature | Betterment | Wealthfront | Schwab |
|---|---|---|---|
| Tax-Loss Harvesting | Yes | Yes (advanced) | Yes |
| Automatic Rebalancing | Yes | Yes | Yes |
| Human Advisor Access | Premium tier | No | Premium tier |
| Socially Responsible | Yes | Yes | Limited |
| Cash Management | Yes (4%+ APY) | Yes (5%+ APY) | Yes |
| Direct Indexing | $100K+ | $100K+ | No |
Robo-Advisor vs DIY Investing
| Factor | Robo-Advisor | DIY Investing |
|---|---|---|
| Effort Required | Minimal | High |
| Cost | 0.25% (typical) | $0 (fund expense ratios) |
| Tax Optimization | Automatic | Manual |
| Customization | Limited | Complete |
| Emotional Discipline | Built-in | Self-control needed |
| Best For | Hands-off investors | Active investors |
When to Choose a Robo-Advisor
- Beginners: Don't know how to pick investments
- Busy professionals: Don't have time to manage portfolio
- Emotional investors: Need discipline to stay the course
- Tax-conscious: Want automatic tax-loss harvesting
- Goal-oriented: Saving for specific targets (retirement, home)
FAQ
Are robo-advisors worth the fee?
For most hands-off investors, yes. The 0.25% fee is often offset by tax-loss harvesting benefits and behavioral coaching (preventing panic selling).
Can robo-advisors beat the market?
Robo-advisors typically aim to match market returns, not beat them. They use passive index investing strategies.
What happens if a robo-advisor goes out of business?
Your investments are held in your name at a custodian (like Schwab or Apex). You'd keep your securities even if the robo-advisor failed.