The robots are not only here, they’re starting to manage your money.

Part of a plan to disrupt the traditional financial advice industry, “robo-advisers” use computer algorithms that customize investments for consumers who are increasingly seeking more easily accessible, faster, and cheaper options. Many of them charge just a fraction of the cost of a human adviser—sometimes as little as 0.15 percent (aka 15 basis points, or bps) a year, depending on how much you invest. This means if you invest $1,000 with one of these robo-advisors, a 0.15 percent annual fee would only be $1.50. Most of these new firms also have little or no investment minimums.

In general, robo-advisors steer their clients toward portfolios made up of low-cost index mutual funds that track the shares of an index like the S&P 500, and exchange-traded funds (ETFs), which are similar to index funds but trade more like a stock (for a primer on the stock market read our post MoneyLion explains: What’s the stock market?).

Most robo-advisors rely on some version of the industry standard Modern Portfolio Theory (MPT) investment strategy, which balances expected returns (how much money you could make) with risk (how much money you could lose) to achieve an “optimal” portfolio given an investor’s particular comfort level for risk. While using MPT doesn’t guarantee the best returns, it does typically achieve a good balance of risk vs return to create long-term investment results that are better than what a typical investor can achieve by picking investments themselves.

Robo-advisers are certainly tapping into what many traditionally underserved investors are looking for: access to financial planning and investment advice traditionally only available to high net-worth individuals and leveraging the web/internet rather than in-person financial advisors. Even though they currently manage just a fraction of the $20 trillion in investor assets out there, Deloitte Consulting LLP report predicted they’ll manage up to $7 trillion within 10 years. That’s one reason that old-school companies like Schwab and Vanguard have rolled out their own competing robo-advisor products recently.

If you’re considering using a robo-adviser for your investments, use this quick summary as a starting point to learn more about who we think are the top six robo-advisors for Fall 2016 (in no particular order).

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Investing Philosophy
Betterment uses low-cost ETFs comprising up to 12 different asset classes (stocks and bonds) across US and international markets to achieve portfolio diversification. Weightings (how much is invested in stocks and bonds) in your portfolio are computed according to Modern Portfolio Theory and rebalanced regularly to match your risk tolerance.

Key product features
Betterment automatically rebalances your portfolio whenever any asset class drifts more than 3 percent from its target level. The platform’s Smart Deposit feature lets you automatically transfer any “surplus” cash from your checking account into your Betterment investing account. RetireGuide lets you link non-betterment accounts, including your 401(k), so that you to receive retirement planning advice.

Account types
Individual and joint accounts, IRAs, but not 401(k)s (Betterment does offer 401(k)s but your employer needs to sign up for Betterment's service and offer it to you).


Investing Philosophy
After investors complete a risk-tolerance questionnaire, the platform offers ETFs in 11 asset classes. Portfolios are similar to Betterment, relying on Modern Portfolio Theory and diversification to deliver portfolios that are customized to match the level of risk that is acceptable to you.

Key product features
Wealthfront offers daily tax-loss harvesting on all taxable accounts. Its portfolio review tool offers a customized report that can help tweak your investment strategy after an evaluation of fees, taxes, cash drag and diversification.

Account types
Individual and joint accounts, IRAs, but not 401(k)s

Schwab Intelligent Portfolios

Investing Philosophy
This long-standing financial services veteran offers more than 50 ETFs covering 20 asset classes, providing as much opportunity for diversification as an investor could want. The larger menu of ETFs allows Schwab to offer more nuanced allocations in your portfolio, including some ETFs offering “fundamental indexing”, which weigh stocks using company fundamentals such as earnings rather than market capitalization, that are more expensive than ETFs used by Betterment and Wealthfront.

Key product features
Schwab generate a customized model portfolio for you, but lets you replace up to three of the chosen ETFs. Its GoalTracker tool gives you a daily snapshot of how your portfolio is performing against your chosen savings or income goal. Tax-loss harvesting is only available for those with at least $50,000 in their account.

Account types
Individual and joint accounts, IRAs

Vanguard Personal Advisor Services

Investing Philosophy
Vanguard brings the human element into play, with dedicated financial advisors that use the company’s investing methods to customize portfolios on a client-by-client basis. They primarily use Vanguard index funds as well as actively managed funds. Vanguard will also add a money market fund for access to liquidity.

Key product features
Vanguard main difference from robo-advisors like Betterment and Wealthfront is that they also have financial advisors that customers talk to, a level of personalization and service that a purely online robo-advisor can’t provide.

Account types
Individual and IRA accounts. Vanguard will consider all of your accounts when creating your customized investment portfolio – even accounts you hold at other firms.


Investing Philosophy
This platform, now owned by investment manager BlackRock, offers a two-tiered service – a free portfolio analysis service and a premium service that provides direct management investment. The free portfolio service leverages the same Modern Portfolio Theory methodology used by Betterment and Wealthfront.

Key product features
The platform’s free product offers personalized recommendations that can be used for any account at any broker. Tax-loss harvesting is available for premium investors. College savings accounts are managed for free, as are 401(k)s that are held at Fidelity and enabled with BrokerageLink.

Account types
Individual, IRAs and certain qualifying 401(k)s. Premium accounts must be held at TD Ameritrade or Fidelity.

Personal Capital

Investing Philosophy
Smaller-balance clients (less than $100,000) get a diversified portfolio of ETFs based on the Modern Portfolio Theory methodology, while higher-asset clients can invest in both ETFs and individual securities through its Smart Indexing process that invests equally in all sectors.

Key product features
Besides Smart Indexing, Personal Capital also offers a spending analysis tool to help streamline budgets. Clients with less than $100,000 invested have access to one dedicated financial adviser, more than $100,000 will get you two. Accounts of more than $1 million also get private banking services.

Account types
Individual and joint accounts and IRAs; the platform helps advise on 401(k) allocations but won’t directly manage 401(k) accounts.

Here's a quick table to show how each robo-advisor compares when it comes to Fees, access to a human advisor, and account minimums:

Robo-Advisor Fees Advisor Access Account minimum
Betterment Fees are based on account balances.

  • Less than $10,000: 0.35% with $100 monthly recurring deposits, or $3 a month.
  • $10,000-$100,000: 0.25%
  • $100,000+: 0.15%

  • No None
    Wealthfront Fees are based on account balances.

  • Up to $10,000: $0
  • $10,000+: 0.25%

  • No $500
    Schwab Intelligent Portfolios No additional management fees or commissions. No $500
    Vanguard Personal Advisor Services Fees are based on account balances.

  • 0.3%

  • Yes (via phone) $50,000
    FutureAdvisor Fees are based on account balances.

  • 0.5%

  • Yes $10,000
    Personal Capital Fees are based on account balances.

  • 0.89%

  • Yes $25,000