Best Robo-Advisors: 2017 Top Picks #best #broker #dealer #for #independent #advisors


Best Robo-Advisors: 2017 Top Picks

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We spent over 300 hours reviewing the top robo-advisors before selecting the best for our readers. And to help you find the one that’s best for you, we’ve highlighted their pros, cons and current offers.

The robo-advisor has officially gone mainstream, with a series of automated advisory launches over the past year by incumbent online brokers. E-Trade put out E-Trade Adaptive Portfolio, Fidelity now has Fidelity Go, and TD Ameritrade launched TD Ameritrade Essential Portfolios.

And yet despite — or perhaps because of — their ties to established heavy hitters in the field, these newcomers brought little innovation. Most failed to stand out in NerdWallet’s in-depth analysis of the industry, falling short of independent startups like Betterment and Wealthfront or merely mimicking those services at a higher price.

Best Robo-Advisors

  • Wealthfront. Best overall and for minimizing taxes
  • Betterment. Best overall and for IRAs
  • WiseBanyan. Best for free management
  • Charles Schwab. Best for free management and for access to a financial advisor
  • Vanguard. Best for access to a financial advisor
  • Personal Capital. Best for minimizing taxes
  • Fidelity Go. Best for IRAs
  • Blooom. Best for 401(k)s

    What is a robo-advisor?

    A robo-advisor is an online, automated portfolio management service. Because these companies use computer algorithms to manage client investments, robo-advisors can offer their services for a fraction of the cost of a human financial advisor.

    That lower-cost management, combined with features like automatic portfolio rebalancing and tax-loss harvesting. can translate into higher net returns for investors. To help you pick the best robo-advisor for you, we’ve selected the top two online advisors in six categories.

    The best robo-advisors overall

    Wealthfront and Betterment offer low management fees, reasonable minimums and innovative tools.

    It takes a lot for smaller, independent companies to maintain their footing amid a slew of new launches, but Betterment and Wealthfront have managed to do that. They pioneered this industry, and they remain the best two options for most investors, according to NerdWallet’s objective ranking system. That’s due to their low account minimums, easy-to-use interfaces and innovative features. Both robo-advisors offer automatic rebalancing, tax-loss harvesting and diversified portfolios .

    They also share the same fee, to an extent: Both services charge 0.25%. Wealthfront manages $10,000 of every account balance for free, which makes that service slightly less expensive overall. But Betterment has two premium offerings that give customers access to a team of financial advisors for an additional charge. Betterment Plus customers get unlimited emails with those advisors and one planning call a year for 0.40%, and Betterment Premium customers get unlimited email and phone calls for 0.50%. Both Betterment Plus and Betterment Premium require a minimum balance of $100,000.

    Best robo-advisors for free management

    These robo-advisors will manage your portfolio free of charge.

    Let’s make one thing clear: Very little in financial services is completely free. Both WiseBanyan and Charles Schwab Intelligent Portfolios offer portfolio management free of charge, but the investments used — primarily exchange-traded funds — still carry expense ratios .

    Investment expenses are an added cost at all of these robo-advisors, so overall, you’re still likely to pay less for these services. Do you get what you pay for? In some ways. WiseBanyan offers tax-loss harvesting only as a paid add-on. Opting in will bring your total cost to 0.25%, up to a maximum of $20 a month. That’s in line with top choices Betterment and Wealthfront. Schwab offers tax-loss harvesting only on taxable account balances of $50,000 or more. The company uses many of its own funds in client portfolios, meaning those aforementioned expense ratios add to its bottom line, but the portfolios are impressive, drawing from over 20 asset classes.

    Best for access to a financial advisor

    These robo-advisors combine the lower costs of online investment management with human advisors.

    If you’re not comfortable with a computer taking the reins, but you’re intrigued by the lower management fees involved, you might be interested in a hybrid service that pairs computer automation with human financial advisors. The best of these hybrid services come from Vanguard Personal Advisor Service s and Charles Schwab Intelligent Advisory. Not to be confused with Charles Schwab Intelligent Portfolios mentioned above, Intelligent Advisory is a human-enabled online advice offering.

    Both Vanguard and Schwab Intelligent Advisory have relatively high minimum investments — $50,000 and $25,000, respectively — but offer personal service with access to financial advisors. Schwab had the benefit of being a little late to the game, launching a few years after Vanguard and undercutting its management fee slightly; it charges 0.28% to Vanguard’s 0.30%.

    Both services offer unlimited access to certified financial planners, which is an advantage over other hybrid advisors, which typically employ registered investment advisors. Clients with balances above $500,000 might prefer Vanguard, as that level of assets gains them access to a dedicated financial advisor rather than a team of advisors.

    Best robo-advisors for taxable accounts

    These robo-advisors offer first-rate tax efficiency and optimization services.

    Both Wealthfront and Personal Capital offer superior tax optimization services for customers with taxable accounts, like individual or joint nonretirement accounts, especially those with high balances.

    Wealthfront’s direct indexing service, available for balances of $100,000 or more, buys individual securities rather than index funds or exchange-traded funds, zeroing in on tax-loss harvesting opportunities. The company says the service can add as much as 2.03% to annual investment performance.

    Personal Capital also uses individual securities rather than funds in accounts with balances of $200,000 or more, though it draws from a smaller selection. That company says its tax optimization strategies can increase returns by up to 1% annually.

    Best robo-advisors for IRA management

    Betterment and newcomer Fidelity Go both offer quality resources for retirement investors.

    Nearly all robo-advisors will manage your IRA, so what makes these guys special? Both services are retirement focused. Betterment’s RetireGuide allows users to link non-Betterment accounts, including outside 401(k)s, then offers comprehensive retirement planning guidance and behavior-finance-rooted tools that can push you to save more.

    Fidelity is one of the biggest 401(k) plan providers, making for easy 401(k) to IRA rollovers if you already have other accounts there. But this robo-advisory offering adds to that lineup: Fidelity Go users get full access to the broker’s retirement planning tools and apps.

    Costs are similar at both companies, though the pricing structure is different. Betterment charges a standard management fee of 0.25% for its digital offering, then uses funds that charge expense ratios of between 0.09% and 0.17%. Fidelity Go breaks from the traditional robo-advisor pricing model to charge an all-in fee that includes investment expenses; that cost is just 0.35% for retirement accounts. The company has a higher minimum investment requirement, however, at $5,000 to Betterment’s $0.

    Best robo-advisor for 401(k) management

    Blooom will manage your employer-sponsored retirement plan.

    NerdWallet editor review

  • Trade Commission $10 /month
  • Account Minimum $0
  • Promotion One month of free management
  • Most robo-advisors manage IRAs and taxable accounts but leave you in the dark about your 401(k). Blooom attempts to fill that hole. The company charges a flat monthly fee of $10 and focuses on management of employer-sponsored plans like 401(k)s and 403(b)s.

    Blooom works within the investments offered by your plan and offers free analysis so you can test the service before signing up. It also provides financial advisors who can help investors with a range of financial planning questions.

    Best robo-advisors: Summary

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