Should You Trust Your Money With These 4 Popular Financial Robo-Advisers?

By Brittany Lyte on 28 January 2015 1 comment

Getting good investment advice is no longer a privilege of the filthy rich. The Internet has made readily available the kind of expert, personally tailored investment guidance that was once enjoyed exclusively by the likes of movie stars, monied inheritors, and CEOs. Many of these "robo-advisors" will not only design a personalized portfolio for your specific needs, but they'll even make the trades for you, suggest ways to minimize your taxes, and rebalance your accounts.

But with so many web brands peddling low-cost financial advice, it can be hard to figure out where to turn. So we've done the homework for you. Read on for our pick of the top automated investment advisors on the Internet. You can thank us when those big returns start coming in.

1. Betterment

Dubbed "the easiest investment site you'll ever use" by Slate, Betterment clients receive 4.3% better returns on average than a typical DIY investor. CEO Jon Stein said that's why the robo-advising brand has hooked more than 50,000 clients. As Stein told Fox Business, "People come to us and they tell us about their goals and then based on those goals and the time horizon, we create portfolios for them and then manage those portfolios for tax efficiency, we rebalance them automatically, and we do everything that a smart investor should do by using technology."

What sets Betterment apart from other online advisors is something that will appeal to investment newbies: You can open an account with Betterment even if you have no money. However, the company recommends a monthly deposit of $100, which is just enough to waive the $3 fee per month for accounts less than $10,000.

2. Wealthfront

Wealthfront was built on the principle that you don't need a lot of money to reap big benefits from the world of investment. Free for accounts totaling $10,000 or less, this automated investment service is one of the largest, claiming over $1.5 billion in client assets.

Aside from its free-of-charge service offer for smaller accounts (accounts larger than $10,000 are billed an annual fee of .25%), what sets Wealthfront apart from other online advisors is its stable of world-class financial experts. Working under the leadership of Burton Malkiel, a renowned economist who helped trail-blaze the low-cost investing revolution, the folks at Wealthfront excel at making small money grow big. All you need to do is meet the $5,000 account balance minimum and answer a few questions about your investment goals. Wealthfront takes care of the rest.

3. AssetBuilder

AssetBuilder only accepts accounts of $50,000 or greater, which means it's best suited for the more dedicated investor. The company, co-founded by widely read personal finance writer Scott Burns, uses funds inclined to earn a smidgen more than normal index funds from a firm called Dimensional Fund Advisors. These D.F.A. funds are typically off-limits to individual investors, making AssetBuilder's portfolio offerings all the more attractive to folks who otherwise wouldn't hire a financial advisor. Choose from a menu of conservative, moderate, or aggressive portfolios designed to match your money with the kind of growth potential and risk tolerance you're seeking. Claiming more than $600 million in assets, AssetBuilder charges between .45% and .20% in annual fees, depending on how much is invested.

4. FutureAdvisor

FutureAdvisor specializes in retirement planning. All of its investment recommendations are made with the goal of setting you up for the most comfortable retirement years possible.

With FutureAdvisor, you can get your 401(k), IRA, and other accounts analyzed, plus receive recommendations on how to improve your existing investments — absolutely free of charge. Then, if you're impressed with the results and want to hire FutureAdvisor as your investment manager, there's a monthly fee of either $9 or $19, depending on the value of your assets. Another perk is the ability to automatically sync your account into FutureAdvisor's recommended asset allocation. FutureAdvisor will perform all the trades for you — all you have to do is grant it the green light to do so. And unlike Wealthfront and Betterment, FutureAdvisor works off your existing portfolio. You never have to transfer your assets into their firms.

Have you used a robo-advisor? Which one and why?

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Guest's picture
RGF Ohio

For what it is worth, actual 2 year results.

Invested. Cash out. Value 7-27-2015

Fidelity ETFs. 35000. 238 38938. ETFs .0017 fee
Betterment. 25000. 2600. 24313. 100% stock
Wealthfront. 25000. 2500 23975. 40% stock
WiseBanyan. 25000. 1600. 24106. 40% stock
Vanguard. 15000. 142. 14575. Mutual fund