Robo-advisors are gaining popularity among retail investors because they are often inexpensive and require small starting balances to begin investing. Robo-advisors are a form of online wealth management service that helps you automate your investment process by making recommendations and maintaining your account.
You can learn more about Robo-advisors, how they work, what services they offer, and whether or not this sort of automated investment is good for you by checking out our article “What is a Robo-advisor?”
Previously, you had to pay a high fee to personal financial advisors for wealth management services and investment advice. On the contrary, Robo-advisors charge a relatively lower fee for almost the same services while being fully automated.
Here is a list of the cheapest Robo-advisors (including free robo-advisors!) available to US investors who wish to explore investing in a diversified automatically managed way or who want to get started at a low or no cost.
M1 Finance is a popular fintech company known for its automated, commission-free investing portfolios. It also offers other financial services like investing, borrowing, and banking services. Its platform gives you the ability to manage all your finances in one place.
Your portfolio is presented in pies divided into slices where you can easily identify the allocation for each investment. You can either build a fully customized portfolio suited to your unique financial objectives and preferences, or you can select from a set of pre-built pies.
You can get additional premium features by subscribing to M1 Finance Plus. Among those benefits: high yield on cash, cash back on purchases, and access to a credit line.
If you choose to open an account at M1 Finance, have a look at this M1 referral bonus article and know how you can benefit from a $10 welcome bonus.
Schwab Intelligent Portfolio is a free Robo-advisor offering customized automated portfolio management services with personal financial assistance. The basic plan is free and offers various account types to fit your requirements. Once you reply to the questionnaire, their algorithm classifies your goals, risk tolerance, and timeline, and they will provide you with a customized portfolio. They have selected 51 ETFs that span more than 20 asset classes, and the allocation of your portfolio depends on the investment strategy (Global, US Focused or Income Focused) and on your risk profile (ranging from Conservative to Aggressive Growth)
They also have a premium service where you get unlimited guidance from Certified Financial Planners (CFP).
SoFi Automated Investing is another free robo-advisor available for US investors. It aims to understand your investment objectives, and offers free financial and career advice as part of its investment management service.
Similar to other robo-advisors, SoFi will recommend a portfolio (between four to nine ETFs) depending on your risk profile and will automatically manage and rebalance the portfolio. Besides the Robo-advisory service, you will have access to SoFi’s other products, such as credit cards, insurance, loans, and crypto.
💲Fees: Free for portfolios holding a minimum of 30% in cash
💵 Minimum balance: $100
Ally Invest is the Robo-advisor of Ally Bank. It offers low-cost, automatically managed portfolios. It is an easy option for Ally clients as they link their accounts to their portfolios, and the robo-advisory feature is integrated into the bank’s mobile app. The only requirement to have a free managed account is to retain 30% of your portfolio as cash (Fees are 0.30% per year if you do not meet this requirement). Ally uses ETFs to create your portfolio, and you can choose from four different strategies (Core, Income, Tax-optimized, or Socially Responsible), and the allocation within the portfolio varies depending on your risk and time horizon.
💲Fees: Free for the first 90 days, then 0.20% per year
💵 Minimum balance: $3,000
Vanguard Digital Advisor is Vanguard's Robo-advisory service. A low-cost robo-advisor that uses Vanguard's ETFs to create a personalized portfolio for each investor based on risk tolerance and preferences while working on a goal-based strategy. Consequently, they recommend connecting all your non-Vanguard accounts so it can incorporate them into your goal projections. As you move closer to your goals, they will decrease the risk of your portfolio.
Be aware that the portfolio allocation is spread among only four Vanguard ETFs, and the weight varies depending on your goals and time horizon.
Betterment is a robo-advisor that helps you manage your money through a set of automatically managed portfolios, cash management features, and financial planning tools. It offers two services:
Betterment Digital: provides a diversified set of automatically managed portfolios at a low management fee of 0.25% annually, including socially responsible investing options. The service includes automatic rebalancing, tax-loss harvesting, access to financial advisors for an additional cost, and a personalized retirement plan. The key advantage is that they don’t have a minimum balance requirement to start investing.
Betterment Premium: On top of the Betterment Digital features, you have unlimited access to certified financial planners and can add checking and cash reserve features at no cost. Still, you need to have a minimum balance of $100,000 to qualify, and the annual fee increases to 0.40%.
Betterment has worked on expanding its product offerings throughout the years since 2008. It has lately acquired Makara, an innovative company offering automated cryptocurrency portfolios.
💲Fees: $1, $5, or $9 monthly fee (depending on account plan)
💵 Minimum balance: $0
Ellevest offers money management services such as banking, investing, coaching, and learning. It has a robo-advisory service offering automatically managed personalized investment portfolios with financial guidance. While any person can open an account at Ellevest, the company focuses its offerings on women. It has three different membership plans with different features Essential, Plus, and Executive.
In order to build your investment portfolio, Ellevest uses a mix of exchange-traded funds (ETFs) and mutual funds that cover several asset classes. The allocation will depend on your risk tolerance, financial situation, and investment goals.
Ellevest Homepage
Cheapest Robo-advisors for US investors compared
Cheapest Robo-advisors in the US (US Free Robo-advisors)
Bottom Line
In conclusion, Robo-advisors can be a convenient investment option for many investors. If you are a US investor looking for a Robo-advisor and fee structure is a crucial factor, this list of low-cost Robo-advisors (including some free Robo-advisors!) may be a suitable starting point. While this list only features seven Robo-advisors that provide free or low-cost portfolio management services, there are many more firms that provide Robo-advisory services that you may find a better fit for your needs.
We hope we have made it easy for you. Keep in mind that there’s no Robo-advisor that’s right for everyone, so your final decision should be informed by self-directed research and personal due diligence depending on your financial objectives and overall investing platform preferences. You might take other factors into consideration while checking for the best Robo-advisor such as: socially responsible investing strategies, access to a personal financial advisor, and other complementary services offered. In general, we recommend that you check their websites, read how their investment process is implemented, compare the fees charged, and make sure that the company is regulated. You can check the full list of Robo-advisors.
Remember, if you have any questions, feel free to leave a comment below.
A reminder that the above should not be construed as investment advice and should be considered information only. Investors should do their own research and due diligence about the services and opportunities best suited for their risk, returns, and impact strategy.
FAQs
What type of fees do Robo-advisors charge?
Robo-advisors can charge fees in different ways. The majority of Robo-advisors charge an annual fee based on a percentage of Assets Under Management (AUM), others charge a flat monthly fee depending on the services they provide or the size of your portfolio.
How much does a Robo-advisor cost?
Generally, Robo-advisors charge annual fees ranging between 0% and 1% of Assets Under Management (AUM).
Are there any free Robo-advisors?
Yes, there are many Robo-advisors that do not charge any management fees. But you should be aware that all ETFs charge annual fees.
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