What is a robo-advisor?
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This post is about 5 best robo-advisor 2022.
What are the top 5 best robo-advisor 2022?
Wealthfront
Pros
- Low fees: 0.25% annual advisory fee
- Wide range of investment options:
- ETFs (Tech, socially responsible, emerging markets, bonds, etc)
- Cryptocurrency trusts
Cons
- Lack of fractional share offerings: does not offer fractional shares, which significantly limits the number of investments you could be investing into, unless you’re putting in a lot of capital. Also means you may not be able to invest the entire amount of cash deposited.
- High account minimum: $500 whereas other brokerages’ minimums are $0.
Wealthfront Overall
Overall, Wealthfront is a good choice beginning investors. The account minimum is about 10% of others (Betterment), offers very low advisory fees, with a wide variety of investment options. However, the lack of fractional share offerings is quite the drawback, because it ultimately means you won’t be able to invest the entirety of what you deposit.
Betterment
Pros
- Low account minimum: $0 account minimum
- Human financial advisor option: In addition to the automated services, Betterment offers the option of working with human financial advisors. This is especially beneficial for those who have more complicated situations and would like the involvement of a human financial advisor.
Cons
- Higher fees: $4 a month or 0.25% annual advisory fee. The 0.25% advisory fee only applies when meeting 1 of 2 options.
- Recurring deposit of $250 every month or
- when your accounts total to at least $20,000
- No direct indexing
Betterment Overall
Overall, Betterment is a decent choice for those who don’t have the $5,000 account minimum for Charles Schwab, since it offers the option to work with human financial advisors. With a recurring deposit of $250 every month, this could be great for someone who’s just starting out with investing, because this helps develop the practice of recurring deposits. (Check this post out for more on building wealth via automating.)
Charles Schwab Intelligent Portfolios
Pros
- No advisory fee and no commissions: You read that right! There are no advisory fees or commissions required. However, the only fee you’d be directly paying for would be the exchange-traded funds (ETFs). (Similar to other banks, if a portion of your investment portfolio’s in cash, the cash deposited will be placed in cash alternatives that pay a higher yield.) Additionally, Charles Schwab makes money when the ETFs are routed for execution (similar to Robinhood).
- Human customer support agents available: 24/7 live customer support available for US-based customers.
Cons
- High minimum account balance requirement: $5,000 account minimum.
- Tax-loss harvesting requirements: while there is no fee associated with tax-loss harvesting, this benefit is only offered to accounts with assets totaling $50,000 or more. (Keep in mind, you must also be enrolled for tax-loss harvesting.)
Charles Schwab Intelligent Portfolios Overall
Overall, Charles Schwab Intelligent Portfolios seems suitable for someone starting out who has a disposable $5,000. Having 24/7 live customer support is quite beneficial, especially for those who are starting to build out their portfolio. Additionally, Charles Schwab doesn’t charge fees for many of its services, unlike the other robo-advisors.
Ellevest
Pros
- Low account minimum: $0
- Focus on women: Ellevest considers gender pay gap and lifetime earnings curve.
- Accessible customer support options: accessible through phone, email, Instagram and Facebook. Being accessible through so many channels is unheard of with investment/finance related accounts.
Cons
- Higher fees: as you can see below, there are several different fees for different transactions you’d have to make, from account management fees, to investment expense ratios, to transaction fees for deposits/withdrawals.
- Account management fees: $5 (plus) or $9 (executive) per month
- Investment expense ratios: 0.05-0.17%
- Account fees: $100 for full transfers OUT and $25 for partial transfers.
- Limited access to CFPs and human advisors: there’s access to 15-minute calls with a CFP; however, depending on the plan, you’d have to pay for additional sessions with a financial planner or coach.
Ellevest Overall
Overall, Ellevest seems like a good option for women who are starting out, as it specifically includes the gender pay gap as well as any lifetime earnings curve (assuming this means periods of unemployment due to maternity leave, etc). However, Ellevest has fees on top of additional fees, which is quite unattractive given other robo-advisors offer some of these services for free.
Vanguard Personal Advisor Services
Pros
- Low account management fee: Starts at 0.30% and decreases as account balances increase.
- Access to financial advisors: unlimited
Cons
- Very high account minimum: $50,000
- Not flexible: Vanguard requires clients to exclusively use Vanguard’s products/funds.
Vanguard Personal Advisor Services Overall
Overall, it seems as though Vanguard’s Personal Advisor Services is very much targeted towards those with higher balances. The access to unlimited financial advisors may be one of its best benefits; however, the high account minimum and exclusivity can be detracting for many.
As you can see, each robo-advisor has its own pros and cons. These are just a few examples of the many robo-advisors out there. If there are any robo-advisors you want to see more of, comment down below and let me know! As always, find the robo-advisor that best suits you and your situation.
There you have it! The best robo-advisor 2022. Interested in learning more? Check out this post for robo advisor pros and cons.
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