Which robo-advisors have the best returns? (2024)

Which robo-advisors have the best returns?

Wealthfront is our highest-scoring robo-advisor thanks to its blend of automated investment portfolios and DIY stock investing portfolios, its wide variety of account options, excellent tax strategy and low management fee.

Wealthfront is our highest-scoring robo-advisor thanks to its blend of automated investment portfolios and DIY stock investing portfolios, its wide variety of account options, excellent tax strategy and low management fee.

Robo-advisor performance is one way to understand the value of digital advice. Learn how fees, enhanced features, and investment options can also be key considerations. Five-year returns from most robo-advisors range from 2%–5% per year.

Schwab Intelligent Portfolios has all the characteristics of an ideal robo-advisor: The company has a strong reputation, its portfolios feature low-cost ETFs and offers all this with an ongoing $0 management fee. We're not fans of the high cash allocation, especially for younger investors.

But depending on the asset class mix and the particular index funds selected, a robo-advisor may underperform or outperform a broad equity index like the S&P 500.

According to Spectrem, on a scale of 1 to 100 (1 being low and 100 being high), wealthy investors rated their knowledge of robo advisers at 15.47, and only 6% said they have ever used one.

Robo Advisors are also infamous because they tend to follow indexed strategies which are best suited for some investors. The generic cons of Robo Advisors are that they don't offer many options for investor flexibility. They tend to not follow traditional advisory services, since there is a lack of human interaction.

While a robo-advisor can be efficient in managing your investing decisions, a human advisor may be best for more complex decisions like helping you choose the right student loan repayment plan or comparing compensation packages for a new job. Cost: If cost is a factor, robo-advisors typically win out here.

Account Services Verdict: Wealthfront

Wealthfront is the clear winner for account services; it offers cash management with a high interest rate of 5.00% and supplemental features that come with a debit card and allow ATM withdrawals. Vanguard also offers a cash management account, but it does not provide a debit card.

Some would diversify across multiple platforms to minimise platform-specific risk. It's a good consideration but if you understand how the platform handles your money and can sleep at night knowing that your funds are safe, there's no need to diversify across platforms just for the sake of it.

How do I choose a robo-advisor?

Customer service access, fees, and cash management are other factors that might be considered. Step 3: Confirm how much you are willing to invest. Most robo-advisors will require a minimum funding amount; some are higher than others.

Schwab Intelligent Portfolios Premium additionally offers comprehensive financial planning with guidance from a CERTIFIED FINANCIAL PLANNER™ professional and access to online planning tools for a one-time planning fee of $300 and just a $30/month advisory fee after that. There is also a $25,000 minimum investment.

On the surface, robo-advising is just as safe as working with a human financial advisor. A robo-advisor's platform may include biases or errors that prevent it from achieving the best investment returns, but then again, humans are also subject to mistakes.

A robo-advisor can help ease the burden of managing your portfolio as you transition to retirement—and help you figure out how to tap your assets in tax-smart ways.

Robo-advisors help automate the decision-making, recommending a portfolio that aligns with an investor's goals and preferences. Robo-advisors may carry higher fees than ETFs, but their costs usually remain below those of a traditional human advisor.

Clients who have more than one million dollars in qualifying assets at Schwab automatically get access to these benefits, including—a dedicated Financial Consultant, access to a wide range of specialists, tailored solutions, and pricing advantages.

The main con of Wealthfront is that its required $500 minimum deposit is higher than other free robo-advisors like SoFi Invest and Betterment Investing.

Other important factors to consider when researching alternatives to Morningstar Direct include customer service. The best overall Morningstar Direct alternative is Bloomberg Terminal. Other similar apps like Morningstar Direct are Seeking Alpha, AlphaSense, Simply Wall St, and Ziggma.

Can you lose money with robo-advisors?

Yes. As with any form of investing, there's always a risk of losing money when using a robo-advisor.

The interface that connects the trader and the buyer is known as the online trading platform. Whereas a Robo Advisor is an algorithm-based process of financial advising with minimal human intervention. Read our experts' take on Online Brokerage vs Robo Advisor to make an informed decision between them.

For instance, the total return for portfolios composed of 60% stocks and 40% bonds showed a wide variation in a backend benchmarking analysis of 44 robo-advisors. Returns ranged from a low of 13.37% to a high of 25.17%, after fees were subtracted, in the 12 months ended Sept.

Funds' expense ratios: The robo-advisor will invest your money in various funds that also charge fees based on your assets. The fees can vary widely, but across a portfolio they typically range from 0.05 percent to 0.25 percent, costing $5 to $25 annually for every $10,000 invested, though some funds may cost more.