Find the Best Robo Adviser for You
As befits a rapidly growing, innovative industry, robo advisers are changing quickly. At a basic level, these automated investment advice services have similarities. Investors answer questions about their time horizon, risk tolerance and financial goals. The robo matches you with a computer-driven diversified portfolio full of low-cost exchange-traded funds, then monitors and rebalances the portfolio and, in some cases, helps with tax-efficient investing (more on that later). Most have low account minimums and charge a modest annual advisory fee of about 0.25%.
But not all robo advisers are akin—and many are sharpening their marketing in order to focus on different types of investors. Some of these automated portfolio managers are squarely aimed at first-time investors who have one investment goal. Others appeal to users with multiple financial goals and a need for financial planning. Still others target affluent people near or in retirement with complex planning issues who seek unlimited access to (live) financial advisers along with the digital investment platform.
As with video conferencing and other virtual services, 2020 was a banner year for robo advisers. “Digital transformation has been accelerated through ,” says Brian Walsh, senior manager of financial planning at SoFi. Several industry trends were also evident in 2020. More digital advisers added socially responsible investing funds to their portfolio lineups. Advisers encouraged clients to consolidate their personal finances, integrating checking, savings and other bank accounts with their managed portfolios. Finally, many robos have set up tiers with different levels of service—for example, availability of human advisers is now the norm, and several have rolled out premium tiers, with higher fees, for those who desire high levels of service from certified financial planners
