Top Robo-advisors to Consider in 2020

Having discussed what robo-advisors are in the previous article, in this article we will be briefly reviewing the top robo-advisors to look out for in 2020. These advisors are being rated according to their overall performance, ie, minimum investment, fees, pros, and cons.

#4 M1 Finance

The M1 robo-advisors allow investors a tailored investment portfolio that fits their individual specifications. It also provides the options of investing through an ETF and mutual fund or investing through individual stocks—both options can also be run together. M1 offers its investors a lower-cost investment option which attracts fractional share transactions and portfolio content control. 

Minimum amount: $100 and $500 for retirement accounts

Fees: 0%

Pros

• No asset management fees or trading fees

• Allows both ETF or mutual funds investments and individual stocks

• Provision for fractional shares

• Transparency

• Flexible portfolio

Cons

• Inactive accounts with less than $20 are charged a fee after 90 days of being inactive

• Transaction timing limitation

• Poor financial-goal-setting advice.

#3 Personal Capital

This robo-advisor requires a $100,000 minimum investment with at least a $200,000 account balance which attracts the services of two assigned financial advisors. Though Personal Capital’s investment amount and fees are a bit on the high side, the still offer terrific services to their customers, and its robust free tools are available to all its investors.

Minimum investment: $100,000

Fees: 0.49% - 0.89% (depending on what package you choose)

Promotion: 2 months (free)

Pros

• Committed financial advisors

• Individual securities option

• Advanced tax optimization

• Robust free tools for all

Cons

• High minimum investment

• High management fee

#2 Betterment

Betterment provides its investors with two investing options—the Betterment Digital (no minimum account and 0.25% fees) and the Betterment Premium ($100,000 minimum account, 0.40% fees, and unlimited phone access). Betterment has over a total of $15 billion assets under management. Betterment has topped its competitors in the aspects of account minimum, management fees, investments, advice packages, goal-based savings, retire-guide, charitable giving options, and high-yield savings. 

Minimum investment: $0

Fees: 0.25% management fee

Access: Website, mobile phone

Pros

• $0 minimum investment

• Relatively low management fees

• Fractional shares option

• Goal-based savings

• Direct charitable giving tools

Cons

• Lacks direct indexing

• Slow opt-out

#1 Wealthfront

Wealthfront was launched in 2011, it has since amounted to a total of $11.5 billion worth of its assets under management (AUM). The robo-advisor’s funds are held by the Royal Bank of Canada. When signing up with Wealthfront, like other robo-advisors, you would be required to fill a questionnaire which is divided into two sections—objective and subjective. The output gotten from your input will be used to test your risk tolerance and rightly set your asset allocations.

Minimum investment: $500 

Fees: 0.25% for general accounts with no charges on withdrawals or trading commission fees and 0.42% to 0.46% for 529 plans, and a management fee of 0.07% to 0.16% for ETF portfolios.

Accounts: Joint, Traditional IRA, Taxable, Rollover IRA, Trusts, 529, SEP IRA, Roth IRA, Non-Profit

Offers: Tax Loss Harvesting, Portfolio rebalancing, automatic deposits, advice

Accessibility: Website, mobile app (android and iPhone)

Pros

• Tax-loss harvesting

• Referral reward

• Risk parity

• Two-factor authentication 

• Free financial planning

• 529 plan

Cons

• No provision for fractional share