What Is A Robo-Advisor & Which One Is Best?


Investing is scary for someone who hasn’t done it before. Many parts of the financial world can feel intimidating at best. Luckily, you don’t need to worry yourself learning complicated investment strategies or the ins and outs of portfolio management and asset allocation. Thanks to robo-advisors, most of the hard parts of investing can be completely automated. You just tell them about your goals and go!

But what is a robo-advisor? How do they work? What is the best robo-advisor? And, most importantly, should you use one? Find out the answers to all of these questions and more below.

Our Picks For The Best Robo-Advisors

If you are new to investing, or simply would rather outsource your investment decisions so that you don’t need to worry about it, robo-advisors might be exactly what you’ve been looking for.

Best Robo-Advisors (2020)
Robo-AdvisorFeeAccount MinimumBest For Someone Looking To...
Betterment0.25 % / year$0Invest w/ a variety of features on an easy to use platform
M1 Finance0%$100 - Taxable Account
$500 - IRA Account
Passively invest in diverse portfolios w/ little money and no management fees
Ellevest$12 - $108 / year$1Passively invest while focusing on gender-specific issues
Acorns$12 - $36 / year$0Build good saving and investing habits
Personal Capital0.49% - 0.89% / year$0 - Tools Only
$100,000 - Personal Advising Services
Use a few free tools or invest with over-the-phone advisors (high net-worth investors only)
Wealthfront0.25% / year$500Create a detailed and all-encompassing financial plan

Best Robo-Advisors Comparison

When it comes to comparing robo-advisors, many offer similar services. The difference among them often comes down to where each robo-advisor specializes.

Knowing this difference is critical. If you’re using the best robo-advisor for high net-worth individuals, but you only have $1,000 to your name, you’re probably missing out on a much better deal.

The best robo advisors have several account types (brokerage accounts, IRAs, etc.)

Here’s a broad overview of each robo-advisor from our list of the best:


One of the pioneers of robo-advising, Wealthfront has been around since 2008!

Wealthfront is likely your best bet for a robo-advisor that can help plan all aspects of your financial life. 

Although Wealthfront has a $500 minimum to start investing, it also has a relatively low management fee. In exchange, you get some of the same modern strategies used by Personal Capital’s team (low-fee ETFs and tax-loss harvesting).

Plus, Wealthfront is exceptional at creating well-diversified portfolios.

But, Wealthfront’s specialty is in its free financial planning service: “Path.” Path is an advice engine that acts as an automatic version of the advice you’d receive from traditional financial planners.

Thanks to this automation, Wealthfront can give you the same or similar information as an in-person financial planner without all the costs.

If you’re at all interested in learning more about best investment practices, or you like the extra flexibility given by a more traditional financial planner, check out Wealthfront and Path. 


Betterment is one of the best robo-advisors out there. Like Wealthfront, It’s been around for a long time, so it has a well-established formula for success.

Betterment combines a simple-to-use UI and approach with lots of features. Add on some of the lowest fees around, and you’ve got a great way to automate investing.

One of my favorite features of Betterment is the ability to set up multiple portfolios. You can dedicate each one to a different goal, allowing you the flexibility to simply set up all your goals in advance and then let Betterment take care of the rest.

One important note about Betterment is their annual management fee increases from 0.25% to 0.40% if you have over $100,000 in your account. However, you get an added benefit: with a higher account value, you get unlimited access to CFPs through Betterment.

This access can be incredibly valuable for planning out your financial goals and strategies to achieve them. It also makes Betterment what I like to call a “hybrid” between traditional financial planners and robo-advisors.

See how Betterment stacks up against Wealthfront: Betterment vs Wealthfront review

M1 Finance

If there were one robo-advisor I had to pick to compete against Betterment as an all-around option, it’d be M1 Finance.

Though M1 Finance is newer than Betterment, it’s quickly amassed a large following and critical acclaim. This is, in part, because M1 Finance does something few other robo-advisors do: they’re free.

M1 Finance has a 0% management fee, making them completely free. Since the name of the game with robo-advisors is to minimize the cost of investing, this gives M1 Finance a huge advantage.

Beyond their uniquely low cost, M1 Finance lets you choose your own investments or use a professionally-created portfolio. They do this using a feature known as “The Pie.”

The Pie takes care of portfolio rebalancing, all while making a visually appealing and easy to understand portfolio breakdown.

In terms of available investments, M1 Finance is also excellent. By letting you invest in stocks, ETFs, and fractional shares, you can use M1 Finance to personalize your portfolio, even if you don’t have a ton of money.

Overall, M1 Finance is a phenomenal service that maximizes your portfolio’s gains in both the short term and long term. And all with no commission fees, portfolio management costs, and the ability to buy fractional shares.

Read the full M1 Finance review to learn more.


Ellevest is a robo-advisor geared towards women. By taking into account the different financial trajectories of most women vs. men, Ellevest provides financial advice that better fits each gender.

To be clear, many men happily use the service and it’s open to anyone.

But, Ellevest offers more than just robo-advising. You can also purchase meetings with CFPs on either an annual basis or a per-session one. These CFP meetings make Ellevest somewhat of a hybrid, just like Betterment.

But unlike Betterment, Ellevest’s robo-advising works on a subscription basis. You pay a monthly fee of $1 – $9 per month, with different service levels depending on the subscription tier.

Depending on the tier, you can invest in IRAs, get discounts on CFP meetings, and create several investment goals with different accounts for each. Regardless of your tier, however, Ellevest has a ton of useful educational resources to help you learn how to manage your money. 

These factors make Ellevest great for someone less experienced with managing money or anyone who wants a gender-specific investment strategy.


Acorns is a fantastic robo-advisor for someone who is new to managing finances. Thanks to their signature “Round Up” feature, Acorns makes it easy for you to build effective saving and investing habits.

By rounding up everyday purchases to the nearest dollar and investing the change, Acorns provides a simple and easy introduction on how to invest. Since the money never reaches your checking account, it’s harder to spend it or take it out of savings accidentally.

Just like Ellevset, Acorns uses a flat monthly subscription fee rather than a percentage. The $12 per year tier lets you use the round-up feature and Acorns’ cashback program called “Found Money.”

By partnering with 350+ other companies, Acorns allows you to get extra money into your account whenever you make a purchase at a partnering store. This is essentially cashback, as you’ll be able to invest that money or withdraw it into your bank account.

The $36 per year tier also lets you keep your money in an IRA account, which will make it more attractive to long-term investors.

Ultimately, though Acorns is a simple and easy to use app, it doesn’t have enough unique features to beat out more specialized robo-advisors. But, as a way to help establish solid saving and investing routines, it’s great!

Read the full Acorns review to learn more!

Personal Capital

If you are simply looking for an easy way to track your net worth and track your progress toward financial goals, then a free Personal Capital account is the perfect tool.

The free account gives you access to Personal Capital’s retirement planner. 

Using a few details like your current age, yearly savings, and expected retirement spending, the retirement planner simulates thousands of scenarios and gives you a breakdown of how much you’ll have by the time you retire and how long it will last. 

Taking into account other sources of income like Social Security, Personal Capital’s tool does a wonderful job explaining how and where your money will go in retirement. It even gives you an estimate of how likely your portfolio is to last a certain number of years.

This tool is incredibly comprehensive. I’d recommend it to anyone who is new to saving. If you’re wondering why building a budget is useful, using a retirement planner can help motivate you to stick to your budget and save over time.

While they have a handful of great free resources for planning retirement and managing finances, they also offer advising and financial planning services to those with at least $100,000.

Boasting a team of experts, including Harry Markowitz (the father of modern portfolio theory), Personal Capital certainly has some heavy hitters helping you manage your wealth.

They charge a management fee between 0.89% and 0.49%, and it decreases as your account balance increases.

In exchange for this higher management fee, you’ll benefit from modern management strategies that involve adjusting portfolio weights and using low-fee ETF strategies.

If you’re looking for a few free tools or have a high net worth and want help from some of the best in the business, check out Personal Capital.

Read the full Personal Capital review to learn more.

What Is A Robo-Advisor?

Robo-advisors are, simply put, automatic investment services (read: a thing that manages your money). By taking advantage of algorithms to create and manage portfolios, robo-advisors can cut a lot of the cost out of investing.

These are the extreme end of passive investing. That’s right, robo-advisors are even more low maintenance than index funds!

It’s useful to think of robo-advisors as financial advisor apps. They cut out the need for an online broker, which means you don’t have to go through a middleman to buy and sell investments. Robo advisors are generally best for the investor who wants a minimal amount of involvement with his portfolio.

The ease of use and low-cost nature of most robo-advisors make them attractive for would-be passive investors. Plus, they’re getting more advanced. This means they’re getting even better at designing and managing portfolios.

How Do Robo-Advisors Work?

Robo advisors operate similarly to traditional financial advisors, in that they allocate your money into specific investments for you. That means you pay a small fee in exchange for not having to manage your investments. The key difference, however, is in the size of the fee and the allowed flexibility.

Robo-advisors use questionnaires on risk tolerance, future goals, and user preferences (e.g., socially-responsible investing) to make your portfolio. With this information, you can get a personalized portfolio that accounts for your needs.

After the robo-advisor makes a portfolio, it’ll manage it for you in exchange for a small fee. These fees vary slightly depending on which robo-advisor you use, but it’s usually around 0.3%.

It’s important to note that this fee is a lot lower than what you’ll find with a traditional advisor. But, robo-advisors usually offer less flexibility, so you have a trade-off there.

So, if you’re an investor who prefers the additional flexibility offered by a financial advisor, or if you’d rather work with someone face-to-face or via phone, consider hybrid advisors like Personal Capital.

Robo-Advisor Pros And Cons

Though there may be exceptions from individual robo-advisors, most of them have the following in common:

Robo-Advisor Pros

  • Easy to use for hands-off investing
  • Low fees
  • Low or no account minimums
  • Automatic portfolio rebalancing & diversification
  • More accessible than traditional advisors
  • Can customize portfolios to suit your needs and goals
  • Many can take advantage of tax-loss harvesting

Robo-Advisor Cons

  • Less flexible than traditional financial advisors
  • Often cost more than target-date funds 
  • No in-person contact 

Should You Use A Robo-Advisor?

Ultimately, robo-advisors are a great way to invest for the hands-off investor. If you’re looking for a “set it and forget it” type of investing tool, robo-advisors may be exactly what you want.

Most robo-advisors offer some type of pre-built portfolio, and these are almost always well-diversified. So, you can rest assured that your investment’s risk is well-managed.

Also, the low fees and portfolio rebalancing make robo-advisors especially attractive for the passive long-term investor.

But, if you want regular in-person appointments or the extra flexibility of working with another human being, consider a traditional financial advisor or hybrid.

Two solid options for finding a financial advisor are Facet Wealth and Smart Asset.

Or, if you want to invest for retirement passively, target-date funds are another great low-cost, automated option.

Robo-Advisor FAQs

What is a robo-advisor?

A robo-advisor is an automatic investment service that replaces a traditional investment advisor with an algorithmic data-driven service.

What is the best robo advisor?

Betterment, M1 Finance, and Personal Capital are some of the best robo-advisors available. However, they do serve slightly different needs, so you should understand which is best for your specific situation.

Is a robo advisor worth it?

Robo-advisors are cheaper alternatives to traditional investing. Thanks to low fees and long-term investment strategies, robo-advisors can be a great choice for the hands-off investor. Because most invest with well-diversified portfolios, they often have similar performance to index funds. This makes them worthwhile if a robo-advisor’s lower fees help it earn you more money than an actively managed investment.