Best Robo Advisors for 2023

An increasing number of businesses and individuals now rely on automated software and intelligent machines to help them in their work. This is because AI and ML-based software can make the decision-making process much easier, faster, and more efficient.

You may not realize it, but intelligent machines are all around us helping us in our daily lives.

If you use Google, you must have come across the auto-fill feature that automatically tries to guess the keywords you’re searching for. Your car’s satellite navigation software helps you find the best route to your destination. Smart home appliances can now monitor and adjust the room temperature and lighting, do the dishes, switch to your favorite shows and much more.

AI predictive software can also make it easier to make investment decisions and find the combination for the best profit-generating assets.

There are a variety of coded programs in the market that can improve financial decisions. These online investment platforms are known as robo advisors, and they're designed to help traders achieve their financial targets. Many stockbrokers and commodity traders use such software for day-to-day operations.

Best Robo-Advisors Overview

The Best Robo Advisors for 2021

Here are our top robo advisor picks for 2021:

Betterment

Betterment is one of the most popular robo advisor platforms for online investments. It has been around for over 10 years and currently ranks in the top two platforms. It has a $0 minimum investment requirement and offers complete automation for investors.

The platform requires you to fill out a risk and goals profile at the time of opening a new account. After you have approved the profile and made a deposit, the automated software invests the money into your portfolio automatically.

It offers tax-loss harvesting, a function mostly used by wealthy investors to minimize tax losses by reduction of capital gains tax. Over some time, the platform can offset income of up to $3,000 just through its tax-harvesting function.

Betterment charges a 0.25% annual fee or $25 for every $10,000 investment on a regular account.

Open an account with Betterment or read our full Betterment review.

Wealthfront

The Wealthfront platform is also popular among individual and professional investors. It has been around since 2008 and went through significant changes in 2011. This robo advisor offers portfolio creation based on the investor’s risk tolerance and objectives and automated trading services.

The Wealthfront software comes with a planning tool called Path. When turned on, Path can analyze your trading habits and evaluate the market to make predictions about where your trading style will take you in the future.

Another feature called PassivePlus can be turned on which makes automated investments for the user. The platform also offers tax-loss harvesting, stock level tax-harvesting, smart beta investments, and risk parity.

The platform is ideal for passive investors who want control over their investments but can’t devote enough time to researching online. It charges a 0.25% advisory fee

Open an account with Wealthfront or read our full Wealthfront review.

M1 Finance

This is one of the top-rated financial advisory apps on the market. M1 Finance has consistently received good reviews from investors for its robust technology and reliable results prediction.

The M1 Finance app offers the full control and customization that you expect from a real financial broker and combines it with the computational power that only a machine can provide to deliver a great result.

The app starts with a risk tolerance and investment goals assessment questionnaire. After you complete the signup process, you'll receive a portfolio recommendation based on your individual needs.

This platform can differentiate between risk-averse and risk-taker investors to help build customized portfolios. The portfolio can be further tailored based on investment strategies. The strategy would depend on user goals. It can be used for generating a regular income, building wealth, and even aggressive investment where your stock has high exposure to risk.

The platform is free and charges no transaction or advisory fees at the moment. The only fee is for closing an account where the platform deducts a one-time $100 termination fee. The company claims it intends to remain free as it will find other ways to make money from its client’s investments.

The M1 Finance software uses 256-bit SSL encryption. Assets are held with a third party that acts as a custodian, and the company is registered as a broker with FINRA. Accounts are also insured and protected by SIPC insurance.

Open an account with M1 Finance or read our full M1 Finance review.

Empower

(Personal Capital is now Empower)

Empower is a relatively new financial platform that has decent to high ratings and is gaining popularity with wealthy investors. It is aimed at high-profile customers and has a minimum balance requirement of $100,000, making it inaccessible for small investors. While the platform charges no account opening or termination fee, a management fee goes from 0.49% to 0.89% for clients based on account balances.

This platform offers some of the best analysis tools you can find on the market. It includes simulators, fee analyzers, technical calculators, and retirement planning options among many others. It has a tax-loss harvesting strategy, and you can also hire up to two dedicated financial advisors to work with you on a range of issues such as estate planning, tax management, retirement planning and remortgaging.

The Empower robo advisor should appeal to investors who want comprehensive analysis tools and want complete control of their investment portfolio. It will also attract users who want to gain access to dedicated financial advisors along with AI predictive analysis.

Open an account with Empower or read our full Empower review.

Acorns

Acorns is another competitive robo advisor platform getting attention from investors. It is aimed at small investors and has a $0 minimum investment to sign up for an account, but plans charge $3 or $5 per month.

Acorns is popular with millennials, students, and young investors. It has a smooth and aesthetically pleasing user interface and offers automatic investment options based on the user’s profile.

Open an account with Acorns or read our full Acorns review.

Related: 7 Simple Reasons Why You Should Use a Robo-Advisor

Ally Invest Cash Enhanced Managed Portfolios

Ally Invest has good ratings and is integrated with Ally.com, an online bank. It allows users to create diversified investment portfolios based on their risk appetite. You can start an account with a $100 investment, and it has NO annual management fee.

The platform has been around for a while, and it was previously known as TradeKing Advisors. It was acquired in 2016 by Ally Financial. The investment portfolios are made of ETFs. Every portfolio has roughly 9 funds, and the usual expense ratio is 0.08%. New customers must fill out an assessment that determines how their portfolio will be organized and managed.

Open an account with Ally Invest or read our full Ally Invest review.

Vanguard Personal Advisor Services

Vanguard has been the leader in providing low-cost mutual funds investment options to its clients for decades. They offered their personal robo advisor service to clients a few years ago, giving more control to the investors.

You can create an account with the minimum balance requirement of $50,000, suggesting that Vanguard is aiming for high net-worth clients. The account management fee is regressive and gets lower from 0.30% as your account balance rises. You can also get unlimited access to dedicated financial advisors.

The service builds portfolios based on client needs and risk preferences. Plenty of analytical tools here should keep investors happy and informed.

Paid non-client promotion. Investor Junkie receives compensation when a reader provides certain personal information to Vanguard after clicking “Open Account” on this page.

Advertiser Disclosure - This content was reviewed and approved by Vanguard. Opinions expressed are the authors alone. (DoughRoller ratings for banks, brokers, robo-advisors and credit cards are weighted averages of the five or more categories we consider, depending on the product, which includes fees, transparency, ease of use, variety of available options, and rates. Factors we consider include advisory fees, user-experience, customer service, and mobile technology.

What is a Robo Advisor?

The core function of a robo advisor is to analyze a lot of financial and market data, determine underlying trends or patterns, assess the external factors that can affect the market and come up with a solution.

A robo advisor is built with thousands of code lines capable of analyzing complex data quickly. It can compare multiple securities and go through hundreds of companies’ historical financial performance. They help investors understand which stocks will go up or down and plan their trades accordingly.

Robo advisors can also be used in forex trading where the AI examines hundreds of currency pairs and finds the one most likely to have a significant change. The trader can use this information to make trades that improve their returns on investment.

The good thing about robo advisors is that they’re automated and improve with time. They’re also very good at researching investments and can create diverse investment portfolios. As you start investing and cashing out regularly, the software learns from its successful predictions and mistakes to improve its predictive capability. Over time, the robo advisor’s predictive ability gets better and better.

Related: Are Robo Advisors Worth It?

How Do Robo Advisors Work?

Each robo advisor is different. It grows and learns from its user’s preferences and the data fed to it. Robo advisors that are used for financial security investment differ from forex trading platforms. They’re usually accessed through the platform provider’s website or web app.

When you set up an account with a robo advisor, you’ll need to answer some questions about your investment goals, risk tolerance, and securities that interest you. You may be asked questions about whether you’re investing in building wealth, saving for retirement, buying a property or other goals.

Once you’ve answered the questions, the program suggests an investment portfolio that coincides with your goals and investment preferences. The portfolio usually consists of a combination of publicly traded stock, mutual funds, ETFs, and bonds.

After you approve the portfolio, you can trade by making a wire transfer, online electronic deposit or mobile transfer to the account.

The robo advisor makes forecasts about the expected movements of securities, and you can use the projections to set buy or sell orders. Some platforms allow automatic monitoring, buying and selling that can be used if you cannot actively monitor the accounts.

The broker charges a fee for the use of their robo advisor platform, and this fee is often separate from the commission paid to brokers for trading.

Read More: Robo Advisors—The Pros and Cons

How to Choose the Right Robo Advisor

Robo advisors are useful if you’re new to financial investing and want to learn how to invest on your own. If you work with a financial advisor, they may guide you through which securities to buy and sell, but they’d almost never give you technical knowledge about how the markets work.

Related: Do You Need a Financial Advisor?

If you try to learn it on your own, it can take a long time for you to get good at trading and you may lose a lot more money. A robo advisor makes investing easier for individuals as it narrows down the market. It lets you focus on the trades that fall in line with your own investment goals.

There are plenty of options available for robo advisors, each offering different benefits. To choose the right robo advisor, you’ll need to take the following information into account:

1. Some robo advisor platforms have a minimum investment requirement, like $10,000 or more. If you’re not looking to invest that much in the market, choose an advisor with a lower investment requirement.
2. Some robo advisors can manage both a retirement or pension account that is not taxable and a taxable investment account. Others are focused on single types of investment accounts and are good for maintaining a trust or mutual fund. Choose the platform that matches the type of account you’ll use.
3. If your goal is to buy a home or plan for retirement, use a conservative robo advisor where major investment decisions remain up to you. If you’re planning for retirement in the next 30 years or looking for a higher return, use a platform that is more aggressive in investment.
4. Consider the fee you’ll be paying for the advice. While most advisors charge a fee of around 0.25%, you can find bargain deals with platforms that cost lower.
5. Online security is becoming an important issue for investors as hackers and cybercriminals can find new ways to exploit security loopholes. If online security is a significant concern for you, then you should pick a platform that puts a strong emphasis on security measures.

Things to Watch Out For

Robo advisors offer a way to manage your financial investments when you can’t devote too much time to monitoring your finances. The process is mostly automated. Built-in algorithms ensure that your investment doesn’t end up negative unless you consciously decide to buy high and sell low.

However, robo advisors don’t offer many of the specific benefits that investors may require. They don’t take the client’s long-term financial goals and needs into account the same way that a financial advisor can. Another disadvantage is that they generally invest in ETFs and index funds. An investor can do this on their own with a basic understanding of financial markets.

While you can communicate with your financial advisor by merely picking up the phone, you can’t do that with a robo advisor. This leaves investors prone to making irrational decisions that a professional human advisor can avert for you.

If you think working with a financial advisor is the best decision for you, we suggest you begin your search for one by using Paladin. It’s a free service that connects you with highly-rated financial advisors. All you have to do is fill out a form online and you’ll receive the three best matches within 24 to 48 hours. From there, you can decide to interview one or all three to find the best fit for your needs.

What if a Robo Advisor Isn’t for You?

A robo advisor isn’t for everyone. And sometimes managing your own investments with no direction is equally as scary. In that case, I would recommend working with a CFP—Certified Financial Planner.

Bottom Line

DoughRoller’s Best Robo-Advisors of 2023

Robo advisors are built on AI models and algorithms. They analyze data and show you possible portfolios for your investment options. Some developers have created complete robo advisors that don’t just analyze data but automatically make investments on your behalf to get the best returns.

These robo management advisors can make it easier and cheaper for you to invest in the financial markets. Their success ratio is relatively high. However, they usually invest in safer indexes and ETFs that don’t generate a high return.

The reason for their popularity is that they give control to investors and remove the need for financial advisors. For investors who do want advice from human analysts, some platforms offer dedicated, on-call financial advisors.

DoughRoller receives cash compensation from Wealthfront Advisers LLC (“Wealthfront Advisers”) for each new client that applies for a Wealthfront Automated Investing Account through our links. This creates an incentive that results in a material conflict of interest. DoughRoller is not a Wealthfront Advisers client, and this is a paid endorsement. More information is available via our links to Wealthfront Advisers.

Empower Personal Wealth, LLC (“EPW”) compensates Webpals Systems S. C LTD for new leads. Webpals Systems S. C LTD is not an investment client of Personal Capital Advisors Corporation or Empower Advisory Group, LLC