We've spent thousands of hours analyzing the robo-advisor market in order to identify the best options for a wide range of needs and objectives. This list represents our top rated robo-advisors across a number of categories, all driven by our proprietary rating methodology. We focus on highlighting the best robo-advisors possible and do not give any preference to robo-advisors from which we may receive compensation. These are the robo-advisors we'd recommend to our family and friends, and they're the same ones we're recommending to you.

Best Robo-Advisors:

Wealthfront: Best Overall and Best for Goal Setting
Interactive Advisors: Best for Socially Responsible Investing and Best for Portfolio Construction
Betterment: Best for Beginners and Best for Cash Management
Personal Capital: Best for Portfolio Management
M1 Finance: Best for Sophisticated Investors and Best for Low Costs
Merrill Guided Investing: Best for Education
E*TRADE Core Portfolios: Best for Mobile

Wealthfront: Best Overall and Best for Goal Setting

4.8

Best Overall: Wealthfront is our top choice overall for robo-advisors because it offers the full package of goal-setting, planning, banking, and investing in an elegant, user-friendly platform.

Wealthfront offers fully digital investing for a very competitive price. It has taken huge strides towards its goal of Self-Driving Money with the launch of Autopilot, which monitors bank accounts and moves funds above your monthly spending needs into an investing account or Wealthfront's high-yield savings account. It’s worth taking a look at the scenarios provided by Path, even if you have your primary investment account at another institution. The other pieces of Wealthfront’s offering—Invest, Cash, Save, and Borrow—can help you accumulate wealth, manage your cash, and open a line of credit without any fuss. Fees for investing are on the lower end of the scale, charging 0.25% of the assets under management.

Best for Goal Setting: Wealthfront is also our top choice for goal setting due to the high quality of its goal-setting and planning technology, which is excellent and should serve as a model for other robo-advisors to emulate.

You can develop a detailed retirement plan, or connect to third-party data to figure out how much you should set aside for a planned home purchase or for college expenses. Setting up a Wealthfront account gives you access to Path, the free financial planning tool that integrates your account data and uses third-party data to better project your financial situation, whether or not you open an investment account.

Interactive Advisors: Best for Sustainable Investing and Best for Portfolio Construction

Best for Sustainable Investing: Interactive Advisors is our top choice for sustainable investing due to its special emphasis on socially responsible investing products and the availability of pre-built portfolios invested according to ESG strategies.

A service offered by Interactive Brokers (IBKR), Interactive Advisors offers a wide range of portfolios from which to choose. Portfolios invested according to ESG strategies, including some of the Smart Beta portfolios, are marked in the list with a green leaf. If you choose a portfolio that is not invested according to ESG strategies, you can avoid entire groups of companies that do not share your values, as well as single stock exclusions that automatically apply to all your investments. Each exclusion group typically comprises 25 stocks and is reviewed annually.

Best for Portfolio Construction: Interactive Advisors is also our top choice for portfolio construction because it offers a vast range of asset classes that can be used to build a portfolio.

The portfolio choices at Interactive Advisors are varied. Most portfolios contain fractional shares of individual stocks. Some portfolios have up to 300 stocks. There are also portfolios made up of ETFs from Vanguard, Wisdom Tree, Legg Mason, State Street, and others. Other portfolios follow certain market sectors, including real estate, consumer discretionary spending, and utilities. This allows investors to take sector positions, which is something not many robo-advisories offer. You can also invest in a general global portfolio that includes equities and fixed income from across the globe. This level of portfolio customization is rare within the current robo-advisory industry and it is one of the main reasons that Interactive Advisors may be a better fit for well-informed investors who want that level of control.

Betterment: Best for Beginners and Best for Cash Management

Best for Beginners: Betterment is our top choice for beginners because its platform is intuitive, user-friendly, and full of educational resources.

Betterment boasts one of the easiest accounts to set up, and the process is optimized for mobile devices. Users enter their age, annual income, and a goal. There are none of the standard risk-related questions. Instead, Betterment presents you with an asset allocation suggestion and its associated risk, which you can change by adjusting the percentage of equity versus fixed income held in the portfolio. Betterment offers five portfolio types and clients can switch strategies after a portfolio is funded. The platform will even tell you if there are any tax implications prior to making a change.

Best for Cash Management: Betterment is also our top choice for cash management because it offers tax-loss harvesting for all accounts, no matter the size, and a range of checking and savings account options.

The firm launched its cash management offerings, Betterment Checking and Betterment Cash Reserve, in April 2020. The checking account includes a debit card, and reimburses ATM fees and foreign transaction fees. In June 2020, Betterment added mobile deposit capability to its checking account offering. With two-way sweep enabled, cash is swept from the checking account into the reserve account, which pays a higher rate of interest.

Personal Capital: Best for Portfolio Management

Personal Capital is our top choice for portfolio management due to the way the firm's advanced technology effectively manages risk and taxes.

The company was one of the first to put tools in investor’s hands and automate elements of portfolio management. Harry “the Father of Modern Portfolio Theory” Markowitz is listed as the company’s portfolio strategy expert. Portfolios are monitored daily and rebalanced when they move outside the asset allocation boundaries. Moreover, Personal Capital uses what it calls “Smart Weighting” to ensure true diversification by monitoring and reducing concentrated exposures to a given sector or investment style, something that isn’t possible when investing solely in ETFs with capitalization weighting.

Personal Capital’s investment management philosophy goes a step beyond tax-loss harvesting, seeking instead to optimize your tax burden.

M1 Finance: Best for Sophisticated Investors and Best for Low Costs

Best for Sophisticated Investors: M1 Finance is our top choice for sophisticated investors due to its unique combination of automated investing with a high level of customization, allowing clients to create a portfolio tailored to their exact specifications.

You can create portfolios containing low-cost ETFs or use individual stocks, or both. M1’s target customer has a long-term focus and experience with using a traditional online brokerage to invest in stocks and ETFs. M1 is offering these potential clients a lower-cost alternative that allows fractional share transactions and a higher degree of control over portfolio construction than other robo-advisors provide.

Best for Low Costs: M1 Finance is also our top choice for low costs as it does not charge any portfolio management or trading fees, or any fees for deposits or withdrawals to a connected bank account.

You can sign up for an M1 Plus account for $125, which gives you a second daily trading window as well as a discount on the interest rate when taking out a loan through M1 Borrow. You’ll also earn interest on cash through the M1 Spend feature. There are frequent discounts offered for M1 Plus, so keep an eye out for those notices. Portfolios held in stock only will not incur any fund management fees. Portfolios with ETFs can incur management fees on the underlying funds that range from 0.06% to 0.20%. There is, however, an account termination fee. In addition, accounts with less than $20 and no trading activity for 90 days are charged a fee.

Merrill Guided Investing: Best for Education

Merrill Guided Investing is our top choice for education due to the extensive resources provided in its Investor Education Hub on the website, which lets you choose a path based on your investing experience and interests.

The Hub aligns financial education content by sophistication level, topic, product, and delivery type (video, tool, tutorial, etc.). In addition, the Life Stage Planning section of the website has tools for everyone from those just starting out to those who are already retired. Merrill also sends out emails related to volatility alerts, plus weekly and quarterly updates.

E*TRADE Core Portfolios: Best for Mobile Experience

E*TRADE Core Portfolios is our top choice for mobile experience due to its well-designed mobile app, which was updated in late 2019, making all features of the Core Portfolios experience exceptionally easy to use on your mobile device.

E*TRADE's mobile app was updated in late 2019, making all features of the Core Portfolios experience easy to use on your mobile device, including setting up an account and enrolling in the service. We found that the workflow on the mobile app is even easier than on the website.

Core Portfolios is the introductory level for E*TRADE’s managed accounts, with a minimum deposit of $500, with funds invested in non-proprietary ETFs at an annual fee of 0.30% of assets under management. As your assets increase, you may choose to move into an account with a higher level of personal service.

Investopedia Robo-Advisor Rating Methodology

Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of robo-advisors. Our 2020 reviews are the result of in-depth evaluations of over 20 robo-advisor platforms, including the user experience, goal-setting capabilities, portfolio construction, costs and fees, security, mobile experience, and customer service. You can read our full robo-advisor rating methodology for a much more in-depth explanation than the summary below.

Overall Star Rating Explained

With the individual investor in mind, we took a critical look at the services and technology provided by robo-advisors. We organized our methodology into the nine categories mentioned above, scoring each advisor across multiple variables to rate performance in every applicable category. The score for the overall award is a weighted average of the categories.

The Review Process

To evaluate these platforms, we sent questionnaires with over 100 queries to the participating robo-advisories. Most of the companies we reviewed gave us socially-distanced video demonstrations of their platforms and services during August 2020.

From the questionnaires, the hands-on testing of the platforms, and the platform demonstrations, we scored each category and then combined the category scores into an overall rating for each robo-advisor. Each category covers the critical elements users need to thoroughly evaluate a robo-advisor.

Why Isn’t Portfolio Performance Rated?

We have chosen to exclude portfolio performance from our review criteria for several reasons. The main reason is that every customer has specific, individualized goals when it comes to investing through a robo-advisor. Some look for a more conservative approach, while others seek aggressive growth. In addition, all investors have different start dates and end dates. Since these services are designed to be used over a very long period of time, ranking their performance against benchmarks like the S&P 500 or the MSCI All World Index over a time frame like a single year or even over three years misses the personalization that these platforms offer.

Another reason is that each of the providers has, on average, more than 20 portfolios available, and several providers have ways to customize portfolios so that the possibilities are endless. It’s impossible to compare apples to apples. We have chosen, instead, to focus on the overall experience of using one of these providers. As such, we hone in on how you can plan for and set goals, as well as how transparent each robo-advisory service is when presenting information to clients.

Is A Robo-Advisor Right for You?

During the financial crisis and market recession that affected the global economy from December 2007 to June 2009, individual investors lost confidence in stock investing as a way to build wealth. Watching major financial institutions go out of business caused a great deal of anxiety among investors, especially those close to retirement who had already weathered several storms. Many lost faith in their financial advisors, who had steered their portfolios into the red.

Into this maelstrom stepped independent fintech startups, including Wealthfront and Betterment, that offered ways to automate an investing strategy, applying modern portfolio theory while removing human emotion from the calculations. Those pioneers have plenty of company now as most major self-directed online brokerage firms have also launched automated investing products while beefing up their advisory services.

Now, in 2020, robo-advisors have become an important part of the investing and financial technology ecosystem and are becoming widely used. But not all robo-advisors offer the same services or cater to the same types of customers. That’s why we examined each of these offerings in detail: to empower our readers to decide whether passive investing should be part of one’s investing strategy, and if so, which robo-advisor best fits their needs.

Types of Robo-Advisors

Robo-advisors offer a wide array of services that fit varying needs. Here, we give you an idea of the types of robos out there.

Robos Connected to Banks or Brokerages

For an easy solution, see if your current bank or brokerage offers a robo-advisory service. If so, that’s a quick way to set up automatic investing with quick transfers into and out of the account. These robo-advisors are part of a larger offering that includes banking and self-directed brokerage services:

Ally Managed Portfolios: Read Review
Charles Schwab Intelligent Portfolios: Read Review
E*TRADE Core Portfolios: Read Review
Fidelity GO: Read Review
Interactive Advisors: Read Review
Merrill Guided Investing: Read Review
TD Ameritrade Essential Portfolios: Read Review
Wells Fargo Intuitive Investor: Read Review

Robos With Step-Up Services

If you’re just getting started with investing, but want a robo-advisor that offers a more complex, full-service product as your assets grow, consider one of these:

Complex Portfolios

Most robo-advisors set up portfolios that are comprised solely of exchange-traded funds (ETFs). These firms offer much more complex portfolios that span multiple asset classes, especially for those with large portfolios:

Socially Responsible Investing

Socially responsible investing is a style that is growing in popularity. These robo-advisors allow you to select socially-responsible stocks and ETFs as part or all of your portfolio:

Ally Managed Portfolios: Read Review
Betterment: Read Review
E*TRADE Core Portfolios: Read Review
Interactive Advisors: Read Review
M1 Finance: Read Review
Merrill Guided Investing: Read Review
TD Ameritrade Essential Portfolios: Read Review
Vanguard Personal Advisor: Read Review
Wealthfront: Read Review

Cash Management Services

These robo-advisors are setting up complete packages of services that include cash management capabilities such as giving you access to your directly deposited funds up to two days early. It’s no coincidence that these two firms were among the first wave of robo-advisors.

Human Advisors Available

Robo-advisors offer different levels of service. While some have services that are completely online, there are several that give you access to human advisors. This group has human advisors included, with no additional fee:

Betterment (Premium level): Read Review
Charles Schwab Intelligent Portfolios: Read Review
E*TRADE Core Portfolios: Read Review
Interactive Advisors (Actively managed portfolios): Read Review
Merrill Guided Investing (Premium level): Read Review
Vanguard Personal Advisor: Read Review
Wealthfront: Read Review
Wealthsimple: Read Review
Wells Fargo Intuitive Investor: Read Review

These robo-advisors let you consult with a human advisor, at an additional fee:

Betterment (standard service): Read Review

How Do Robo-Advisors Work?

Robo-advisors are low-cost automated investment platforms that manage money using algorithmic execution and hold the same legal status as human advisors. They must register with the U.S. Securities and Exchange Commission to conduct business, and are therefore subject to the same securities laws and regulations as traditional broker-dealers. The official designation is "Registered Investment Adviser," or RIA for short. Most robo-advisors are members of the independent regulator Financial Industry Regulatory Authority (FINRA), as well. Investors can use BrokerCheck to research robo-advisors the same way they would a human advisor.

When you choose a robo-advisor and head to its website or fire up its mobile app, you will be asked some questions about your current financial situation and your future goals. There will be a few questions that help the algorithm determine how much investment risk you can live with. Some robo-advisors help you define several goals, such as retirement 30 years from now and saving for a down payment on a house in 3 years. Others guide you to building up investing assets as a goal, with a single pot of gold at the end of your rainbow. Our reviews describe the goal-setting process in detail, so you can see the different styles.

If you’re investing for retirement, you’ll then consider whether to open a tax-deferred account, such as an Individual Retirement Account (IRA), or a taxable account. The investments the robo-advisor will choose for you will differ depending on the tax status. Most robos will enable you to have both a taxable and a tax-deferred account, with different time frames and investment holdings.

Check on the firm’s minimum to open an account. You’ll need to deposit a chunk of change to get the process going; $5,000 is the average. There are several that allow much smaller initial deposits, and a few that require significantly larger funding minimums.

Depending on your initial deposit, the time frame for achieving your goal, and the level of risk you can handle, the algorithms get to work and set up a suggested portfolio. With most of these services, you’ll be presented with a broadly diversified portfolio of low-cost ETFs. You also might find a mutual fund or two included, and if you start out with a large opening deposit, there could be individual stocks as well.

These portfolios are designed using Modern Portfolio Theory (MPT) which constructs portfolios that are intended to maximize expected returns while lowering risk. MPT assumes that investors are risk-averse, meaning they prefer a less risky portfolio to a riskier one for a given level of return. These portfolios mix equities (stocks) with fixed income (bonds), and are designed to become more conservative as the goal date approaches.

Additional services provided by robo-advisors include rebalancing and tax minimization. Rebalancing helps keep the portfolio within its original parameters when one class of assets, say an ETF that tracks a global large-cap index, grows faster than an ETF that is invested in government bonds. The algorithms also rebalance portfolios when you deposit or withdraw funds.

There are a variety of ways that robo-advisors approach tax minimization. One is tax-loss harvesting, which sells securities that have declined in value, generating a loss that you can report when you file your tax return, intended to offset any capital gains or taxable income generated by the rest of the portfolio. When you take a loss, the IRS prohibits you from repurchasing that same asset, or one that is substantially identical, for 30 days following the sale. Most robo-advisors have identified several ETFs that cover the same sector without falling afoul of the IRS’ definition of “substantially identical,” so you can stay invested in a balanced portfolio while lowering your tax bill. Keep in mind that not every investor will benefit from tax-loss harvesting. Be sure to examine your income and tax situation before electing it on your robo-advisor.

Another way robo-advisors minimize your tax bill is by putting tax-exempt ETFs, such as those invested in government-issued bonds, in your taxable account while placing any potential big gainers in a tax-deferred account. This strategy is called “asset location.”

These are all tasks that can be done manually, but algorithms are considerably more efficient.

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