How We Review Robo-Advisors (original) (raw)

Investopedia’s list of the best robo-advisors is based on in-depth research and robust data across 21 companies that offer digital investment services. We reviewed each company’s account services, investment options, customizable portfolio management features, cash management tools, fees, and much more. This guide explains the categories and criteria we used to evaluate each company’s offerings and our scoring process for determining the best robo-advisors.

Our editors and researchers independently evaluate all recommended products and services. If you click on links we provide, we may receive compensation. Our advertising partnerships are not a factor in how we evaluate products, though they may affect the order of products you see listed in our articles.

How We Research Robo-Advisors

Through a combination of subject matter expertise, consumer survey and company survey data, and industry research, we developed a quantitative model that scores each company based on nine major categories and 59 criteria that are crucial in evaluating the advisors’ offerings and usability.

To collect the data, we sent a digital survey with 64 questions to each of the 21 companies we included in our rubric. Additionally, our team of researchers verified the survey responses and collected any missing data points through online research and conversations with each company directly. The data collection process spanned from Jan. 8, to Feb. 9, 2024.

In 2023, our research team conducted a survey of 205 U.S. adults aged 18 to 72 who are current clients of one of 18 robo-advisors that are part of our rubric. Participants in this 2023 survey opted-in to an online, self-administered questionnaire from a market research vendor. Survey data collection took place between Aug. 30, and Sept. 15, 2023, with 11 video interviews conducted with volunteer respondents from Sept. 7, to Sept. 17, 2023. Multiple quality checks, including screeners, attention gauges, comprehension evaluations, and logic metrics, among others, were used to ensure only the highest quality responses were included.

This 2023 survey was used to inform our weighting and scoring process for our 2024 best robo-advisor awards to best serve readers’ needs. We adjusted the weights for goal planning, fees, portfolio contents, portfolio management, and user experience because our survey told us that those factors matter more and less to readers looking for a robo-advisor.Investors are likely to use robo-advisor platforms to invest for goals like large purchases—houses, vehicles, and travel—more than retirement. The majority of investors who use these platforms are in their 20s and 30s, and consider themselves to have intermediate-to-advanced computer skills. Fee-based financial planning tools and services is the most searched topic by robo-advisor users.

Robo-Advisor Evaluation Categories

Based on a combination of subject matter expertise and the results of our 2023 Robo-Advisor Consumer Survey, we developed the following category weights:

These categories were then broken down into 59 weighted criteria, resulting in 1,239 data points that make up our scoring rubric.

Through this all-encompassing data collection and review process, Investopedia has provided you with an unbiased and thorough review of the top robo-advisors.

From Titan's online demonstration with Investopedia.

Data Collection and Scoring

Goal Planning

Investors have diverse sets of goals and timelines that extend well beyond simply saving for retirement. That's why having access to tools that help you build the capital needed to make large purchases is also a top considerations when choosing a robo-advisor.

This entire section accounts for 21% of the total weighted score in our evaluation.

To evaluate goal planning, we looked to see if the following tools and features were available to clients:

Retirement Planning Tools

We score this on a binary scale, awarding 1 point to companies offering retirement planning tools, and 0 points to those that lacked these tools.

Planning Tools for Large Purchases

We score this on a binary scale. If the robo-advisor offers planning tools for large purchases, a score of 1 was given. For companies lacking these tools, a score of 0 was given.

Other Goal Tools

For this criteria, we scaled the responses (0.00, 0.25, 0.50, 0.75, 1.00) and awarded companies with the largest selection of goal-planning tools outside of retirement and large purchases the highest scores. Conversely, companies with more limited goal-planning tools received the lowest scores.

Portfolio Management

The quality and availability of portfolio management features is critical when choosing a robo-advisor. It’s essential to know how portfolios are managed and the features available to clients to monitor their portfolios. This entire section accounts for 17% of the total weighted score in our evaluation.

To evaluate portfolio management, we looked at the following features:

Automatic Rebalancing

We scored this item on a continuous scale of 0.00 to 1.00, as opposed to a binary scale. Companies that provide daily portfolio monitoring and rebalancing based on portfolio drift from predefined thresholds received the highest score, while companies that rebalance with less frequency received a lower score.

Tax-Loss Harvesting

We score this on a binary scale, giving robo-advisors that provide true tax-loss harvesting features a score of 1, while companies that lack this feature or only provide tax mitigation strategies received a score of 0.

Frequency of Tax-Loss Harvesting

For this criteria, we scaled the responses (0.00, 0.25, 0.50, 0.75, 1.00) and awarded companies with the greatest frequency of tax-loss harvesting activity the highest scores. Conversely, companies with more limited tax-loss harvesting activity received the lowest scores.

Real-Time Reporting on Progress Towards Goals

We scored this on a binary scale, awarding 1 point to companies that provide real-time reporting on progress toward goals, and 0 points to companies that lack this feature.

Consideration of Synced External Accounts

We score this on a binary scale. Companies got a score of 1 if they consider synced external accounts when performing critical functions like portfolio analysis or taxable transactions. Companies that lack this feature received a score of 0.

Account Types

We scored this item on a continuous scale of 0.00 to 1.00, as opposed to a binary scale of 1 or 0. Companies with the largest selection of supported account types received a higher score and companies with the smallest selection received a lower score.

Portfolio Contents

The asset management industry is always evolving and new investment vehicles that improve tax efficiency, provide access to new asset classes, and address socially sensitive concerns are constantly being introduced. The best robo-advisors quickly incorporate these features and maintain a wide range of non-proprietary investment types that help lower the barrier to entry, suppress fees, and broaden allocation options.

This entire section accounts for 17% of the total weighted score in our evaluation.

To evaluate portfolio contents, we looked to see if the following asset classes were available to clients:

Socially Responsible Investing (SRI) or Environment, Social, and Governance (ESG) Options

Robo-advisors that provide SRI or ESG investments were given a binary score of 1, while a 0 was given if these options are not available.

Non-Proprietary ETFs or Mutual Funds

We scored this item on a continuous scale of 0.00 to 1.00. Companies with the largest selection of non-proprietary ETFs or mutual funds received a high score and companies with the smallest selection received a low score.

International Stocks and Bonds

For this item, we scaled the responses (0.00, 0.25, 0.50, 0.75, 1.00) and awarded companies with the largest selection of international stocks and bonds the highest scores. Conversely, companies with limited international stock and bond offerings received the lowest scores.

Fractional Shares

We score this on a binary scale. Robo-advisors that offer fractional share investing were given a score of 1, while a lack of this offering resulted in a score of 0.

Dividends on Fractional Shares

We scored this on a binary scale. Companies that offer customers the ability to collect dividends on fractional shares received a score of 1, while a score of 0 was given to companies lacking this offering.

Hedging Strategies

We scored this on a binary scale. Companies that employ hedging strategies were given 1 point, and companies that do not use these strategies got 0 points.

Fees

Because many of these digital wealth management platforms invest client assets in prepackaged portfolios and involve minimal human supervision, they are able to charge lower fees than traditional financial advisors. But there are also a number of robo-advisors that provide more customized products and access to licensed representatives, which may result in higher fees.

This entire section accounts for 15% of the total weighted score in our evaluation.

When analyzing the costs associated with using a robo-advisor’s platform and services, we looked at the following criteria:

Fees and Commissions Charged for Trading Individual Stocks

We score this on a binary scale. If the ability to trade individual stocks was offered for no fee, a score of 1 was given. Companies that either lacked stock trading capabilities or charged a fee for offering this feature received a score of 0.

Cost Per Month for an Account With $5,000

We used a scaled criteria model (0.00, 0.25, 0.50, 0.75, 1.00) and awarded companies that levy the lowest fees on accounts with a $5,000 balance the highest scores. We gave companies that charge the most the lowest scores.

Cost Per Month for an Account With $25,000

We used scaled criteria (0.00, 0.25, 0.50, 0.75, 1.00) and awarded companies that levy the lowest fees on accounts with a $25,000 balance the highest scores. We gave companies that charge the most the lowest scores.

Cost Per Month for an Account With $100,000

We used scaled criteria (0.00, 0.25, 0.50, 0.75, 1.00) and awarded companies that levy the lowest fees on accounts with a $100,000 balance the highest scores. We gave companies that charge the most the lowest scores.

Termination Fees

For this criteria, we score on a binary scale and companies that did not charge a termination fee were given 1 point, while companies charging termination fees received 0.

Average Underlying Fee for ETFs

We used a scaled criteria model (0.00, 0.25, 0.50, 0.75, 1.00) and gave the highest scores to companies with the lowest average underlying fee for ETFs. Conversely, companies with the highest average underlying fee were given the lowest scores.

Account Services

In an industry as competitive as the robo-advisor industry, the best platforms must offer robust cash management tools and give access to convenient banking services in order to keep customers happy.

This entire section accounts for 10% of the total weighted score in our evaluation.

Our account services category measures the quantity and quality of the following key services that each platform offers:

Combining Self-Driven Trading and Robo-Advisor Services

A binary score of 1 was given to companies that provide self-driven trading services at the stand-alone digital advisor level, while a 0 was given to those companies without this capability.

Placing Trades for Individual Stocks

Companies that allow users to place trades in stocks at the stand-alone digital advisor level were awarded a binary score of 1, while a 0 was given to those companies without this offering.

Number of Individual Stocks Available to Trade

We scored this item on a continuous scale of 0.00 to 1.00. Companies that offer access to trading in the largest number of stocks received the highest scores, while companies with smaller stock offerings received lower scores.

Placing Trades for Specific Mutual Funds

Companies that offer their users the ability to place trades for specific mutual funds received a binary score of 1 and companies lacking this offering were given a score of 0.

Placing Trades for Fixed Income

Companies that offered their users the ability to place trades for fixed income directly, not through ETFs or mutual funds, received a binary score of 1, while a lack of this capability demanded a score of 0.

Placing Trades for REITs

Robo-advisors that allowed their customers to place trades for REITs at the stand-alone digital level directly, not through ETFs or mutual funds, received a binary score of 1, while companies without this offering received a score of 0.

Placing Trades for Other Asset Classes

Companies that allowed users to place trades for any other asset classes, such as crypto or forex, received a binary score of 1, and companies without this capability were given a 0.

Automatic Sweeps

Here, we scaled the responses (0.00, 0.25, 0.50, 0.75, 1.00) and awarded companies with the most automatic sweep options the highest scores. We gave the lowest scores to companies with the fewest options.

Interest Paid on Cash Balances

The amount of interest paid on cash balances was scored on a continuous scale of 0.00 to 1.00. Companies offering the highest APY on uninvested cash received the highest scores, while companies that offer low or no interest received the lowest scores. Since APYs are variable, we are constantly monitoring how rate changes may impact the winners in our lists.

Integration With Banking or Brokerage Accounts

Companies that offered integration with banking or brokerage accounts for easy account transfers received a binary score of 1, while a lack of this capability resulted in a score of 0.

Portfolio Margin Availability

Robo-advisors that make portfolio margin available were given a binary score of 1, while digital advisors without this item received a score of 0.

Fee Charged for Using Portfolio Margin

We scored this item on a continuous scale of 0.00 to 1.00. Companies that charge the lowest fees for portfolio margin received the highest scores, while companies with the highest fees received lower scores.

Process for Withdrawing Funds

When it comes to withdrawing funds, we scaled the responses (0.00, 0.25, 0.50, 0.75, 1.00) and awarded companies with the most convenient methods the highest scores. Conversely, companies that added layers of complexity to this process were given the lowest scores. For example, convenient methods include one-click withdrawal, which takes two days to settle, and auto monthly, quarterly, or annual withdrawals.)

Charitable Giving Options

For this criteria, companies that provided charitable giving options were given a binary score of 1, and those without this capability received a score of 0.

Discounts Available on Other Products and Services

Companies that offer discounts on other products and services, like lower interest rates on loans provided by the parent company, were given a binary score of 1, while companies without these offerings received a score of 0.

User Experience

At their core, robo-advisors are digital wealth management platforms, which means human assistance is often limited during the onboarding process. Therefore, the best robo-advisors provide a smooth user journey and easy-to-use features that make investing enjoyable for less experienced investors.

This entire section accounts for 5% of the total weighted score in our evaluation.

To evaluate each platform’s user experience, we looked at the following features:

Usability

We scored this item on a continuous scale of 0.00 to 1.00, as opposed to a binary scale. Our subject matter expert tested the usability of each platform and gave companies with the best user experience a high score. Conversely, platforms that offer a weak user experience were given lower scores.

iOS App Availability

A binary score of 1 was given to companies that provide an app for iOS devices, while a lack of this app resulted in a score of 0.

Android App Availability

A binary score of 1 was given to companies that provide an app for Android devices, and a score of 0 was given for no app availability.

Security and Education

Although robo-advisors are designed so that you only need minimal involvement in the money management process beyond the initial onboarding survey, the best robo-advisors provide useful prompts and other forms of educational content to help guide you along your journey.

In addition, most robo-advisors offer two-factor authentication and encrypted security measures. However, there are meaningful differences in the level of SIPC insurance available to insure your money against institutional failure.

This entire section accounts for 5% of the total weighted score in our evaluation.

When examining the educational and security offerings of the companies we reviewed, we looked at the following criteria:

Educational Videos

If a robo-advisor offered educational videos, it received a binary score of 1. For robo-advisors without this form of educational content, a score of 0 was given.

Educational Articles

If a robo-advisor provided access to educational articles, it received a binary score of 1. Any company that lacked this content received a 0.

Frequently Asked Questions (FAQs)

Companies offering access to FAQs were awarded a binary score of 1, and companies lacking this information received a 0.

Website Encryption

Robo-advisors that have encrypted websites were given a binary score of 1, and companies lacking this level of security received a 0.

Two-Factor Authentication

Companies requiring two-factor authentication were awarded a binary score of 1, while companies without this level of security received a 0.

Excess SIPC Insurance

If robo-advisors offered excess SIPC insurance, they received a binary score of 1. Any company not offering this extra level of security received a 0.

Customer Service

Some robo-advisor platforms are designed so that the growing number of users who prefer to help themselves can do so using FAQs and features like chatbots. However, other robo-advisors have found better ways to maintain a human element in their customer service for those clients who still need it.

This entire section accounts for 5% of the total weighted score in our evaluation.

When measuring the breadth of customer service offerings each of these digital platforms delivers, we considered the following criteria:

Online Chat for Prospective Clients

Companies that have an online chat for prospective clients received a binary score of 1, while a 0 was given to companies without this feature.

Licenses Held by Advisors

For this key criteria, we scaled responses (0.00, 0.25, 0.50, 0.75, 1.00) so that companies that provide access to advisors with the most professional licenses received the highest scores, and advisors with fewer licenses were given the lowest scores.

Telephone Customer Service Hours

The hours that customer service is made available via telephone was scaled (0.00, 0.25, 0.50, 0.75, 1.00) so that companies with the most availability were given the highest scores, and companies with limited availability were given the lowest scores.

Live Chat Customer Service Hours

The hours that customer service is made available via chat was scaled (0.00, 0.25, 0.50, 0.75, 1.00) so that companies with the most availability were given the highest scores, and companies with limited availability received the lowest scores.

Email Customer Service Hours

The hours that customer service is made available via email was scaled (0.00, 0.25, 0.50, 0.75, 1.00) so that companies with the most availability were given the highest scores, and companies with limited availability were given the lowest scores.

Account Setup

Many users look for ease and simplicity when setting up any account, and this is especially true when it comes to signing up for and optimizing a digital investment account, such as with a robo-advisor.

This entire section accounts for 5% of the total weighted score in our evaluation.

As we examined the account setup category, we considered the following set of critical criteria:

Online or Offline Account Setup Process

If the entire process of setting up a robo-advisor account could be completed online, a binary score of 1 was awarded. Conversely, platforms where any part of the process required offline procedures received a 0.

Minimum Account Size

This item was scored on a continuous scale of 0.00 to 1.00. Companies with the lowest account minimums received higher scores, while companies requiring high account minimums received lower scores.

Ability to View a Portfolio Prior to Funding

If robo-advisor companies allowed customers to see proposed portfolios prior to funding, they were awarded a binary score of 1. Any companies that did not allow this advantage received a score of 0.

Portfolio Customization Availability

For this item, we scaled the responses (0.00, 0.25, 0.50, 0.75, 1.00) and awarded companies with the greatest flexibility of portfolio customization (companies that provided the easiest and most efficient way of portfolio customization like dynamic portfolio allocation, portfolio diversification, etc.) the highest scores. Conversely, companies with limited customization methods received the lowest scores.

Portfolio Customization Options

When it comes to portfolio customization options, we scaled the responses (0.00, 0.25, 0.50, 0.75, 1.00) and awarded companies with the largest selection of portfolio customization options the highest scores (options such as ETF-only portfolios, sustainable impact portfolios, tax aware portfolios, etc.). Conversely, companies with a limited selection received the lowest scores.

Portfolios Adjustments

If the robo-advisor provides portfolios that adjust according to target dates and specific goals, a binary score of 1 was awarded. Conversely, the lack of this feature received a 0.

Extra Credit for Access to Human Advisors at No Extra Charge

As the robo-advisor industry has grown increasingly competitive, more and more companies are offering access to human advisors at a variety of service levels. In order to provide our readers with the information necessary to make the most informed decisions possible, our research team collected data at the stand-alone digital advisor level, free of any premium features. We then awarded a credit to companies that allow digital-level customers to speak with a licensed investment professional, and an additional credit if that advice comes at no extra charge.

Articles That Use Our Methodology

The investment industry is always evolving, with more cutting-edge investment products and platforms constantly being made available. Robo-advisors are an important part of this ever-changing landscape, which is why we’ve written extensively on the subject.

The research conducted and data collected to create this methodology have been used to compile the following list of recommendations:

All Investopedia articles that review the robo-advisor companies that make up our list of the best, such as Wealthfront and Betterment, are based on the research, data, and grading process described in this methodology, along with subjective insights from our editors and industry experts.

Meet the Investing Research & Reviews Team

Amrut Deshmukh

Investing & Trading, Research Analyst at Investopedia

As an Investing & Trading Research Analyst at Investopedia, Amrut possesses a strong background in trading, investing, asset management, portfolio management, quantitative fnance, and entrepreneurship. Amrut holds a bachelor's degree in Computer Science & Engineering from Visvesvaraya Technological University (VTU), Bangalore, as well as a Master of Science degree in Finance from the Gabelli School of Business at Fordham University in New York, New York.

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Michael Sacchitello

Senior Editor, Investing and Trading Product Reviews

Michael is the Senior Editor of Investing and Trading Product Reviews for Investopedia and has 20 years of mutual fund, macro market research, institutional trading desk, and trading education experience. He is a chartered member and Subject Matter Expert (SME) for the industry-leading Chartered Market Technicians (CMT) Association.

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