Investing with robo-advisors has become very popular in recent years to save money while investing. Until a few years ago, you had to pay large fees to have a professional financial advisor manage your investments. Now, a robo-advisor can essentially do the same service for a fraction of the cost. If you have been considering switching to a robo-advisor (or recently started using one), this guide can help you understand what exactly is a robo-advisor and how they differ from a traditional DIY investment account.

What is a Robo-Advisor?

At first thought, having a computer manage your investments might seem a little scary. Truth is, many mutual funds rely on computers to execute a trade in a split second and maintain proper asset allocation. In today’s trading environment, human traders can no longer trade quicker than computers to find unnoticed pockets of profit.

A robo-advisor is very similar to using a financial advisor. The only difference is the cost. Using a financial advisor will cost at least 1.35% of your portfolio value each year. With a robo-advisor, the annual management can be as low as 0.25% plus expenses charged by each ETF in your portfolio.

Are Robo-Advisors Cheaper Than Financial Advisors?

For every $10,000 you invest, you can expect to pay the following management fees every year:

  • Financial Advisor: $135 (1.35%)
  • Robo-Advisor: $25 (0.25%)

If you have $40,000 to invest, a traditional financial advisor will collect $540 a year compared to $100 for a robo-advisor.

Over the course of a lifetime, that’s a lot of money that could have been invested instead of paying a broker’s salary. The same thing goes for active mutual funds vs index mutual funds. Index funds invest in many of the same companies as an active mutual fund for a significantly lower cost.

What do Robo-Advisors Invest In?

Robo-advisors invest in ETFs (exchange-traded funds). They are very similar to a mutual fund because they invest in dozens or hundreds of companies but they trade like a stock. That means they can be bought or sold anytime the market is open instead of after the market closes. Robo-advisors use ETFs because they are cheaper than most mutual funds (active & index funds) meaning investment costs are kept as low as possible.
When you start investing with a robo-advisor, you will complete an investment questionnaire to determine your investment goals. You would complete this same questionnaire if you used a financial advisor or opened your own DIY account. You will probably get the same answers for how to allocate your portfolio (i.e. 80% stocks, 20% bonds) and the recommended percentages of large cap, mid cap, small cap, and international stocks. The only difference is that these DIY & financial advisor alternatives will recommend more expensive investment options in most instances.

Robo-Investing Has a Human Touch Too

Not every robo-advisor is strictly 100% automated. If you have a certain account balance or for an additional fee, you can have access to a certified financial planner that will review your portfolio. This is still a good option if you want an extra set of eyes on your portfolio and still want to talk to a human at least once a year about your investing objectives. And, this is still cheaper than using a financial advisor for many people.

In fact, even many of the major brokerages such as Schwab, Vanguard, and TD Ameritrade have introduced robo-managed portfolios that also offer access to financial advisors. This can be a good balance between DIY investing (lowest investment costs) and having a financial advisor do everything for you (the most expensive option).

Some of the robo-advisors that offer human advisory access include:

  • Betterment
  • Personal Capital
  • WealthSimple

Online brokerages have also created their own robo-advisory services with human advisor access:

  • Charles Schwab Intelligent Portfolios
  • Fidelity Go
  • Vanguard Personal Advisory Services

We have reviews for each of these platforms that are accessible below. Bear in mind that you might need to invest at least $100,000 before you get full access to the human advisory service, although Schwab and Fidelity Go offer access at only $5,000.

The Best Robo-Investors

There are new robo-advisor services starting up all the time. Here a few good ones to get you started:



Betterment is probably the most well-known robo-advisor. Their annual account fees start at 0.25% and they don’t have a minimum account balance requirement or minimum initial investment. You can also get access to a CFP when you have assets of at least $100,000 with an annual management fee of 0.40%.

Read our Betterment Review to learn more.



Wealthfront will invest your first $10,000 for free. After that, the fee is 0.25% annually. This is a solid pick for a robo-advisor.
Read our Wealthfront Review to learn more.

Personal Capital

Personal Capital

If you want to invest your money and track your entire net worth all in the same place, Personal Capital is a good place to consider. You can track your net worth for free & all investing plans have access to a financial advisor. The annual fees start at 0.89% which is higher than the others and is a better recommendation if you want access to a human financial advisor. Read our Personal Capital Review to learn more!


WiseBanyan is the first fee-free robo-advisor. You still have to pay the ETF account fees, but, they don’t charge an account management fees. Instead, they make their money from add-on services like tax-loss harvesting. This is arguably the cheapest robo-advisor once you have more than $10,000 in assets.

Read our WiseBanyan Review to learn more!

E*TRADE Adaptive Portfolio

E*TRADEs roots go deep as one of the first online discount stock brokerages. They now have an Adaptive Portfolio robo-advisor platform that gives you full access to the E*TRADE investing platform if you want to enjoy the conveniences of hands-off investing. The annual management fee is 0.30% and the initial account balance requirement is $5,000.

Read our E*TRADE Adaptive Portfolio review.


Fidelity Go

Fidelity is one of the largest brokerages that holds many individual investment and corporate retirement accounts. Their robo-advisor platform is Fidelity Go that invests solely in Fidelity ETFs and Index Mutual Funds.

Read our review of Fidelity Go.

FutureAdvisor Review


Future Advisor takes a different approach to investing with robo-advisors. They will provide asset allocation recommendations for free for any investment, regardless of your brokerage. Their premium robo-advisor service will only manage assets at Fidelity or TD Ameritrade.

Learn more about FutureAdvisor with our review.


Vanguard Personal Advisor Service

Vanguard has also entered the automated investing foray with their Personal Advisor Service. While the day-to-day portfolio management might be managed by a computer algorithm, all portfolio actions are reviewed by a Vanguard advisor. Your assets will be invested in one of the most revered fund families in the world, Vanguard. To qualify, you will need at least $50,000 in your investment account.

Read our review to discover if Vanguard Personal Advisor Service is for you.



WealthSimple is the first socially-conscious robo-advisor.  It’s possible to invest in low carbon emissions, cleantech, gender diversity, and halal-friendly funds. You can also invest in traditional ETFs too. There are no account balance requirements at WealthSimple and management fees will not exceed 0.5%.

Read our WealthSimple review here.


Alternatives to Investing with Robo-Advisors

You don’t need a robo-advisor to automate your investing. Investing with robo-advisors is still a relatively new concept and haven’t been tested long-term.  Since most of the investing world is already automated, there is less risk.

Here are some ways you can invest at a low-cost by yourself.

  • Index mutual funds or Index ETFs have fees as low as those invested in robo-advisors. You can even invest in the same funds as the robo-advisors without the management fee. But, you will be responsible for rebalancing the portfolio.
  • Target Date Funds are also a good investment option for your 401k. They automatically shift your asset allocation from stocks to bonds as you near retirement. They are still managed by a human fund advisor and therefore costs are often higher than robo-advisors.
  • Using a human financial advisor is the most expensive option, but, it’s a good option if you want that regular human interaction. Here are some tips to choosing a good financial advisor that will put your interest first and be the best “return on your investment.”


Investing with robo-advisors can be an effective way to invest at the lowest possible cost & still let an “expert” make those hard investing decisions. Robo-advisors are still new with a growing number of satisfied customers. So, they can be a good alternative to complete DIY investing or using a financial advisor.

What robo-advisor interests you the most?

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