Robo-advisors are an excellent option for investors looking to streamline their investment management while keeping costs below those of traditional financial advisors. Some robo-advisors even offer their services without charging an annual management fee.
If you’re considering robo-advisors, here’s what you need to know and five options that will manage your money without a fee.
Understanding Robo-Advisors
Robo-advisors utilize algorithms to create an investment portfolio tailored to your risk tolerance and investment objectives based on a series of questions you answer. Many robo-advisors also provide additional features such as tax-loss harvesting and automatic rebalancing to enhance returns and make investing more hands-off.
The top robo-advisors typically have much lower fees compared to traditional financial advisors, and you can usually start with a minimal investment. Some robo-advisors offer free management for small amounts of money, while others do not charge a management fee at all. However, keep in mind that fees for the funds used in your portfolio may still apply.
Best Free Robo-Advisors
1. Schwab Intelligent Portfolios
Schwab Intelligent Portfolios from Charles Schwab is a popular choice for its free basic tier, offering portfolio management, automatic rebalancing, and tax-loss harvesting (with a minimum of $50,000 in assets for this feature). The fund fees range from 0.02 percent to 0.19 percent, with a mix of Schwab’s own funds and those from low-cost providers like Vanguard.
- Management fee: Free for basic tier
- Fund fees: 0.02 percent to 0.19 percent
2. Fidelity Go
Fidelity Go is a great option for beginners, offering free advisory services for assets up to $25,000 and a 0.35 percent annual fee for assets above that threshold. Fidelity uses its zero-cost mutual funds for portfolios, resulting in zero fund fees for assets up to $25,000.
- Management fee: Free up to $25,000 in assets
- Fund fees: Free
3. Interactive Advisors
Interactive Advisors is a low-cost robo-advisor, with a 0.20 percent annual fee if you opt for managed portfolios. You can choose themed funds with expense ratios ranging from 0.10 percent to 0.75 percent, capped at 0.75 percent to ensure cost control.
- Management fee: Free if self-managed
- Fund fees: Capped at 0.75 percent
4. SoFi Automated Investing
SoFi Automated Investing is a cost-effective option with no management fee, only fund expense ratios to consider. Your total costs could be around 0.10 percent annually, providing access to financial advisors for additional support.
- Management fee: Free
- Fund fees: 0 percent to 0.35 percent
5. Ally Invest Robo Portfolios
Ally Invest Robo Portfolios offers a fee-free “cash-enhanced” portfolio, with 30 percent of assets in cash earning competitive interest rates. Alternatively, a fully invested option incurs a 0.30 percent annual fee. Portfolios consist of low-cost ETFs with fund fees ranging from 0.03 percent to 0.25 percent.
- Management fee: Free for “cash-enhanced” portfolio
- Fund fees: 0.03 percent to 0.25 percent
Editorial Disclaimer: It is recommended that all investors conduct their own research before making investment decisions. Past performance is not indicative of future results.