A robo-advisor is an automated online application that uses complex computer algorithms to offer financial advice with minimal human intervention. This automated financial advice is focused on portfolio and wealth management.Introduction to Robo-Advisors

What is a Robo-Advisor?

A robo-advisor is an automated online application that uses complex computer algorithms to offer financial advice with minimal human intervention. This automated financial advice is focused on portfolio and wealth management.

Robo-Advisors combine ETFs and Government Bonds to suggest low-risk portfolios. Unfortunately, at the moment, most Robo Advisor services are applicable only to US investors. Nevertheless, at the end of this article, you can find Robo-Advisors for the UK, and other European investors.

 

What Robo-Advisors Offer?

Robo-advisors offer financial advice by applying modern economic theories, and of course, several diversification techniques. The whole process creates an automated investment service which is able to provide:

  • Portfolio Management (i.e. by combining ETFs and Bonds)

  • Multi-Level Portfolio Diversification

  • Wealth Management (reinvesting dividends, controlling tax, tax harvesting, etc.)

  • Improving Investment Decision-making (making decisions easier, and speeding up processes)

  • Making Online Platforms easier and more efficient for users

  • Enhancing the general investor satisfaction throughout the levels of the advisory process

 

Robo-Advisors and Specifications

These are some key parameters when choosing a robo-advisor service:

  • Applicable Investors (most services are available only for US investors)

  • Account Types (Some robo-advisors are designed specifically for wealth management, others not)

  • Minimum Deposit (usually between $2,000 and $5,000)

  • Investment Selection (Offering wide selection of ETFs, Bonds, etc)

  • Cost of using the Automated Investing Service (The fee is usually between 10 and 50 basis points of the managed assets)

  • Funds Custody (Allowing, or not, to maintain your funds in your own brokerage or require transferring funds to their custodian)

  • Tools Available (Tax harvesting, reinvesting dividends, etc.)

 



(a) US-Based Robo-Advisors

Ranking US Robo Advisors by their Assets

These are the top US Robo-advisors (ranked by asset size).

Robo-Advisors

Under-Management Assets

(in USD)

Betterment

$4.2 billion

Charles Schwab

$4.1 billion

Wealthfront

$2.8 billion

Personal Capital

$2.1 billion

FutureAdvisor

$0.6 billion

Matif Investing

$0.12 billion

Data: 2016

Automated investment services (Robo-advisors) situated in the US

 

(1) Betterment Robo-Advisor (Alexa=12,000)

Betterment has served more that 170,000 customers and has invested more than $4 billion. The only thing you have to do is to define how much you want to invest in stock ETFs and how much in bond ETFs. These are some key points of Betterment's robo-advisor services:

  • Betterment Robot AdvisorOnly for US investors (requires permanent US address, social Security Number, and US bank account)

  • Charges fees from 0.15% (for accounts over $100,000) to 0.25% (accounts over $10,000) and up to 0.35%

  • The minimum account is just $10

  • Offers Low-Cost ETFs (bonds and equities)

  • Tax harvesting tools (accounts of $50,000, or more)

Contact Robo Advisor: (855) 381-5956 or This email address is being protected from spambots. You need JavaScript enabled to view it.

Situated: New York, United States

Link to Robo Advisor: https://www.betterment.com/



(2) Schwab Intelligent Portfolios (Alexa=1,130)

Schwab Intelligent Portfolios is another online Robo Advisor that suggests ETF portfolios. Deposit and lending products are offered via the Charles Schwab Bank, Member FDIC. Schwab builds your ETF portfolio with up to 20 different asset classes. These are some key points of Schwab's robo advisor services:

  • Schwab Robot AdvisorMinimum Account is 5,000 USD

  • No advisory fees or commissions charged, the only fees you pay are the operating expenses of the ETFs

  • Monitors and continuously rebalances your portfolio

  • 24/7 customer support

Contact Robo Advisor: 855-694-5208

Situated: United States

Link to Robo Advisor: https://intelligent.schwab.com/



(3) WealthFront Robo-Advisor (Alexa=18,000)

WealthFront offers equity-ETFs and avoids government bond ETFs. WealthFront helps investors to create their own portfolios in a few clicks, by using easy-to-use built-in financial tools. These are some key points of WealthFront's robo advisor services:

  • WealthFront Robot AdvisorCurrently only for US investors (requires US social security number or Tax ID Number)

  • Charges 0.25% advisory fee

  • The first $10,000 managed for free

  • The minimum deposit amount is $500

  • Fund methods include Bank Wire and Account Transfer (ACAT)

  • Tax harvesting tools (accounts of $100,000, or more)

Contact Robo Advisor: 650.249.4250

Situated: Redwood City, United States

Link to Robo Advisor: https://www.wealthfront.com/


 

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(4) Personal Capital (Alexa 10,000)

Personal Capital offers free financial software for tracking investments. There is also a wealth management service for accounts of more than $100,000, or more. These are some key points of Personal Capital's robo advisor services:

  • The cost for the first one million dollars is 0.89% of assets under management and can get as low as 0.49% for over 10 million US Dollars.

  • Combines ETFs and Individual Stocks

  • Tax optimation tools

  • All assets are managed by Personal Capital's Investment Committee

Contact Robo Advisor: (855) 855-8005

Situated: California, United States

Link to Robo Advisor: https://www.personalcapital.com/



(5) FutureAdvisor (Alexa=75,000)

FutureAdvisor will recommend the creation of a portfolio for an annual fee of 0.50%. These are some key points of FutureAdvisor's robo-advisor services:

  • Free investor's portfolio analysis and investing recommendations

  • 0.50% annual fee of assets directly managed (0.125% billed quarterly)

Situated: San Francisco, United States

Link to Robo Advisor: https://www.futureadvisor.com/



(6) Motif Investing (Alexa=30,000)

Motif enables investors to create their own motif basket of ETFs and individual stocks. A motif can include up to 30 stocks or ETFs. Each motif is weighted according to each investment profile, innovative trend, and market insight. These are some key points for Motif's robo-advisor services:

  • No account minimum, start a motif for as little as $300

  • Minimum $2,000 in order to trade on margin

  • All motif trades are in real-time

  • Fees include $9.95 per Motif and $4.95 per Stock / or ETF

  • Motif Investing is a member of FINRA and SIPC

Contact Robo Advisor: 1-855-586-6843 or This email address is being protected from spambots. You need JavaScript enabled to view it.

Situated: Rancho Cordova, United States

Link to Robo Advisor: https://www.motifinvesting.com/



(7) SigFig Robo Advisors (Alexa=51,000)

SigFig manages your investments without having to transfer your funds. SigFig offers two financial services, the Asset Management service, and the Diversified Income service. SigFig offers several financial tools such as portfolio rebalancing, re-investing dividends, tax loss harvesting, and whitelisting. These are some key points for SigFig's robo-advisor services:

  • $2,000 minimum account deposit

  • The first $10,000 are managed for free

  • 0.25% fee after the first $10,000

  • Accounts more than $10,000 enjoy an online personal advisor

  • SigFig Wealth Management, LLC is a SEC registered investment advisor

Contact Robo Advisor: 1-(855)-9-SIGFIG

Situated: United States

Link to Robo Advisor: https://www.sigfig.com

 

 

 

 

(b) European-Based Robo-Advisors

Most European Robot Advisers are situated in the UK.

(8) Nutmeg Robo-Advisor (Alexa=89,000)

Nutmeg offer robo advice when investing in Collective Investment Vehicles and primarily ETFs. These are some key points for Nutmeg's robo-advisor services:

  • Available for all investors, over 18 years old, maintaining a UK bank account (check the list of accepted countries below)

  • 500GBP minimum account

  • Accounts above 5,000GBP get free monthly setup

  • 0.3%-0.95% fees

  • Using large custodian banks

  • Regulated by the FCA

Accepted Countries: Austria, Australia, Belgium, Canada, Czech Republic, Denmark, Estonia, Finland, France, Germany, Hong Kong, Hungary, Iceland, Italy, Japan, Lithuania, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Poland, Republic of Ireland, Romania, Singapore, Slovakia, Slovenia, Spain, Sweden, and Switzerland.

Situated: London, United Kingdom

Contact Robo Advisor: 020 3598 1515, This email address is being protected from spambots. You need JavaScript enabled to view it.

Link to Robo Advisor: https://www.nutmeg.com/robo-advisor



(9) MoneyFarm Robo Advisor (Alexa=102,000)

MoneyFarm offers advice for investing in ETFs. These are some key points for MoneyFarm's robo-advisor services:

  • Only for UK residents, over 18 years old

  • 1GBP minimum account

  • The first $10,000 managed for free, after 0.4%-0.6% fee $10,000

  • Additional 0.25% fund manager fee

Situated: London, United Kingdom | Milan, Italy

Contact Robo Advisor: 0800-433-4574, This email address is being protected from spambots. You need JavaScript enabled to view it.

Link to Robo Advisor: https://www.moneyfarm.com/uk/



(c) Robo-Advisors in the Rest of the World



(10) Stockspot Robo Advisor (Alexa=590,000)

The Australian-based firm, Stockspot, offer robo-advisor services since 2013. The minimum account is $2,000. Note, that if you invest $10,000 or less, Stockspot's service is free for the first 12 months. There are four (4) accounts available:

  • Less than $10,000, Bronze Account type, 0 advice fee and $6.6 monthly management fee

  • Less than $50,000, Silver Account type, 0 advice fee and 0.066% monthly management fee

  • Less than $500,000, Gold Account type, $55 annual advice fee and 0.055% monthly management fee

  • More than $500,000, Platinum Account type, $55 annual advice fee and 0.044% monthly management fee

  • Additional fees are charged for purchasing ETFs

Situated: Australia

Contact Robo Advisor: (02) 8091 8090, email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Link to Robo Advisor: https://www.stockspot.com.au/



The MyPrivateBanking’s Report about Robo-Advisers

 

These are some findings of the report “Attitudes towards Robo-Advisors – Evidence from the US and the UK” conducted by MyPrivateBanking.

  • High-net-worth individuals, especially the young, use online investment tools more than other investors

  • More than 70% think that robo-advisors and similar tools can positively influence their wealth manager’s decision-making process by speeding up onboarding procedures

  • The young and the wealthy are more opened as concerns using robo advisors in the future

  • UK investors would pay more than US investors for robo-advisors advice

  • In the UK, more investors think they will use robo advice tools in the future

More about the report here: http://www.myprivatebanking.com/Report/robo-advisors-report-2015

 

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