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🔰 Introduction to Robo-Advisors

What is a Robo-Advisor?

A robo-advisor is an automated online platform that uses advanced computer algorithms to provide financial advice with minimal human involvement. This type of automated advice primarily focuses on portfolio management and overall wealth management.

Robo-advisors combine ETFs and government bonds to recommend low-risk portfolios. Unfortunately, most robo-advisor services are currently available only to U.S. investors. However, at the end of this article, you will find options tailored for UK and other European investors.

 

What Robo-Advisors Offer?

Robo-advisors offer financial advice by applying modern economic theories along with various diversification techniques. This process results in an automated investment service capable of providing:

• 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:

• 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 over 170,000 customers and managed more than $4 billion in investments. All you need to do is decide how much you want to allocate to stock ETFs and how much to bond ETFs. Here are some key points of Betterment's robo-advisor services:

• Only 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 recommends ETF-based portfolios. Deposit and lending products are provided through Charles Schwab Bank, Member FDIC. Schwab constructs your ETF portfolio using up to 20 different asset classes. Here are some key points of Schwab's robo-advisor services:

• Minimum 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 while avoiding government bond ETFs. It enables investors to build their own portfolios in just a few clicks using intuitive, built-in financial tools. Here are some key points of WealthFront's robo-advisor services:

• Currently 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/

 

 

(4) Personal Capital (Alexa 10,000)

Personal Capital provides free financial software for tracking investments. It also offers a wealth management service for accounts with $100,000 or more. Here 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 offers portfolio recommendations for an annual fee of 0.50%. Here 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 allows investors to create their own customized basket of ETFs and individual stocks, known as a "motif." Each motif can include up to 30 stocks or ETFs, with weights assigned based on the investor’s profile, innovative trends, and market insights. Here are some key points of 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 requiring you to transfer your funds. It offers two main financial services: Asset Management and Diversified Income. SigFig provides several tools, including portfolio rebalancing, dividend reinvestment, tax-loss harvesting, and whitelisting. Here are some key points of 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 offers robo-advisory services focused on investing in Collective Investment Vehicles, primarily ETFs. Here are some key points of 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 has been offering robo-advisor services since 2013. The minimum account size 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 account types 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

  

■ Introduction to Robo-Advisors

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