Robo advisors, those automated investment services offered by banks, brokerages and other financial firms, promise low-cost, computer-driven investment management geared to your goals. If you want to understand how to pick the best robo advisor for your needs, see our guide which analyses the offerings from 10 companies.
Although $1,000 is not enough to get started at Charles Schwab (it’s a heavy-weight competitor in robos, but its Intelligent Portfolio service requires $5,000 to open an account), it’s plenty for SoFi.
The fintech company’s digital advice service, called SoFi Invest, has a $1 minimum and there’s no annual management fee. What’s more, SoFi’s digital service wins top marks as best overall robo adviser from the Robo Report, a quarterly publication from Condor Capital, a Martinsville, N.J.-based advisory firm, that measures the performance, among other things, of robo advisor services.
SoFi’s program is similar to other robo services. You answer a quick online survey that touches (lightly) on your goal, financial situation and risk tolerance. Then an algorithm spits out a recommended diversified portfolio for you that holds a smattering of exchange-traded funds that are appropriate to your investment timeline.
SoFi competitor, Wealthfront, has a $500 entry minimum and charges 0.25% in annual management fees. Wealthfront’s robo portfolios have performed better than peers over the past three and five years, according to the Robo Report, thanks in part to a 10% allocation to energy stocks, the best-performing sector in the U.S. stock market over the past two years.
At Fidelity, the price of entry and costs are low in the beginning for its Fidelity Go digital advisory service — there’s no minimum to open an account, no annual management fee and the funds in the portfolio charge 0% in expense ratios. That’s in part why the Robo Report names Fidelity Go as the best robo advisor for first-time investors. Once balances exceed certain levels, annual fees apply. For balances between $10,000 and $49,999, the management fee is $3 per month; for $50,000 and over, it’s 0.35% of assets per year.
Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.