Robo-Advisor is perfect for investors, except for professional portfolio management, except for traditional money manager billing.
Using a robo-advisor, you pay about 1% to 2% of your account balance (managed assets, or AUM) each year, compared to about 0.25% of your AUM (or $25 per year) of your AUM (or $25 per year). Also, automated portfolio management companies can do large businesses, which can manage small amounts of money for free or charge management fees. (Name it below.)
Why is it so cheap? In short, technology.
Robo-Advisors uses algorithms to build a diverse investment portfolio based on answers to a few questions about risk tolerance and investment goals. Continuous management tasks such as portfolio rebalancing and tax cuts are also handed off whenever possible via smart automation.
Many of the best robo-advisors also have low investment minimums. Please note that free account management does not mean a completely paid investment. One exception – Fidelity GO- still pays fees for Exchange Trade Funds (ETFs) used to build a portfolio.
Here are four robo-advisors who manage your money without charge.
Best Free Robo Advisor
1. Schwab Intelligent Portfolio
Charles Schwab is also one of Bankrate’s best online broker picks, and is provided by a top-notch robo-advisor to Schwab Intelligent Portfolios.
Schwab does not charge portfolio management fees to the basic entry level tier of robots. This includes access to automatic rebalancing and goal setting and tracking tools. You have an account that costs at least $5,000. However, access to free slow harvesting is limited to customers with assets of at least $50,000 in their taxable portfolio.
Schwab has chosen dozens of different funds to build a portfolio, with most fund fees ranging from 0.02% to 0.19%. Certainly, Schwab uses some of its own funds in its portfolio building, but it also provides funding from low-cost leaders such as Vanguard, so you can make sure that it’s not paying much of the fund fee.
Premium Tier comes with unlimited access to your financial advisor, but then you will pay a one-time plan fee of $300 and $30.
- Account Min: $5,000
- Management fee: Basic tier is free
- Funding fee: 0.02% to 0.19%
2. The fidelity is
Fidelity Go is another powerful free robo-advisor choice, especially for those just getting started. Customers do not pay an advisory fee of up to $25,000 for their assets.
If your account balance exceeds that, an annual admin fee of 0.35% will apply, but only assets above the free threshold will apply.
Savings don’t end there. Another bonus to using Fidelity Go is that Fidelity builds its portfolio using its own zero-cost mutual fund, so it doesn’t pay any additional fees for the funds it invests. This means that the total cost of assets up to $25,000 will be zero. It’s a pretty good deal for people just starting to build an investment portfolio. If you accumulate over $25,000, you will unlock another perk. Free, unlimited, 30-minute planning calls with a loyal advisor.
- Account Min: Open $0; $10 for investment
- Management fee: Assets up to $25,000
- Funding fee: none
3. Interactive Advisor
Interactive Advisors offer Robolite plans that do not charge an administrative fee if you want to (or are willing to) obtain specific portfolio management tasks yourself.
The Diyish option starts with choosing from a variety of pre-built portfolios from a basket of low-cost ETFs categorized into themes. Interactive advisors handle the initial portfolio structure, but ongoing management tasks (maximum rebalancing) are not automated. (Interactive Advisors also offers a more classic robo investment service that offers everything from portfolio buildings to ongoing management teams with a management fee of 0.20% per year.)
Customers who choose to use the free service can choose from a number of different theme funds with cost ratios ranging from 0.10% to 0.75%. The Interactive Advisors Caps Fund costs 0.75%, so you can see that you won’t pay any more. Fund selection includes a variety of active and passive strategies, industry funds, ESG funds, and more.
- Account Min: It’s $100, but it’s a minimum for some funds.
- Management fee: Free if you manage it yourself
- Funding fee: Caped at 0.75%
4. Ally Invest Robo Portfolio
Like Interactive Advisors, Ally Invest Robo Portfolios offers both free and paid automated portfolio management plans. However, to avoid paying out-of-pocket advisory fees, you need to comfortably allocate a high percentage of your investmentable assets to cash.
Ally’s No-Fee “Cash Enhanced” portfolio holds 30% of the portfolio’s assets in cash. Money will earn competitive interest rates that have risen over the past few years, but your revenues can slow down your market-focused portfolio. Ally Invest’s more fully invested robo management portfolio will have an annual management fee of 0.30%.
When you select the type of account you need, you will find four different portfolio options built with low-cost ETFs. Fund fees range from 0.03% to 0.25%, but most are less than 0.10%.
- Account Min: Open $0; $100 to invest
- Management fee: “Cash Enhanced” portfolio is free
- Funding fee: 0.03% to 0.25%
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. Furthermore, investors recommend that past investment products performance is not a guarantee of future price increases.