Robo-Advisor Comparison Tool

A robo-advisor is a digital platform that provides automated, algorithm-driven financial planning services with little to no human supervision. They collect information from clients about their financial situation and future goals through an online survey, and then use the data to offer advice and automatically invest client assets.

Most robo-advisors use modern portfolio theory to build and manage a diversified portfolio of low-cost index funds and ETFs tailored to your risk tolerance and investment timeline.

Learn more: Morningstar Robo-Advisor Guide

Investment fees might seem small, but they can significantly impact your returns over time. Even a 1% annual fee can reduce your portfolio value by tens of thousands of dollars over several decades.

For example, on a $10,000 investment growing at 7% annually over 30 years:

• With a 0.25% fee: Final value ≈ $66,000
• With a 1% fee: Final value ≈ $57,000

That 0.75% difference results in $9,000 less in your pocket!

Learn more: FINRA Investor Education

Index Funds are passively managed mutual funds or ETFs that track a specific market index, like the S&P 500. They offer broad market exposure, low operating expenses, and low portfolio turnover.

Robo-Advisors are services that use algorithms to automatically manage your investments, typically using a portfolio of index funds. They provide additional features like automatic rebalancing, tax-loss harvesting, and personalized portfolio allocation.

For most beginner investors, robo-advisors offer a good balance of automation, diversification, and low costs. More experienced investors might prefer building their own portfolio of index funds to have more control and potentially lower fees.