6 Robo-Advisors with Rock Bottom Minimums
Robo-advisors, the online financial advisory services powered by algorithms instead of humans, come in a variety of formats. There are those targeted towards the wealthy, with high minimum investment amounts of $50,000 to $100,000.
But for the rest of us, there are many robo- or technology-assisted advisors with rock bottom minimums that feature well-regarded platforms. Read on for snapshots of some that offer low entry fees. (For more, see: Is a Robo-Advisor Always the Most Cost-Effective Choice?)Betterment
Minimum: $100 with automatic investing setup
Description: Betterment invests a client's assets in up to 12 different asset classes, which are optimized for the best risk/return combination in a selected asset allocation. The Betterment platform offers low-fee stock and bond exchange traded funds (ETFs) in percentages that align with the clients' risk profile.
Fees: The fees are based on assets under management (AUM)—0.35% with $100 monthly deposit up to $9,999; 0.25%/$10,0000-$99,999; 0.15% /$100,000+.Financial Guard
Minimum balance: $1,000
Description: Financial Guard is a fixed fee online investment advisor. Financial Guard delivers professional and what it calls transparent investment advice at a fixed price. Financial Guard's fees are reported to beat those of a traditional financial advisor. Financial Guard allows an investor to aggregate all of his or her investment accounts (such as a 401(k) plan, IRA, brokerage, 529 plan, etc.) in one place and provides a detailed and holistic portfolio assessment grade (A-F). The platform offers advice to set optimal diversification with lower fees.
Fees: Financial Guard charges each user, regardless of assets, the same fixed price of $149.95 per year or $15.95 per month. Financial Guard offers a free 30-day trial. (For more, see: A Roundup of Web-Based Financial Services Apps.)Personal Capital
Minimum balance: There is no minimum balance required to use the software, input your accounts and access the dashboard. The advisory service is available to users with $100,000 or more.
Description: Personal Capital promotes a tagline of better financial lives through technology and people. Its service combines free tools that gather and analyze all of your financial data with a financial advisor (for those with over $100,000) to help manage and grow your investments. The platform analyzes your cash flow, investment allocation and offers a retirement planner.
Fees: The software is free to all users. Client fees are based upon AUM and range from 0.89% to 0.49% for the highest net worth clients.SigFig
Description: SigFig is a portfolio optimization platform that helps investors track investments. The company uses algorithmic investment strategies to analyze, monitor and improve users' portfolios. The platform works to diversify client investments, reduce risk and minimize fees. SigFig's asset management technology analyzes the user's current investments, learns about the investor's goals and risk tolerance, and tailors a portfolio strategy to each client. Unlike other platforms that also serve as an investor's custodian, SigFig customers keep their money in their existing accounts with Fidelity, Schwab (SCHW), or TD Ameritrade (AMTD). (For related reading, see: 5 Robo-Advisor Apps for Your Smartphone.)
Fees: 0.25% of AUMWealthfront
Minimum: $500. (The account minimum required to qualify for the Tax-Optimized Direct Indexing service is $100,000.)
Description: Wealthfront is an automated investment management service that aims to achieve optimal investment returns. The platform also uses modern portfolio theory to deliver long-term returns with a low probability of significant downside. After incorporating a client's tolerance for risk, low-cost ETFs are used to represent each asset class.
Fees: 0.25% on all AUM after the first free $10,000.WiseBanyan
Description: WiseBanyan is a free financial advisor built on two pillars: helping clients start investing as soon as possible and minimizing fees as much as possible (lower fees equal higher returns). WiseBanyan provides its clients with tailored and optimally diversified portfolios to achieve financial goals. The company automates everything from portfolio rebalancing to dividend reinvestment to recurring deposits.
Fees: WiseBanyan manages all client accounts with no management fees or trading fees, but it recently started charging for its new tax-loss harvesting service.The Bottom Line
A low minimum investment amount is important for a new investor looking to get started with investing for the long term. Yet there's more to investing than a low entrance fee. Apart from the investment minimum, be sure to evaluate a robo-advisor's services and fees to find your best match. Also, be aware that robo-advisor firms are constantly evolving and may change their minimums and fee structures in the future. (For more, see: Asset Builder: Right for You?)