Where Schwab, Fidelity, and Vanguard ranked this year.

Morningstar Research Services’ Amy Arnott, portfolio strategist, and Gabe Denis, senior manager research analyst, discuss how the lines are blurring between robo-advisors and traditional financial advisors.

Timestamps:
What’s a Robo-Advisor? 0:38
Investor Benefits From Robo-Advisors 1:25
Did 2022 Stand Up Against 2023? 2:03
Tax Loss Harvesting 3:05
Limitations of Digital Investment Advice 3:59
Robo-Advice vs. Human Advice 4:57
Robo-Advisor Fees 6:30
The Best Robo-Advisors Advisors of 2023 7:50
Schwab Intelligent Portfolios 9:01
Fidelity Go 10:35
Vanguard Robo-Advisor 11:33
The Worst Robo-Advisor 13:15

Read about topics from this episode.
The Best Robo-Advisors of 2023
What Is a Robo-Advisor?
Should You Be Using a Robo-Advisor?
Are Robo-Advisors Worth Your Investment?

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Microsoft Bets Big on AI: What Investors Should Know, Part Two

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Ivanna Hampton
Amy C. Arnott
Gabriel Denis

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In recent years, robo-advisors have taken the investment world by storm. These automated investment platforms have revolutionized the way everyday investors manage their portfolios. With advanced algorithms, robo-advisors offer investors a hassle-free and low-cost investment experience. In this article, we will explore three of the best robo-advisors available, along with one that falls short of expectations.

1. Betterment:
Betterment is one of the most popular robo-advisors, boasting an impressive track record and a user-friendly interface. Built on Nobel Prize-winning research, Betterment offers a diversified portfolio of low-cost ETFs tailored specifically to each investor’s goals and risk tolerance. With features like automatic rebalancing and tax-loss harvesting, Betterment ensures that your investments stay on track while minimizing tax obligations. Additionally, their user-friendly mobile app provides real-time performance tracking, making it easy to monitor your investments on the go.

2. Wealthfront:
A close competitor to Betterment, Wealthfront also offers a top-tier robo-advisory service. Wealthfront’s approach is grounded in Modern Portfolio Theory, blending low-cost ETFs to create a well-diversified portfolio. The platform offers advanced features like direct indexing, which can potentially increase your after-tax returns. Wealthfront also provides a Path financial planning tool that helps users map out their financial goals and create a personalized saving strategy. With a low minimum investment requirement of $500, Wealthfront is an accessible and affordable option for investors.

3. Vanguard Personal Advisor Services:
While most robo-advisors rely solely on algorithms to manage your investments, Vanguard Personal Advisor Services takes it a step further by offering access to real-life financial advisors. While this service comes at a higher fee, it provides a valuable human touch that some investors might prefer. Combining the expertise of financial advisors with Vanguard’s low-cost index funds, this robo-advisor offers a balanced approach to wealth management. Vanguard Personal Advisor Services is an excellent option for investors who desire personalized attention while still benefiting from automated portfolio management.

However, amidst all the success stories, it’s important to highlight one robo-advisor that falls short of expectations:

Acorns:
Acorns is often seen as an entry-level robo-advisor due to its unique investing strategy. Acorns connects to your debit or credit cards and rounds up your everyday purchases to the nearest dollar. The spare change is then automatically invested into a portfolio of low-cost ETFs. While the idea of investing your “spare change” is innovative, Acorns falls short in terms of high fees. For small accounts, Acorns’ monthly fee can be relatively high in comparison to the investment amounts. Additionally, the simplicity of Acorns may not satisfy investors seeking more control over their portfolios.

In conclusion, robo-advisors have made investing accessible to the masses, providing automated and cost-effective portfolio management. Betterment, Wealthfront, and Vanguard Personal Advisor Services stand out as market leaders, offering a range of features and services. While Acorns offers a unique approach to investing, its high fees and limited control make it less appealing when compared to the top robo-advisors. It’s essential for investors to assess their own needs and preferences when choosing the right robo-advisor for their financial goals.