Best Robo-Advisors: Top Picks for 2024

Robo-advisors automate investment management by using computer algorithms to build and manage an investment portfolio for you, based on your goals and your tolerance for risk. Since portfolio management is handled by software rather than a human financial advisor, robo-advisors charge lower fees, which can translate to higher long-term returns for investors. A few of the advisors on our list even offer completely free portfolio management.

Robo-advisor services range from automatic rebalancing to tax optimization, and require little to no human interaction. A robo-advisor might be a good fit if you prefer to be largely hands-off with your investments and you don’t have the kind of complex financial situation that requires a direct relationship with a human financial advisor.

That said, many providers offer access to human advisors available for questions related to account management or long-term investment planning — though these services may cost more.

Opening a robo-advisor account is very similar to opening a brokerage account or bank account: You’ll provide some personal information and then link an existing account from which you can transfer money to fund the new account. The primary difference is in most cases, robo-advisors will take you through an onboarding quiz to help determine how to invest your portfolio. These quizzes generally ask about your investment goals, risk tolerance and time horizon, and the robo-advisor will use your answers to build the most optimal portfolio for you.

Robo-advisors are paid through their account management fee. This is usually shown as a percentage, such as 0.25%. This means the fee is a percentage of the money that you invest. For example, if you put $1,000 into a robo-advisor investment account, and it charges a 0.25% fee, you’d pay $2.50 for that year’s worth of investment management. If you put in $100,000 you’d pay $250. Both of those figures are significantly lower than what they would be if you worked with a traditional financial advisor.

Expense ratios are different from management fees: They are not paid to the robo-advisor, but to the people and institutions that manage the funds you’re invested in.

Here’s what you’ll want to look at:

Management fees. This is what you’ll pay annually to have an account at a robo-advisor. See our calculator below to help you analyze these.

Expense ratios. These are like management fees, only they’re paid not to the robo-advisor, but to the investments the robo-advisor uses. Mutual funds, index funds and exchange-traded funds all charge this annual fee to cover the costs of running the fund.

Account types. Investment accounts fall into two general categories: Retirement accounts, such as IRAs and 401(k)s, that offer tax advantages while adhering to certain rules; and taxable accounts, where there are no specific tax advantages but also no limits on contributions or distributions.

Investments. Most robo-advisors use low-cost index funds and ETFs.

Rebalancing. Portfolios are fluid, and market fluctuations can cause the mix of investments you hold to get out of sync with your goals. Rebalancing brings that allocation back to its original mix.