Guide to Selecting the Right Automated Investment Platform
Discover how to choose the best robo-advisor for your investment needs. This guide covers essential questions like investment options, minimum deposits, account management, and hybrid services blending automation with human advice. Learn to compare platforms such as Betterment and Wealthfront to find a suitable digital financial partner, whether you're a beginner or seeking more personalized assistance.
Guide to Selecting the Right Automated Investment Platform
Automated investment platforms, known as robo-advisors, are digital financial planning services powered by algorithms with minimal human involvement. Typically, these platforms gather user information about their financial goals and current assets through online questionnaires, then automatically create and manage investment portfolios based on that data.
Popular robo-advisors include Betterment, Wealthfront, and others, often referred to as online wealth management services.
Robo-advisors may suit you if:
You lack the time to manage your investments manually
You’re not interested in learning about individual stock investing
You plan to invest modest amounts of money
You prefer low-risk options and do not attempt to time the market
Questions to consider when choosing a robo-advisor:
What types of investments appeal to you?
If you're interested in a diverse mix of small, mid, and large-cap funds, Betterment could be suitable. Their bond options include municipal and international bonds. WiseBanyan, another free robo-investment service, offers real estate investment trust ETFs.
How much money are you looking to invest?
If you're just starting, opt for services with low minimums or no fees. For example, WiseBanyan has a $1 minimum investment and no management fees for basic accounts, plus they offer referral bonuses.
Additionally, many low-cost robo-advisors like Wealthfront and Betterment cater to beginner investors.
Will a robo-advisor manage funds in your existing accounts?
If you prefer not to transfer assets, platforms like FutureAdvisor and SigFig can manage your current accounts directly. Both provide free access to robust financial tools.
Are hybrid options available with human financial advisors?
If you need more personalized advice or have complex financial situations, many robo-advisors offer access to certified financial planners (CFPs) through hybrid models.
Do they support different account types?
If you require specific account types, check whether platforms like Betterment or others offer the options you need.
Once you've identified your priorities, you can compare robo-advisors by visiting their websites or using online comparison charts to analyze features side by side.
