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The Best Automated (Robo-Advisor) IRAs
Pick one of these automated, or robo-advisor, IRAs if you want to put your retirement savings on auto-pilot.
Key Takeaways
- An automated IRA will create a portfolio for you and rebalance it over time, so you can just ‘set-it-and-forget-it’.
- These accounts were pioneered by tech-driven “robo-advisors” like Betterment and Wealthfront, but are now offered by almost all of the large financial institutions like Fidelity, Schwab and others.
- To use these accounts, you’ll generally pay an annual fee that’s expressed as a percentage of your assets, known as a “management fee” or an “advisory fee”. While some providers offer automated portfolios for free, most of the larger players will charge a management fee of 0.25-0.35% of your assets per year.-
The best automated IRAs
Fees: 0.25%
Best if you want: A low-fee automated portfolio with a user interface that's simple and easy-to-use.
Limitations: Not much ability to influence the portfolio they create for you.
Access to Human Advisor: Not at this time.
Fees: 0.20%
Best if you want: An automated IRA with a single all-in fee from one of the most established names in the industry.
Limitations: Vanguard exclusively uses 4 Vanguard ETFs for its portfolios and there's no way to change this.
Access to Human Advisor: Not at this time.
Fees: 0%
Best if you want: A zero-fee portfolio from a digital brand with a range of other financial products like student loan refinancing and debit cards.
Limitations: Not much ability to influence the portfolio they create for you.
Access to Human Advisor: Yes - SoFi has certified financial professionals on staff that you'll get access to.
Fees: 0.30%
Best if you want: An automated portfolio and you have an existing banking or brokerage relationship with TD Ameritrade.
Limitations: The user experience isn't as intuitive as newer, digital-first institutions.
Access to Human Advisor: Not at this time. TD does offer other accounts with human advisors, but they have higher fees and account minimums.
Fees: 0.35%
Best if you want: An automated portfolio from one of the biggest brands in finance with solid customer support and reasonable fees.
Limitations: Your portfolio will mainly have Fidelity funds in it, but Fidelity's management fee covers the cost of those funds so you'll only pay one all-in fee.
Access to Human Advisor: Not at this time.
Fees: 0.45%
Best if you want: A simple automated portfolio with potential fee discounts for existing Bank of America and Merrill Lynch customers.
Limitations: A platform that's not quite as easy-to-navigate as newer institutions and comes with a higher fee.
Access to Human Advisor: Only if you have more than $20,000 to invest and are willing to pay a higher fee (0.85%).
Fees: 0%
Best if you want: An automated IRA at Schwab, especially if you already have accounts there.
Limitations: Your portfolio will mainly have Schwab funds in it and Schwab keeps more of your money in cash than competitors which could impact your returns.
Access to Human Advisor: Only if you have more than $25,000 to invest, and for an extra fee of $30/month.
Fees: 0.30%
Best if you want: An automated portfolio with the ability to incorporate socially-conscious investments in your portfolio (ESG).
Limitations: You'll be allocated into one of five portfolios which is a little less customized than other automated providers.
Access to Human Advisor: While no advisor is assigned to the account, users can call to consult a specialist.
Fees: 0.25%
Best if you want: An automated, low-fee portfolio from the largest independent provider of digital accounts. Betterment was a pioneer in providing "set-it-and-forget-it" portfolios for a low-fee.
Limitations: Not much ability to influence the portfolio they create for you.
Access to Human Advisor: Yes - you can buy a consultation ($299) or pay a higher annual fee (0.40%) for unlimited access on an ongoing basis.
Fees: 0%
Best if you want: An automated IRA from a leading digital bank offering a range of other financial products (incl. bank accounts & mortgages).
Limitations: Ally's 0% fee only applies to the "Cash-Enhanced" portfolio which puts 30% of your assets into cash, which could impact your returns.
Access to Human Advisor: Not at this time, though you'll get access to Ally's call center support.
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Most automated IRAs involve a similar process:
- You open an account with one of these companies online – this usually takes minutes.
- You answer 5-10 questions about yourself, usually including your age, net worth, and attitude towards risk (this is often known as a “risk tolerance questionnaire”).
- They use this information to propose a diversified portfolio for you. That portfolio usually contains low-cost exchange traded funds from providers like Vanguard, BlackRock, and iShares.
- These ETFs are a low-cost way to get access to specific asset classes, like US and international stocks, emerging market stocks, and bonds. Your specific mix of ETFs depends on what your ‘risk level’ appears to be. Generally a higher risk-tolerance will mean more stocks (equities) and a lower one will mean more bonds (fixed income).
- You fund your account, in this case by transferring the assets previously in your 401(k).
- Once your account is funded the IRA provider will purchase the right investments to create your portfolio.
- They monitor your portfolio over time and automatically rebalance it so it remains appropriately diversified.
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