The Best Robo Advisor … For You

September 26, 2014

Firm Fees On $250,000 Trading Fee Estimate Weighted Average Tracking Difference Munis Tax Savings 25% Tax Bracket Asset Location Benefit Estimate Net Cost/Savings Estimate
Wealthfront -0.24%   -0.07% 0.21% 0.20% 0.10%
Betterment -0.15%   -0.03% 0.13% 0.20% 0.15%
FutureAdvisor -0.50% -0.05% -0.09% 0.00% 0.20% -0.44%
Covestor 0.00% -0.05% -0.11% 0.00% 0.00% -0.16%
WiseBanyan 0.00%   -0.01% 0.00% 0.00% -0.01%
Invessence -0.25%   -0.48% 0.13% 0.00% -0.60%

The overall robo-advisor costs are low enough to support any choice my son makes on robo-advisor asset allocation, though he'd have to be really keen on Invessence's or FutureAdvisor's philosophies to choose them over freebie WiseBanyan or tax-efficient Wealthfront and Betterment.

Putting It All Together

At ETF.com, we recommend investors first pinpoint the economic exposure they want, focusing on funds that select and weight securities to best meet their goals. Next, we suggest investors consider the costs of all appropriate funds. But we never suggest investors choose unsuitable funds on the basis of cost.

You should choose a robo advisor the same way.

Here's a table summarizing everything we've learned so far about the robo 60/40 portfolios.

Firm Best For Costs
Wealthfront HNW investors seeking investment committee guidance Tax benefits cover fees & tracking costs
Betterment HNW investors looking to mimic the markets Tax benefits cover fees & tracking costs
FutureAdvisor Factor investors Highest fees
cCvestor Emerging markets enthusiasts No fees, but moderate tracking costs
WiseBanyan Low-tax-bracket growth investors Very low cost
Invessence U.S.-centric investors Highest overall costs

HNW = High Net Worth

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