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The robo-advisor field is getting crowded, with new platforms springing up regularly and changing frequently. These exciting algorithmic automated trading platforms are made up of a variety of players. Some robo-advisors (or digital advisors) have higher minimums and more sophisticated investments platforms. Others use a low cost, low fee stable of index ETFs and mutual funds.

Choosing the five best robo-advisors for 2016 is a challenging task, because the best robo-advisor for you might not be the best choice for your neighbor. That said, we’ll examine, several factors and rank robo-advisors based upon the following criteria; low initial investment, low fees, and quantity of services. In general, each of the five best robo-advisors for 2016 offer well-researched, low fee investment options.

In this analysis we’ll assume that lower fees and lower investment minimums are preferable along with greater portfolio management services. While some investors prefer access to a greater number of investment options, this study assumes that more investment choices don’t necessarily translate into a better product. (For more, see: Are Robo-Advisors and FA's Worst Nightmare?)

1. TradeKing Advisors

TradeKing Advisors, an affiliate of TradeKing Securities, LLC is an online investment advisory service that offers professional portfolio management to all investors at an affordable price. The investment process is easy. You answer several questions from a risk tolerance questionnaire. Next, TradeKing Advisors provide you with a diversified investment portfolio, designed and managed by the industry experts at Ibbotson Associates, a Morningstar company.

TradeKing Advisors offers two investing approaches, Core and Momentum portfolios. Additionally, TradeKing is the only advisor in this list that offers the momentum approach.

To build a portfolio you need at least $500 for a Core Portfolio and $5,000 for the Momentum Portfolio. The five Core Portfolios include a maximum of 17 asset classes with a mix of exchange traded funds and notes. The asset classes include domestic equities, foreign equities, fixed income securities as well as real estate assets. The Momentum Portfolios attempt to harness the market movements and trends.

There is no minimum investment amount to open an account at TradeKing. Although, for portfolios worth less than $5,000, there’s a $1.00 per month charge. Fees for portfolios worth more than $5,000 are competitive at TradeKing. With a balance of $5,000 or more, Core Portfolios charge 0.25% of assets under management (AUM). The annual fee for any size Momentum portfolio is 0.50% AUM.

For an additional charge, investors in Core Portfolios may sign up for Risk Assist, a program that attempts to stabilize your investments’ values by reducing equity exposure during a steep market decline. The charge for adding Risk Assist to Core Portfolios is an additional 0.50% or 0.75% (0.25% + 0.50%).

In return for the advisory fee the advisor constructs and manages your chosen portfolio. This includes reinvestments and rebalancing. There are no transaction fees. Unlike most of the other robo-advisors, TradeKing doesn’t offer tax loss harvesting. (For more, see: TradeKing vs. TradeStation: Which Meets Your Needs?)

2. SigFig

SigFig manages your investments (in TD Ameritrade Holding Corp., Charles Schwab Corp. or Fidelity Investments accounts) and creates an “intelligent, tax-efficient, diversified portfolio” for a low fee. Unlike the other robo-advisors mentioned, you don’t open a distinct account at SigFig, but keep your existing investment accounts.

SigFig starts with a quick risk quiz, based upon your age and time horizon. The platform has a robust portfolio tracker app which shows your asset allocation, investment yields, fee breakdowns and more. They have two types of services, Asset Management and Diversified Income. This article focuses on the Asset Management offering.

The SigFig approach recommends funds based upon a variety of criteria, including risk-adjusted three-year historical performance, fees, ratings and several other factors. There is a $2,000 minimum balance.

SigFig is free for accounts less than $10,000, and the first $10,000 is always managed for free. There’s a 0.25% management fee for accounts greater than $10,000. The accounts worth more than $10,000 also have access to an online personal investment advisor.

SigFig offers many extra services for their 0.25% fee including a unique portfolio corrector. This tool optimizes your portfolio and helps minimize fees and maximize returns. Other services include; portfolio rebalancing, reinvesting, tax efficient migration, tax loss harvesting, and whitelisting (accepting a comparable fund to the one recommended). When managing a portfolio, SigFig claims to choose lowest fee funds while maximizing returns and considering tax consequences. (For more, see: Computer-Based Financial Planning: How it Works)

3. Wealthfront

Wealthfront builds and manages a personalized, diversified investment portfolio with a variety of low fee ETFs. Your Wealthfront account is held at Apex Clearing Corporation (APEX), and Wealthfront makes investments on your behalf. The portfolio asset classes are allocated according to the results of a short risk questionnaire

Wealthfront’s investment strategy is grounded in modern portfolio theory passive investing strategy. This approach strives to give the investor the greatest return for the least amount of risk by utilizing low cost funds. In addition to the typical stock and bond ETFs, Wealthfront also offers a real estate (VNQ) and Natural Resources (XLE) ETF.

Wealthfront recently lowered its minimum investment amount to an affordable $500. Additionally, there are no management fees for accounts valued at less than $10,000. Once you hit $10,000 the Wealthfront platform fees are 0.25% of AUM. Similar to SigFig, the first $10,000 is always managed for free. There are no trading fees and the underlying mutual fund fees average a low 0.12%.

Wealthfront offers several additional portfolio management services. The single-stock diversification service addresses the ‘overweight in company stock’ problem for employees with an abundance of company stock. The firm claims to practice ‘tax-optimized direct investing’ a strategy for tax-loss harvesting and minimizing investing costs. Under this practice, individual stocks representing an index are purchased in lieu of the actual index ETF so that certain stocks may be sold for tax loss harvesting. The firm also performs ‘daily tax-loss harvesting’. Finally, Wealthfront offers periodic rebalancing.

4. Betterment

Wealthfront’s closest competitor, Betterment also offers a low cost, index fund, passive investing approach. The company trades through Apex Clearing Corporation, as does Wealthfront. Betterment starts out with a brief risk questionnaire. Their platform is structured according to an investor's goals. Betterment promises to get each client the optimal fund mix with the best returns for the least amount of risk. Their offerings include 12 asset classes that account for your risk preference and time horizon.

Similar to Wealthfront, Betterment’s investment options include low-fee, index mutual or exchange traded funds. The Betterment platform allows for up to 12 stock and bond funds representing both international and U.S. investment opportunities.

Betterment’s fees range from 0.15% to 0.35%, depending upon the AUM and auto-deposit choice. Betterment does not have a minimum investment amount. For accounts valued at less than $10,000 there are 2 pricing choices; with at least a $100 per month auto deposit, the management fee is 0.35%, without auto deposit, the fee for lower balance account is $3.00 per month. Accounts greater than $10,000 pay 0.25% of AUM while accounts valued at more than $100,000 are charged 0.15%. There are no additional transaction fees, except the underlying low expense ratio fees charged by the fund companies. The ETF management fees range from 0.09% to 0.17%.

Finally, Betterment also offers additional services. Consumers receive smart rebalancing, personalized advice, extreme tax efficiency and tax loss harvesting. (For more, see: Wealthfront Versus Betterment)

5. Schwab Intelligent Advisor

Schwab’s recent entrance into the robo-advisor field makes a splash due to its free model. This platform promises no advisory fees, account service fees or commissions. Schwab Intelligent Portfolios calls itself an “online investment advisory service that builds, monitors, and rebalances your portfolio-so you don’t have to.” Similar to Betterment, Schwab is goals-based and helps you keep on top of your savings and income goals.

Schwab requires at least $5,000 to open an Intelligent Portfolios account. This is the highest minimum requirement for all of the robo-advisors discussed in this article.

The initial 12 question inquiry form gives Schwab the information to design your portfolio. Although their ETF portfolio allows for up to 20 asset classes, your individual account may not include all of their offerings. Schwab has the broadest asset classes and investment choices of any of the former automated advisors and includes stock, fixed income, real estate, and commodity ETFs. Where Schwab differs is in the allocation to cash. Each Intelligent Portfolio has a percent invested in cash. Schwab explains that cash is important to a well-diversified portfolio and improves stability, liquidity, diversification, and protects against potential inflation.

Schwab can afford to offer a no-fee service because they’ll earn revenue on the consumers’ investments their ‘Schwab-branded ETFs and money market funds’. They also may be compensated by the firms which make the trades. As with all of the companies, there are annual management fees for the underlying ETFs. But those are the only fees for investors in the Schwab Intelligent portfolios. According to Schwab, “ETFs offered by other online advisors have operating expense ratios in ranges similar to that of Schwab Intelligent Portfolios.” The total operating expense ratio of a typical portfolio will range from 0.12% for a conservative portfolio for 0.25% AUM for the more aggressive investor.

Schwab’s services include the typical automatic rebalancing. Accounts valued at more than $50,000 are eligible for the automatic tax loss harvesting.

The Bottom Line

According to the criteria of low fees, diverse index fund offerings, and robust services, the best robo-advisor for 2016 goes to SigFig. Their 0.25% fee is among the lowest. SigFig offers the widest array of services, including an online personal advisor for accounts greater than $10,000. Their app is state of the art and the portfolio corrector is compelling. That said, it’s a tough contest to call the winner of the ‘best robo-advisor’ because it's important to take into consideration your own personal situation. If you want a platform which holds your assets in their custody, then one of the other robos might be a better fit for you. (For more, see: Are Robo-Advisor Services Becoming More Human?)

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