The 3 Best Robo-advisors for Retirees

May 30, 2016 — 9:11 PM EDT

Robo-advisors are making it easier for retirees to get investment advice at an affordable price point. However, these computer-generated advisors aren’t all the same, which can be huge for people nearing or in retirement. After all, a person looking to drawdown retirement dollars is going to have different needs than a 40-something investor who is just starting to build a nest egg.

Robo-advisors offer different bells and whistles. Some robo-advisors will help clients manage their existing investments while others will only let customers build new investment portfolios. Meanwhile, some robo-advisors will help retirees develop strategies to access their investment dollars while others won’t. The one common denominator among robo-advisors is that they all claim to create tax-efficient investment strategies. With lots of robo-advisors to choose from, retirees can afford to be choosy and pick the robo-advisor that meets their unique needs. (For more, see: Why Robo-advisors Make Sense for Retirees.)

Ease of Use

One of the big things retirees and soon-to-be retirees need when investing is simplicity. That applies especially to online investment platforms. If the platform is too difficult to use, hard to find information or is otherwise cumbersome, it’s going to quickly become frustrating. That’s why retirees need to choose a robo-advisor that is easy to navigate. Thankfully when it comes to that, many robo-advisors deliver. WealthFront and Betterment are two examples of robo-advisors that make it easy, but they aren’t the only ones. A rule of thumb: before plunking down any money check out the robo-advisor’s website. If it’s hard to navigate before signing up, chances are it’s going to be complicated when it comes to investing. (For more, see also: How Do the Robo-Advisors Differ?)

Automated Plus Some Hand-Holding

Retirees have unique needs, whether it’s making sure they have enough regular income to live off or managing their tax exposure to protect their bottom line. And while most robo-advisors boast the ability to engage in tax loss harvesting and other tax-advantaged strategies, sometimes the situation calls for a little bit of human intervention. While not every robo-advisor is going to offer human advice, some do, like Vanguard Personal Advisor Services. Sure, you will pay a little more for that human interaction, but it could be invaluable if you need some hand holding but still like the idea of a computer-generated investment plan. And it also means you can get help even if you don't have hundreds of thousands of dollars to invest.

Security Should Be a Top Concern

When it comes to investing online, retirees and those nearing retirement have to be scrupulous when choosing the robo-advisor they work with. After all, they hold the keys to your castle, and if your financial and identifying information falls into the wrong hands it can cost you a lot. Because of that you have to go with a robo-advisor that takes security seriously. According to guidelines from the Securities and Exchange Commission, investors have to understand who the robo-advisor is sharing your information with and make sure they explain their level of security. It's also incumbent upon the investor to choose a strong password and access the website on a secure network. While nothing is a sure bet, sticking to robo-advisors that have been around the block for a while may be a better option than a start-up without a track record.(For related reading, see: How Will the Fiduciary Rule Impact Robo-Advisors?)

The Bottom Line

People in or near retirement can benefit from robo-advisors since they provide a low-cost way to invest and provide some financial advice. But retirees need to be a little bit choosier when it comes to which robo-advisor they invest with. They need to be mindful of advice, ease of use and security when comparing different robo-advisors.