These services are the best for setting up a focused socially responsible portfolio. They all feature individual stock picking for the most granular level of portfolio design. We re-weighted our scoring rubric so that robo-advisors offering socially responsible individual portfolios that were transparent about portfolio contents earned additional points. We also overweighted the ability to customize a portfolio.
We consider individual stocks a better way to construct a socially responsible portfolio than exchange-traded funds (ETFs) that are designed to filter out bad actors. Being able to delete specific companies might throw the asset balance off, but it's important to socially responsible and impact investors to create a focused portfolio.
Best Robo-Advisors for Socially Responsible Investors in July 2020:
- M1 Finance
- Motif Investing
- Interactive Advisors
- Personal Capital
Swell Investing was originally on our list for socially responsible investors, but it shut down on August 30, 2019. Check out some of the other services on this list if you want to build a portfolio based on socially responsible or impact investing. Motif Investing ceased business on May 20, 2020, and transferred all remaining customer accounts to Folio Investing. We are working on a Folio review. In the meantime, sophisticated investors should consider one of the other services on this list.
- Account Minimum: $100 ($500 minimum for retirement accounts)
- Fee: 0%
M1 Finance offers a unique combination of automated investing with a high level of customization, allowing clients to create a portfolio tailored to their exact specifications. You can create portfolios containing low-cost ETFs or use individual stocks – or both. M1’s target customer has a long-term focus and experience with using a traditional online brokerage to invest in stocks and ETFs.
There are two portfolios that have the title of socially responsible that are made up of Nuveen ETFs, listed under "Expert Pies," or you can construct a collection of stocks that are socially responsible. You can accept the weighting suggested by M1, or re-weight it your own way. There's even a "Pot Pie" available for those who want to invest in cannabis stocks. The site is remarkably flexible, and most services that M1 offers are available for free.
Ability to trade fractional shares
No trading fees or asset management fees
Flexible portfolio building, including more than 80 "expert" portfolios
Portfolio composition and rebalancing available at any time
You can also place individual stock/ETF orders
Trades are placed once per day during a “trading window,” which puts transaction timing out of your control
Accounts with less than $20 and no trading activity for 90 days are charged a maintenance fee
There is no online chat capability and most support is typically through email
The platform offers very little help for setting financial goals
- Account Minimum: $1,000
- Fees: 0.25% for managed portfolios, 0–0.50% for others
Motif Investing shut down on May 20, 2020, and all existing accounts have been shifted to Folio Investing. Motif customers are eligible for a discounted fee on Folio Investing’s Unlimited pricing plan. Folio is a subscription service with monthly fees that range from $5 to $29.95 per month. We are working on a review of the Folio platform.
Motif Investing launched its Impact Portfolios in 2017, adding three portfolios that are invested in sustainable industries, fair labor practices, or ethical practices to its large suite of investing themes. CEO Hardeep Walia would prefer that these portfolios not be thought of as automated, though they offer many features of automated investing, including regular deposits, rebalancing, and tax-loss harvesting. You’ll need a separate Motif impact account for each value in which you want to invest, but you can view a summary of all your Motif accounts on the dashboard. You can also open a regular Motif brokerage account if you’d like to explore any of the non-impact-focused portfolios available on the platform.
Once your motif has been chosen, you can go through each asset class and delete any companies in which you do not want to invest. There are graphs showing the returns for each portfolio since its inception. Once funded, your portfolio is purchased, which includes fractional shares of stock in each company, weighted according to Motif’s algorithms.
Asset models constantly updated to be sure companies pass MSCI screens
Low-cost impact portfolio investing
The equity portion of the portfolio is invested in individual stocks
Share investing ideas with your Investing Circle, a group of other Motif clients
Only three impact portfolios available
You have to open a separate account with Motif to invest in an impact portfolio
Very little in the way of goal-setting capabilities
- Account Minimum: $100 for portfolios managed by Interactive Advisors. $10,000-$120,000 for portfolios managed by boutique money managers.
- Fees: 0.08-1.5% per year, depending on advisor and portfolio chosen
Interactive Advisors, a service offered by Interactive Brokers, offers a wide range of portfolios from which to choose. You can choose socially responsible portfolios from among the offerings or find the appropriate exclusion group to avoid companies that do not share your values, as well as single stock exclusions that automatically apply to all your investments. Each exclusion group typically comprises 25 stocks and is reviewed annually. The exclusion groups defined in 2020 are:
- Animal testing
- Business ethics controversies
- Corporate political spending and lobbying
- Energy intensive
- Fossil fuels
- Greenhouse emissions
- Hazardous waste
- High water usage
- Tobacco, alcohol and gambling
- Weapons and gun manufacturers
If there is a company not on one of these lists that you want to avoid, you can enter the ticker symbols you want to exclude from any portfolio that contains individual stocks.
Some of the portfolios are developed and managed by Interactive Brokers, while others are offered by wealth management firms and large fund firms such as FTSE Russell, Wisdom Tree, and State Street Global Advisors. The management fees vary and are set by the firms offering the portfolios.
Wide range of portfolios offered
Most portfolios include baskets of stocks rather than ETFs
The PortfolioAnalyst tool lets you consolidate and track all of your financial accounts
Some of the portfolios offered have very high minimums
The process of opening and funding an account is difficult
Not clear how much you will pay as fees include commissions on stock trades
- Account Minimum: $100,000
- Fees: 0.89% to 0.49% for accounts over $1 million
Personal Capital does not want to be classified as a robo-advisor and would prefer to be considered a digital asset management service that also includes personalized advice from financial planners. The primary focus of most Personal Capital investing accounts is planning for retirement, and you are assigned a financial planner upon opening an account.
Personal Capital's approach to creating socially responsible portfolios utilizes a combination of exclusive and inclusive filters, seeking out companies doing a better job managing environmental, social, and governance (ESG) issues. The portfolios aim to maximize returns, minimize risk, and reduce the tax impact of investing. Personal Capital partners with Sustainalytics, an ESG research, and ratings firm, to locate U.S.-based firms with very high measures of social responsibility. Portions of Personal Capital portfolios are held in ETFs, primarily for fixed income and international investments, so those cannot be filtered for ESG ratings.
Each client is assigned to a financial planner
Only companies with very high ESG scores are included
Tax optimization strategies used to design and manage portfolios keep the tax burden to a minimum
Investing account customers require a very high minimum of $100,000
The mobile app is missing some key features available only on the desktop webpage
Portions of socially responsible portfolios are held in ETFs
New clients must talk with a human financial planner during the sign-up process
Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of robo-advisors. Our 2019 robo-advisor reviews are the result of six months of evaluating all aspects of 32 robo-advisor platforms.
Social responsible investing (SRI) is the practice of investing in companies or sectors that considers environmental, social and corporate governance (ESG) criteria to generate long-term competitive financial returns and positive societal impact.
These types of investments include companies that are engaged in social justice, environmental sustainability, alternative energy, and clean technology efforts. For this category, we awarded platforms that provided users with a range of SRI investment choices and the ability to customize their own portfolio.
Our team of industry experts, led by Theresa W. Carey, conducted our reviews and developed this best-in-industry methodology for ranking robo-advisor platforms for investors at all levels. Click here to read our full methodology.