Choosing The Best Robo Advisors – An Interview with the Top Robo Advisor Expert, Barbara Friedberg


Choosing The Best Robo Advisors – An Interview with the Top Robo Advisor Expert, Barbara Friedberg

Is a Robo-Advisor Right for Me?

Type “robo-advisor” into the Google search box and over 9 million results populate. While ten years ago, a robo-advisor was barely a concept. Actually, the entire financial management industry has been disrupted during the past decade by the best robo-advisors.

With the popularity of low fee index funds stealing market share from higher-fee actively managed funds, investors benefit with lower investment fees. Commissions have dropped to just a few bucks per trade, with some apps offering free trading. Fintech robo-advisors are another component of the low fee investing landscape.

While investment management is a very old profession, digital investment management is a relatively new invention. Learn about digital investing and find out if a robo-advisor is right for you.

What is a robo-advisor?

A robo-advisor is a version of investment management that uses computer programs, or algorithms to create optimal portfolios for investors.

Most robo-advisors’ algorithms are based upon modern portfolio theory, a concept that strives to offer the highest returns for the least amount of risk.

The portfolios or group of investments created by a robo-advisor are tailored to the user’s time-frame, goals, risk tolerance, age, assets and other criteria. Some robo-advisors offer financial advisor access, while others are completely digital.

The main draw of robo-advisors is that they offer investment management for fees typically lower than those of financial planners.

Are robo-advisors all alike?

There is a tremendous distinction within the automated investing or robo-advisor categories.

Robo-advisors distinguish themselves by their fees and offerings. In particular, following is a list of distinctions you’ll find within the class of robo-advisory investment managers.

Robo-advisors vary based upon:

  • Fee structure
  • Tax strategies such as availability of tax-loss harvesting
  • Access to financial advisors
  • Types of investments from individual stocks to various types of investment funds
  • Investment strategies including smart beta, socially responsible, passive index fund investing and/or active management
  • Target market-some robo-advisors are geared toward newbies while others court higher net worth, sophisticated investors
  • Minimum investment amount
  • Rebalancing frequency
  • Client services and contact hours
  • Available account types
  • And more

Who needs a robo-advisor?

A robo-advisor is ideal for the investor who wants professional management for a lower management fee than that of a typical financial planner. Robo-advisors are great for individuals who would like occasional access to financial advisors and the ability to pay for advice on an as-needed basis.

Both Betterment and Personal Capital robo-advisors offer financial advisory access. Yet, the Personal Capital investment management platform targets a wealthier clientele with a minimum of $100,000 to invest and includes financial advisor access for all clients. While Betterment has a basic digital level has a zero minimum, the $100,000 minimum premium level includes financial advisor access, similar to that of Personal Capital. Except, the lower-fee Betterment digital client can purchase financial planning packages that include limited meetings with a Certified Financial Planner.

So, it’s clear that even if you’re an investor who wants investing guidance, you can still use a robo-advisor. In fact, today many typical financial advisors are competing with robo-advisors by using computer algorithms to manage the investments while spending their time counseling their clientele.

For cost-conscious investors who can do without a financial planner, there are multiple robo-advisors that fit the bill. M1 Finance, Wealthfront and Betterment Digital all offer low or no fees to manage your investments. M1 Finance doesn’t charge management fees and is a convenient mix between DIY investing and a typical robo-advisor. While Wealthfront offers Path, a digital financial advisor that promises to replace your need for a human financial planner.

Any investor beginning investor on up to a moderately affluent individual can find a digital money manager that provides financial planning and investment management. The key is choosing the robo-advisor with the best combination of fees, minimums and services for you.

Who doesn’t need a robo-advisor?

If you’re a do-it-yourself investor and have enough time and knowledge to manage your own portfolio, then you don’t need a robo-advisor. This group includes the passive investor able to choose the appropriate percentages of each fund, to match her risk comfort and tolerance levels. If she can also rebalance back to the preferred asset allocation, then a robo-advisor is unnecessary.

If you have a complex financial situation and great wealth, you would probably prefer a full service financial manager. The firm that offers tax, estate, and sophisticated investment planning is usually best for these ultra-high net worth individuals.

Although, in some cases, for the cost conscious, even the uber-wealthy might be happy investing with a robo-advisor and paying accountants, and lawyers for additional guidance. In fact, Elm Partners is a well-respected robo-advisor for the wealthy, with a $300,000 minimum, that only charges .12% to manage your assets.

Actually, with such a wide variety of robo-advisors, there is probably an appropriate pick for almost any type of investor.

Which is the Best Robo-Advisor for Me?

Choosing a robo-advisor isn’t easy. There are online tools to help you choose a robo-advisor and narrow down your options. But, the preferred approach to determining the best robo-advisor for you is to figure out what you’re seeking in an investment manager.

Do a quick self-analysis before wading through the crowded robo-advisory pool.

For instance, if you want a free robo-advisor with zero investment management fees, there are several to choose from: WiseBanyan, M1 Finance, Schwab Intelligent Portfolios.

If you want a robo-advisor with financial planners, there’s another list including:

  • Ellevest
  • Personal Capital
  • Betterment
  • Wealthsimple
  • Vanguard
  • SigFig
  • TD Ameritrade Essential Portfolios
  • Vanguard Personal Advisor Services
  • And more

For the socially conscious investor, many robo’s are adding this investment approach. In fact, socially responsible investing is becoming so popular that it’s difficult to find a robo-advisor that doesn’t offer one.

Making the final robo-advisor decision is a personal one. There are many excellent platforms from which to choose. You’re best served choosing a robo-advisor that’s been around for a few years.

Ultimately, most robo-advisors are well-run, based upon sound financial principals and will manage your money for a reasonable fee. If you’ve been putting off investing or would like some low fee investment management, you’ll be well-served by letting a robo-advisor manage your assets.

Barbara A. Friedberg, MBA, MS is a veteran portfolio manager, expert investor, and former university finance instructor. She is author of Personal Finance; An Encyclopedia of Modern Money Management and several other books. Friedberg’s websites include Robo-Advisor and



In this weeks episode…

We interview veteran portfolio manager Barbara Friedberg to discover the best robo advisors you should consider for your portfolio. Barbara is an author, fintech consultant, and former university finance instructor. She is one of the foremost experts on robo advisor platforms.

She joins us today to talk about the essential details you need to know and how to differentiate each from their peers.

Tim Picciott, Andy Wang, Kirk, and Miranda joins us this week on our panel to discuss how robo-advisors are affecting the financial service industry.


Looking for a better way to invest? Consider Betterment.

It doesn’t cost much to start, and you get access to a portfolio built around your risk tolerance and your goals. Using Modern Portfolio Theory, pioneered by a Nobel laureate, Betterment can help you build wealth without getting caught up in the noise of the market.

Invest better with Betterment.


Today’s Guest, Barbara Friedberg:

Barbara A. Friedberg, MBA, MS is a veteran portfolio manager, fintech consultant, expert investor, author and former university finance instructor. She is CEO of Robo-Advisor, a robo-advisor review and information website. Her work is found on US News and World Report, InvestorPlace, and more.


Barbara Friedberg’s online presence: (free downloadable)


Social: Twitter @barbfriedberg, @roboadvisorpros and LinkedIn


Books referenced:

A Random Walk Down Wall Street- Malkiel

Elements of Investing – Malkiel and Ellis

Invest and Beat the Pros-Create and Manage a Successful Investment Portfolio

Personal Finance; An Encyclopedia of Modern Money Management (publisher, Greenwood Press)

How to Get Rich; Without Winning the Lottery


Today’s Panelists

Kirk Chisholm | Innovative Wealth

Tim Picciott | The Liberty Advisor

Andy Wang | Runnymede Capital Investments

Miranda Marquit | Planting Money Seed

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