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The Best Automated (Robo-Advisor) IRAs

Pick one of these automated, or robo-advisor, IRAs if you want to put your retirement savings on auto-pilot.

Key Takeaways

  • An automated IRA will create a portfolio for you and rebalance it over time, so you can just ‘set-it-and-forget-it’.
  • These accounts were pioneered by tech-driven “robo-advisors” like Betterment and Wealthfront, but are now offered by almost all of the large financial institutions like Fidelity, Schwab and others.
  • To use these accounts, you’ll generally pay an annual fee that’s expressed as a percentage of your assets, known as a “management fee” or an “advisory fee”. While some providers offer automated portfolios for free, most of the larger players will charge a management fee of 0.25-0.35% of your assets per year.-

The best automated IRAs

Open Accounton Betterment's website

Fees: 0.25%

Best if you want: An automated low-fee portfolio from the biggest independent provider of digital accounts. Betterment was a pioneer in providing "set-it-and-forget-it" portfolios for a low-fee.

Limitations: Not much ability to influence the portfolio they create for you.

Access to Human Advisor: Yes - you can buy a consultation ($199) or pay a higher annual fee (0.40%) for unlimited access on an ongoing basis.

Fidelity LogoOpen Accounton Fidelity's website

Fees: 0.35%

Best if you want: An automated portfolio from one of the biggest brands in retirement accounts with a well-developed customer support system.

Limitations: Your portfolio will mainly have Fidelity funds in it, but Fidelity's 0.35% fee now covers the cost of investing in those funds so you'll only pay one all-in fee.

Access to Human Advisor: Not at this time.

SoFi logoOpen Accounton SoFi's website

Fees: 0%

Best if you want: A zero-fee portfolio from a Milennial-focused brand with a range of other financial products like student loan refinancing and debit cards.

Limitations: Not much ability to influence the portfolio they create for you.

Access to Human Advisor: Yes - SoFi has certified financial professionals on staff that you'll get access to.

Open Accounton Wealthfront's website

Fees: 0.25%

Best if you want: A low-fee automated portfolio with a user interface that's simple, clean, and very easy to use.

Limitations: Not much ability to influence the portfolio they create for you.

Access to Human Advisor: Not at this time.

Open Accounton Ally's website

Fees: $0 to trade stocks and ETFs online

Best if you want: An easy-to-use trading account at a rapidly growing, digital-first institution.

Limitations: Ally has some great tools for traders (charts, watchlists, screeners) but a little less third-party research.

Access to Human Advisor: Good: market data and some third-party research on stocks (e.g. Morningstar, CFRA).

Open Accounton Vanguard's website

Fees: 0.30%

Best if you want: An automated portfolio managed by Vanguard, one of the leaders in providing low-cost investment products. Access to this service at Vanguard requires a higher minimum investment ($50,000) but comes with access to human financial advisors.

Limitations: Not as easy to use and poorer user experience than newer, digital-focused institutions.

Access to Human Advisor: Yes - you'll be assigned a full financial advisor to help manage your portfolio.

TD Ameritrade LogoOpen Accounton TD Ameritrade's website

Fees: 0.30%

Best if you want: An automated portfolio from a big provider of retirement accounts. Customers of TD Bank can also get some discounts on their IRA fees.

Limitations: The user experience isn't as intuitive as newer, digital-first institutions.

Access to Human Advisor: Only an initial consultation

Open Accounton Personal Capital's website

Fees: 0.89%

Best if you want: A higher-touch experience that combines a digital portfolio with regular access to financial advisors who can help with all your financial questions.

Limitations: Higher fees and higher account minimum, although it comes with higher-touch service.

Access to Human Advisor: Yes - you'll be assigned a full financial advisor to oversee your account and provide general advice.

Open Accounton Merrill Lynch's website

Fees: 0.45%

Best if you want: A simple automated porfolio from Merrill Lynch with potential fee discounts for existing Bank of America / Merrill Lynch customers.

Limitations: A platform that's not quite as easy-to-navigate as newer institutions.

Access to Human Advisor: Only if you have more than $20,000 to invest and are willing to pay a higher fee (0.85% p.a.).

Open Accounton E-Trade's website

Fees: 0.30%

Best if you want: An automated portfolio from a well-known broker and the ability to add socially-responsible ETFs to your portfolio.

Limitations: You'll be allocated into one of five portfolios which is a little less customized than other automated providers.

Access to Human Advisor: Good access to investment specialists if you contribute over $10,000.

Open Accounton Charles Schwab's website

Fees: 0%

Best if you want: A zero-fee portfolio from a well-recognized financial brand.

Limitations: Your portfolio will mainly have Schwab funds in it and Schwab keeps more of your money in cash than competitors which could impact your returns.

Access to Human Advisor: Only if you have more than $25,000 to invest, and for an extra fee of $30/month.

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An “automated” or “digitally managed” IRA uses technology to select the right investments for you and digitally rebalances them over time. A key advantage of these automated IRAs is that they make investing decisions for you. This makes them a good fit for people who want to outsource their investing decisions or don’t feel qualified to make their own trades. By using technology to pick investments, not humans, these automated IRAs are available at low-fees and now collectively manage billions of dollars assets. They’re offered both by younger, ‘fintech’ companies and more established financial institutions.

Most automated IRAs involve a similar process:

  1. You open an account with one of these companies online – this usually takes minutes.
  2. You answer 5-10 questions about yourself, usually including your age, net worth, and attitude towards risk (this is often known as a “risk tolerance questionnaire”).
  3. They use this information to propose a diversified portfolio for you. That portfolio usually contains low-cost exchange traded funds from providers like Vanguard, BlackRock, and iShares.
  4. These ETFs are a low-cost way to get access to specific asset classes, like US and international stocks, emerging market stocks, and bonds. Your specific mix of ETFs depends on what your ‘risk level’ appears to be. Generally a higher risk-tolerance will mean more stocks (equities) and a lower one will mean more bonds (fixed income).
  5. You fund your account, in this case by transferring the assets previously in your 401(k).
  6. Once your account is funded the IRA provider will purchase the right investments to create your portfolio.
  7. They monitor your portfolio over time and automatically rebalance it so it remains appropriately diversified.

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