Competition is heating up in the robo-advice market as new players enter the space, acquisitions expand scale and account openings surge.
It’s only March and the robo-advice sector has already seen a lot of change this year. Goldman Sachs’ Marcus Invest and Stash’s Smart Portfolios entered the playing field. Betterment announced its acquisition of Wealthsimple Inc.'s U.S. book of business, while M1 Finance raised another $75 million in funding — and got caught up in a Twitter spat with Wealthfront. Social Finance Inc. announced it’s going public with a blank-check company that values the upstart at around $8.7 billion.
However, when it comes to the top five robo-advisers by assets under management for investment accounts, the largest robos have remained consistent over the past few years.
Vanguard Personal Advisor Services reigns king, with an AUM clocking in at $212 billion as of year end 2020, largely due to its stellar hybrid approach with human advisers in the mix, according to Backend Benchmarking’s Robo Report covering the fourth quarter of 2020.
In fact, Vanguard won best robo-adviser for complex financial planning needs, according to the report. Vanguard’s Personal Advisor Services includes planning with a live adviser for only a 0.30% annual management fee.
“In previous rankings, we have highlighted a lower quality online experience at Vanguard than many of the independent robos,” said Backend Benchmarking’s head of research David Goldstone in the report. “Following the introduction of Vanguard’s digital-only offering, Digital Advisor, Vanguard has also revamped the online experience.”
Charles Schwab & Co.’s digitally advised assets rank second in AUM size, with $57.9 billion in managed assets. The offering gives investors a choice between Schwab Intelligent Portfolios, which does not have an advisory fee with a $5,000 minimum, and Portfolios Premium, which is subscription based with a minimum of $25,000.
Schwab’s introduction of a free financial planning tool, Schwab Plan, to all users with a Schwab brokerage account earned the firm an honorable mention for best digital financial planning robo, according to the report.
Rounding out the top five rankings by AUM are independent robo-advisers Betterment, Personal Capital and Wealthfront.
Betterment, which also ranked as winner for best robo-adviser for first-time investors, manages about $18.1 billion in assets. Investors can get started with Betterment with any size initial investment for a low 0.25% annual advisory fee, making it an accessible option, according to the report.
When it comes to other features, Betterment also offers Socially Responsible Investing, income-focused investing, and smart-beta investing — strategies that may be more interesting to fresh investors still navigating what makes sense for them, Goldstone said.
“With no investment minimum, competitive fees, clear financial planning tools, an ability to upgrade for access to CFPs, and different options to explore, Betterment is our top choice for the first-time investor,” he said.
Coming in fourth place by AUM size is Personal Capital, which manages $16.5 billion in assets. Personal Capital is the runner-up for the best robo for digital financial planning, right behind Betterment. The Robo Report cites Personal Capital’s series of individual tools for specific insights that makes it stand out from competitors.
For example, there are tools for analyzing adviser fees, debt management, and a Portfolio Checkup. “These tools tend to be visual, intuitively designed, detailed, and free,” Goldstone said. “Personal Capital also stands out for its inclusion of debt management planning, an area many robos have not yet integrated.”
Wealthfront closed out the top five with $15.85 billion in AUM, but took home the win for best robo for digital financial planning — outpacing Schwab, according to the report.
Wealthfront won first place for this category due to its innovative features and sleek user interface. Without having to sign up for any paid service, users see their linked accounts in one place, their overall plan’s expected future value, and Wealthfront instantly calculates the user’s savings rate.
From there, the user can model a variety of planning goals, including saving for college or buying a home. As each scenario is added to the plan, users check in to their overall goal and see its impact.
“When looking at some of the innovative components that Wealthfront boasts, the first is the new Autopilot feature,” Goldstone said. “Autopilot allows the user to set a specific amount of cash to be used as the liquidity in the plan, while excess cash is recommended to be moved to a Wealthfront investment account.”
After a two-year period of inversion, the muni yield curve is back in a more natural position – and poised to create opportunities for long-term investors.
Meanwhile, an experienced Connecticut advisor has cut ties with Edelman Financial Engines, and Raymond James' independent division welcomes a Washington-based duo.
Osaic has now paid $17.2 million to settle claims involving former clients of Jim Walesa.
Oregon-based Eagle Wealth Management and Idaho-based West Oak Capital give Mercer 11 acquisitions in 2025, matching last year's total. “We think there's a great opportunity in the Pacific Northwest,” Mercer's Martine Lellis told InvestmentNews.
Osaic-owned CW Advisors has added more than $500 million to reach $14.5 billion in AUM, while Apella's latest deal brings more than $1 billion in new client assets.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
