What is a robo-advisor, and why are people using them in 2025?
If you want low-cost investing without managing it all yourself, robo-advisors offer a simple solution. These are automated platforms that build and manage an investment portfolio for you, based on your goals and risk tolerance. They use algorithms to handle things like asset allocation, rebalancing, and—in some cases—tax strategies. You don’t have to pick stocks or rebalance funds manually. It’s hands-off investing with lower fees than traditional advisors.
Rebalancing means automatically adjusting your portfolio back to its target mix of investments. For example, if stocks grow and start to dominate your portfolio, the robo-advisor will sell some and buy more bonds to keep the balance aligned with your goals. Most platforms do this daily or whenever your allocations drift significantly.
This article compares three of the most popular robo-advisors in 2025: Wealthfront, Betterment, and SoFi. You’ll get a breakdown of fees, features, and where each one shines—or falls short. Remember that while robo-advisors charge management fees, you’ll also incur the underlying expense ratios of the ETFs or mutual funds within your portfolio, though these are typically very low. For a broader overview of how these platforms fit into the digital investing sphere, consider our Best Investing Apps for Beginners in 2025 guide.
A Quick Reader Scenario
Let’s say you’re 35, have $15,000 saved, and want to grow it without micromanaging. You’re not looking to beat the market—you just want a steady path to retirement. In that case, a robo-advisor is a solid fit. It’ll allocate your funds into a diversified portfolio, rebalance it as markets shift, and keep you on track without the heavy lifting. This makes them a strong contender among the Best Fintech Tools for Passive Investing in 2025.
Wealthfront
Wealthfront charges a 0.25% annual advisory fee, with a $500 minimum to start. It includes automated tax-loss harvesting for all taxable accounts, which can help offset your capital gains. The interface is clean, and the automation tools are excellent.
Where it stands out:
- Automated tax strategies are robust, helping to maximize after-tax returns.
- Strong college savings and retirement planning tools.
- Smart financial advice via the Path tool, offering projections and recommendations.
- Daily rebalancing to maintain your target allocation.
Drawbacks:
- No direct access to a human financial advisor for personalized advice.
- The $500 minimum is higher than some other entry-level robo-advisors.
Best if: You’re comfortable with automation and prioritize advanced tax efficiency for your investments.
Betterment
Betterment keeps the barrier to entry low—there’s no account minimum to open an account, though a $10 minimum is needed to start investing. It offers two pricing tiers:
- Digital: 0.25% annually (or $4/month for balances under $20,000 or if you don’t meet deposit minimums).
- Premium: 0.65% annually with unlimited human advisor access for accounts with at least $100,000.
Where it stands out:
- Low entry cost for beginners, making it highly accessible.
- Comprehensive goal-based investing features and integrated cash accounts.
- Optional access to real financial planners for accounts meeting the Premium threshold.
- Regular rebalancing triggered by market drift, keeping your portfolio on target.
Drawbacks:
- The $4 monthly fee on small balances (under $20,000 without recurring deposits) can significantly eat into gains.
- The Premium plan’s 0.65% fee is notably more expensive than competitors’ base offerings.
Best if: You want flexibility to grow from DIY automated investing to having optional human advice as your assets increase.
SoFi Robo Investing
SoFi now charges a 0.25% management fee (as of late 2024). The minimum investment is just $50. Unlike some others, its automated investing service includes one complimentary meeting with a Certified Financial Planner (CFP) and connects tightly with SoFi’s broader suite of banking tools.
Where it stands out:
- Easy onboarding process and a very low starting amount of $50.
- Includes a valuable one-on-one session with a CFP, a feature often costing extra elsewhere.
- Option to invest in classic, sustainable (ESG), or alternative portfolios, offering some customizability.
- Automatic rebalancing to stay aligned with your goals.
Drawbacks:
- Does not offer tax-loss harvesting for its automated investing accounts.
- Fewer in-depth customization tools or advanced investment options compared to rivals.
Best if: You already use SoFi for banking or lending and want all your financial services in one integrated ecosystem, or you value an initial CFP consultation.
Robo-Advisor Summary Table
*Betterment’s $4 monthly fee applies for balances under $20,000 unless recurring deposits of $250/month or more are set up.
Are Robo-Advisors Safe?
All three platforms are registered investment advisors and use robust encryption to protect your data. Your assets are typically held with a third-party custodian like Apex Clearing or Pershing. These accounts are SIPC (Securities Investor Protection Corporation) insured up to $500,000, which protects you if the platform fails, but not if your investments drop in value due to market fluctuations. For a broader perspective on safeguarding your assets, consider exploring general Best Apps for Tracking Your Net Worth which often include security features.
People Also Ask (PAA)
Are robo-advisors worth it in 2025? Yes, if you want low fees, automated rebalancing, and easy access to diversified portfolios. They’re ideal for hands-off investors focused on long-term growth rather than active trading.
Can robo-advisors beat the market? Most are built for long-term, diversified investing—not for beating the market. Their primary goal is consistency, cost efficiency, and tracking broad market benchmarks over time.
Is Betterment or Wealthfront better? It depends on your priorities. Wealthfront generally has stronger automated tax tools and a higher initial minimum. Betterment offers a lower entry point and the flexibility of human advisor access at its Premium tier.
Are there free robo-advisors? Yes, some platforms offer no-fee services, though they often have specific conditions. For example, Schwab Intelligent Portfolios offers $0 advisory fees but requires a $5,000 minimum and maintains a notable cash allocation. Fidelity Go offers no advisory fees for accounts under $25,000, with a 0.35% fee for larger balances.
Alternatives to Robo-Advisors
If you want more control but still appreciate automation, consider hybrid models. This is where you might look for The Best Tools for Managing Multiple Investment Accounts if you have complex needs.
- Fidelity Go: Offers no advisory fees for accounts under $25,000, charging 0.35% for balances of $25,000 and over. It invests in Fidelity’s proprietary Flex mutual funds, which have zero expense ratios, further reducing costs for investors. It also provides unlimited 1-on-1 coaching for accounts over $25,000, which is a valuable feature for its fee structure.
- Vanguard Digital Advisor: Known for its extremely low all-in cost, typically around 0.15% annually (after a 90-day fee waiver), including underlying fund expenses. It requires just a $100 minimum to start, making Vanguard’s renowned low-cost index funds accessible for automated, long-term passive investing.
- Schwab Intelligent Portfolios: This stands out for charging $0 in advisory fees for its base service. It requires a $5,000 minimum investment and notably maintains a higher cash allocation than many competitors (6-30% of your portfolio, on average), which is something to consider for potential returns. For those seeking human guidance, Schwab Intelligent Portfolios Premium starts at a $25,000 minimum and has a one-time $300 planning fee plus a $30 monthly subscription. This offers a different approach than what you might find with typical Best Dividend Trackers and Portfolio Management Tools.
Choosing What Works for You
Pick the robo-advisor that matches your goals, not just the lowest fee. If you’re just starting out, Betterment or SoFi will get you moving fast. If you want advanced tax efficiency and automated features, Wealthfront is hard to beat. For those who want a deeper plan or more hands-on help, hybrid models like Fidelity Go, Vanguard Digital Advisor, or Schwab Intelligent Portfolios make sense. You can also compare these to broader categories in Top 10 Fintech Tools Every Investor Should Know.
Most robo-advisors aim to match long-term market returns—not beat them—so your performance will usually reflect a well-balanced benchmark portfolio. The underlying ETF expense ratios also contribute to your overall cost, even if they aren’t explicit management fees.
The key is clarity. Choose a tool that keeps your investing simple and focused—not one that overwhelms you with features you won’t use. For traders seeking more active control, exploring 7 Must-Have Apps for Day Traders or the Best Stock Screeners for Retail Investors might be more suitable.
Related: Fintech & Investing Tools in 2025: The Ultimate Guide to Building Wealth with Technology
