Robo Advisor Rating Methodology

Robo Advisor Rating Methodology

We believe in transparency and objectivity, this is why we want you to know how we rate robo advisors

Factor Weightings

Robo advisors offer different features depending on the type of customers they want to serve. Some robo advisors are entirely automated, whereas others offer hybrid models to provide investment advice (i.e., a combination of human and algorithmic automated advice).

The evaluation methodology for robo advisors takes into consideration nine different factors. These factors are then weighted depending on what we consider essential for the adequate functionality of a set robo advisor service.

  • Account minimum (Weight 10%)
  • Account fees (Weight 10%)
  • Portfolio construction (Weight 20%)
  • Types of accounts supported (Weight 15%)
  • Customer support (Weight 5%)
  • Features and tools (Weight 15%)
  • Security (Weight 10%)
  • Ease of use (Weight 10%)
  • Educational resources (Weight 5%)

Account Minimum (Weight 10%)

This refers to the minimum account balance required to open an account. The less amount of money required to open an account will have a higher rating, whereas a high amount of money required to open an account will have a lower rating.

Account Fees (Weight 10%)

Account fees refer to the management fees required to manage a user’s account. In general, the higher the fees, the lower the rating for this factor will be. These fees include but are not limited to;

  • Annual management fees
  • Incidental fees: statement fees, closure fees, transfer fees, etc.
  • Expense ratios of the fund used to construct the portfolios

Portfolio Construction (Weight 20%)

This refers to the types of assets a robo advisor uses to build the portfolio of its users. Most robo advisors use ETFs to construct a portfolio, so to rate the best robo advisor in this category, we also take into consideration what other assets are available to investors to build a portfolio, such as:

  • Stocks
  • Cryptocurrencies
  • Mutual Funds
  • Bonds and other fixed income assets
  • REITs
  • Proprietary and non-proprietary ETFs and mutual funds
  • Specialty assets to build Socially Responsible Investing (SRI) portfolios

In general, the more options a robo advisor offers to its users, the better the rating for this factor will be.

Types of Accounts Supported (Weight 15%)

This factor refers to the types of accounts available to investors for their investments. The more accounts supported, the higher the rating for this factor will be. The robo advisor that offers the following accounts will have the highest rating;

  • Taxable
  • Joint
  • Traditional IRA
  • Roth IRA
  • 401(k)
  • 529
  • Trusts
  • Custodial

Customer Support (Weight 5%)

This factor takes into consideration how responsive a service provider is when it comes to supporting its customers. A robo advisor that offers the following support will have the highest rating:

  • Live chat for new and existing clients
  • 24/7 phone support
  • Support via email
  • Help center
  • Contact form
  • Ability to speak to a human advisor and representative
  • Website and mobile apps usability

Features and Tools (Weight 15%)

This factor refers to the added features and tools a robo advisor makes available to its customer. The more features a robo advisor offer the higher the ratings will be. Some of the features and tools we consider include:

  • Tax loss harvesting
  • Goal planning tools
  • Access to a human advisor a no additional cost
  • Customizability of portfolios
  • Retirement planning tools
  • Added services (i.e., banking, self-directed investing, fractional shares, etc.)
  • Frequency of automated portfolio rebalancing
  • Reporting and analysis

Security (Weight 10%)

When it comes to security, we take into consideration a number of factors. The robo advisor that offers the following security features will have the highest ratings:

  • Protection of customer data
  • Encryption for robo advisor for web and mobile platforms 
  • Two-factor authentication for web and mobile platforms
  • SIPC insurance

Ease of Use (Weight 10%)

This refers to how easy a platform is to use for beginner investors. The easier a platform is to use, the higher the rating for this factor will be. We take into consideration the following factors:

  • Availability of web applications
  • Availability of mobile applications (iOS and Android apps)
  • Overall usability and ease of use of user interface of all portals

Educational Resources (Weight 5%)

This factor refers to the number and quality of resources a robo advisor offer to its users to keep them up to date, informed, and educated about their investments. As we stated in our editorial guidelines, people should not need a finance degree to make smart money decisions, so the robo advisors that offer more education resources to their customers will have the highest rating in this category. We take into consideration the following:

  • Access to webinars and live sessions to explain how their service works
  • Access to high-quality videos explaining how the services work and the options available to customers 
  • Access to tutorials explaining how the service works
  • Access to high-quality articles
  • Access to frequently asked questions

Product Updates

Robo advisor reviews are performed annually; however, our team of writers and editors will make updates to the content throughout the year and as necessary to keep our reviews up to date. We also maintain contact with service and product providers to keep the information as current as possible.

Review Team

Our editorial team oversees all product reviews and follows strict editorial guidelines to ensure we remain objective with our reviews. You can learn more about our editorial team on our about us page and learn how we make money because we like being transparent with our readers.

We always welcome feedback. Contact us at [email protected].