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Why 'Free' Robo-Advisors Aren't Really Free

Hidden costs, cross-selling, and misleading marketing can be a problem.

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The advent and growth of the robo-advisor industry holds considerable promise for investors, including those of modest means. Whereas traditional advisors have historically underserved them, smaller investors can now easily be matched with curated, diversified portfolios run by computer algorithms after filling out a risk-tolerance questionnaire and detailing their investment goals, all for a fraction of what they might otherwise pay.

Alec Lucas does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.