Are Robo-Advisors Still Worth It?

Robo-advisors haven’t replaced traditional advisors as many expected when they emerged in the early 2010s. Instead, they have widened the availability of advice and influenced how all firms serve clients.

Automated investing now serves as the first stop for many investors on their financial journey. Investors can start growing their assets with a robo-advisor and move on to a traditional advisor once their needs become too complicated for the algorithm. Instead of usurping the incumbents, many robo-advisors adopt a hybrid approach and offer access to a human advisor in the higher-touch tiers of their services.

In our 2025 Robo-Advisor Report, we evaluate 16 major digital advice providers and explore the aspects that help differentiate them. Here’s what we uncovered about where the robo-advice industry stands today.

What Differentiates Robo-Advisors?

Pricing

Fees are an ever-important consideration: The less you pay, the more you keep. The median robo-advisor fee stands at 0.25% in 2024, much lower than what traditional advisors typically charge. Some programs charge a flat monthly or annual fee, such as Titan or the premium version of Schwab Intelligent Portfolio. This translates to a lower percentage fee for investors with larger balances, but it can be substantially more expensive for smaller accounts.

While advisory fees remained stable across most robo-advisors in the past year, some programs have hiked their prices. Betterment Premium raised its fee by 25 basis points to 0.65%, though the new offer is still competitive given the certified financial planner access and additional services provided. SoFi’s formerly free program now costs 0.25% and comes with an overhauled asset allocation from its BlackRock partnership. The fee trend is unsurprising given the consolidation of the industry. As the robo-advisor space matures, firms are trading off price competition in favor of adding or maintaining attractive program features.

Beyond the sticker price, investors should also keep an eye on what they’re paying for inside the portfolios and whether their providers are making money off their assets in ways beyond their headline fees. Yields on uninvested cash are a common pointer. Providers can earn a spread by funneling assets into in-house cash accounts without sharing the benefits with investors. Robo-advisors can also benefit from putting clients’ assets in their in-house funds, which is acceptable if these are sound strategies with reasonable fees.

Portfolio Construction

Most robo-advisors offer a diversified portfolio made up of low-cost, typically passive mutual funds or exchange-traded funds with automatic balancing. There is no single best way to build a portfolio, but investors should look for programs with well-researched, long-term investment strategies and robust investment staff.

Glide paths are a differentiating feature. While most robo-advisors offer static asset allocation, Betterment and Vanguard offer glide paths that shift clients from aggressive allocations to conservative allocations as they approach their goals, similar to a target-date fund.

Bigger isn’t necessarily better when it comes to portfolio size. Many robo-advisors target younger investors with smaller accounts; thus, simple and low-cost portfolios trump exhaustive asset-class exposure. Investors who have amassed wealth in taxable accounts, however, may prefer a little more complexity, such as Betterment’s practice of subdividing broad asset classes into smaller buckets, such as large-, mid-, and small-cap US stocks, to better harvest tax losses.

Some programs offer a wide variety of unique asset classes, but investors should focus on whether they fit in the portfolio. Sizable stakes in volatile securities such as cryptocurrencies or emerging-markets bonds, for instance, can hurt more than they diversify if investors don’t have a long enough investment horizon. Most robo-advisor programs offer municipal bonds for taxable accounts, which can lower taxable distributions but might not be ideal for every tax bracket.

Financial-Planning Services

Price and portfolio construction are the most important differences among robo-advisors, but breadth of services also distinguishes the best.

Some robo-advisors offer account aggregation, or digitally linking to assets held outside the robo-advisor. By providing outside account information, customers allow programs to pull in updated values and asset allocations for all their accounts, not just those at the robo-advisor. This can help them offer more holistic and accurate advice, though currently few robo-advisor programs consider external assets when planning for a client’s goal.

Retirement drawdown advice is another important yet rare feature. While robo-advisors’ target clientele tends to be younger, this will become more important as more clients approach their retirement age or goal. Currently, only Vanguard and Schwab offer built-in services to help investors figure out how to spend their assets in retirement.

Some robo-advisors bridge this gap by offering access to CFPs. This hybrid approach, often available in the more-expensive service levels, takes care of aspects that the firm cannot automate. Clients with larger balances can access a CFP in most premium robo-advisor programs, who can help them sort out anything from retirement withdrawals to estate and tax planning. SoFi clients can consult a CFP free of charge in its cheap basic tier.

Are Robo-Advisors Worth It for You?

The semitailored approach of robo-advisors can be a good fit for early- to midcareer investors who want to further their investment strategy but don’t have the means, need, or interest to engage a traditional financial advisor.

These investors would benefit from robo-advisors that offer:

• Lower fees. Perhaps the greatest appeal of robo-advisors is their substantially lower price tag for advice. Of the 16 providers we reviewed, the median advisory fee was 0.25%. Financial advisors tend to have advisory fees around 4 times that amount—about 1%—which is a greater burden on individuals investing less money.
• Lower account minimums. These substantially reduce barriers to entry to investing. Four of the 16 robo-advisor platforms we reviewed have an account minimum of $50 or under for their most basic services, and nearly every other provider has a minimum of $5,000 or less. On the other hand, research from Cerulli Associates shows that only 7% of financial advisors focus on serving individuals who invest less than $100,000.
• Strategies to minimize taxes. Several robo-advisors we reviewed include the option to sell underperforming investments at a loss to offset taxes owed from other, higher-performing securities. This sophisticated strategy, known as tax-loss harvesting, speaks to the breadth of services and tax efficiency that these providers can offer at a lower price.

The Drawbacks of Robo-Investing

If you’re still learning the basics about investing and are intimidated by making decisions independently (and looking to invest a good amount), it might be smart to work with a human advisor who can take the lead and guide you through the ins and outs of their decision-making.

Investors with larger, more complex portfolios could also benefit from the support of a traditional financial advisor. That’s especially true for complex matters like insurance and risk management, estate planning, and retirement drawdown strategies.

Other factors could also complicate a portfolio. For instance, if you have a family member with a disability, you could likely benefit from one-on-one guidance around a special-needs trust or ABLE account.

Not All Robo-Advisors Are Created Equal

While robo-advisors have not upended the financial advice industry, they have certainly widened its market. These services opened the door for a market of newer investors with less complicated financial needs and less time to dedicate to DIY solutions.

But not all robo-advisors are created equal. Investors still need to do some due diligence on what programs might work best. A reasonable price tag and a sensibly constructed portfolio are good starting points, and additional features can also be helpful depending on the investor’s goals and circumstances.