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5 Active Management Robo-Advisors to Beat the Market

Last Updated on October 10, 2022 by Barbara A. Friedberg, MBA, MS

Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t  believe is valuable

Active Management Robo-Advisors, the Next Digital Investment Wave

Active investment advisors attempt to outperform the returns of a passively managed index fund investment approach. One of the most appealing features of the robo-advisor is the fact that you can get the benefits of professional financial management with lower fees than a traditional financial professional. In contrast, a complaint of robo-advisors is that most offer only passively managed, index fund portfolios. But that isn’t true!

Robo-advisors began as a way to get a basic, passively managed index fund investment portfolio for a low fee. But, as market volatility increases, active investment advisors and robo-advisors may be worth consideration.

A newer type of actively managed robo advisor includes the T Rowe Price Active Portfolio Plus, the Titan invest app, the Merrill Edge robo and several others. As market declines persist, the demand for active investment advisors may increase.

And, as robo-advisors expand their services, you’ll notice that one of the earliest robo-advisors, Betterment offers smart beta portfolios, in addition to the original passive investment model. And Wealthfront has added the hundreds of ETFs which users can add to customize the existing passive portfolios, or to create new ones.

What the active robo-advisor looks like depends on the platform you choose, and you should take a look at a few different options before choosing your digital advisor. Some active management strategies might help time the market as well as provide financial advisors..

Overall, the goal of these actively managed robo-advisors is to beat the market.


*Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link.

What Are the Benefits of an Active Investments Advisor?

There are many benefits to robo-advisors in general, and they’re worth looking into before you make any decisions.

Robo-advisors with active management are unique in some ways, however. Three benefits of actively managed robo-advisors are:

1. Timing the Market

Market timing is the practice of buying and selling securities based on economic trends, corporate information, and market factors,” according to InvestingAnswers.

The typical robo-advisor is great at matching market returns. And that’s quite good as historical stock market returns are approximately 9% with bonds near 5%. In fact, many active investment strategies fail to beat the market averages.

Yet active robo-advisors strive to best the market averages! And with newer and more sophisticated algorithms, it just might be possible.

Timing the market is in contrast with the typical “buy and hold” investment approach.

Timing the market strives to capture more of the increases and less of the declines in investment markets.

2. Emotional Support

An actively managed robo-advisor with a human component can also be a support in a fluctuating market. After all, a robot may not be able to empathize with your fears but a human advisor might be able to guide you away from an emotional (and bad) decision!

Sometimes you might just need some extra hand holding through a difficult time, when making a big investing decision, or when confronted with a drastic change in your life. While robo-advisors can guide you through these moments with pre-programed options, a human can personalize the decision-making process.

T.Rowe Price’s active plus portfolios combine active fund management with access to human financial consultants. This human plus actively managed investment option is currently available only for retirement accounts with a minimum value of $50,000.

3. Beat the Market

The investing landscape changes drastically, frequently, and rapidly. Active robo-advisor’s, regardless of the particular strategy have one goal – to beat the market.

Active robo-advisors, like their passive counterparts use a variety of strategies. Some offer human advisor access, others only email and phone contact. From Empower’s sector weighting investment style to Elm Partners value and momentum investment approach, there’s an active robo-advisor for any investor seeking to go beyond the market-matching index fund investment approach.

What Does an Active Management Robo-advisor Look Like?

Active management robo-advisors look slightly different depending on the platform.

active investing with a robo advisor

1. Empower (formerly Personal Capital) Advisors

Known for it’s free money and investment management tools, the paid Empower (formerly Personal Capital) Wealth Management platform is sensitive to changes in the economic climate.

Empower calls it’s investment management approach dynamic asset allocation. The platform creates your portfolio by incorporating your goals, age, risk tolerance level. But unlike passively managed robo-advisors, Empower adjusts your investments when you goals change or the market conditions evolve.

Every Empower Advisors client receives access to certified financial planner to help with investment and finance related advice.

The Empower investment strategy is unique. The Smart WeightingTM approach equal weights the market sectors as opposed to the typical method of market weighting. In other words, equal weight means that you have the same percentage invested in the major market sectors; communications, consumer cyclicals, consumer defense, energy, financial, health care, industrials, materials, technology and energy.

Empower claims that this approach better protects your investments from losses in a market decline and might lead to higher returns than the typical passive index fund approach of other robo-advisors.

Regardless of whether you sign up for Empower (formerly Personal Capital) Advisors digital financial management platform, they offer superb FREE investment management analysis tools, including retirement planning. I use them myself!

2. Titan Invest App

Titan Invest is a robo-advisor that’s allows those of all income levels to invest like a big-time hedge fund manager. The app strives to mirror the best hedge fund stock picks and outperform the market returns.

The Titan investment strategy invests each investor’s money in two ways. The first is the core 20 stock investment portfolio which includes the top long-term stocks of the most successful hedge funds. The second is a hedge security which aims to hedge against large losses in your Titan portfolio during market downturns.

Titan Invest might be a good fit if you’re aiming to beat the market over the long term (i.e. many years). One of Titan’s main objectives is to deliver outstanding long-term investment returns (net of fees) in excess of the stock market average.

Titan offers various investment strategies and recently added Cathy Wood’s ARK venture capital fund, along with cryptocurrency, private equity and real estate opportunities.

3. Alpha Architect

Alpha Architect has a variety of research-based, actively managed investment solutions. Although not officially a robo-advisor, the firm does offer active management through ETFs and separately managed accounts, using active rules and research-based investment management. A Alpha Architect started out working only with extremely wealthy clients but designed actively managed robo-advisor solutions in 2016 to help them reach more clients.

In order to keep costs low for these investors, Alpha Architect created a robo-advisor that would play up the strengths of the autonomous, set-it-and-forget-it robo-advisor while simultaneously offering additional human support to complement these strengths.

DIYers can create their own active robo-advisor with M1 Finance.

Alpha Architect relies heavily in their investment research to offer active management investment solutions for those seeking to beat the market returns.

They also believe in the ability to beat the market through taking advantage of a combination of the robo-advisor’s automatic allocations and a human financial planner’s ability to minimize loss.

4. T.Rowe Price ActivePlus Portfolios

The T.Rowe Price active robo-advisor has 10 model portfolios, for a range of goals. The platform invests in eight to 13 T. Rowe Price actively managed funds that are rebalanced and aligned with your investment goals. Like a traditional robo-advisor, the process begins with a detailed questionnaire to understand your goals and risk tolerance.

The underlying funds are actively managed and the only fees you pay are the underlying management expense ratios of the individual funds. The T. Rowe Price ActivePlus Portfolios are currently available for retirement accounts valued at $50,000 or more.

Looking for help choosing a robo-advisor? Check out our Robo-Advisor Selection Wizard.

5. Merrill Edge Guided Investing (MEGI)

Back of America’s Merrill Lynch offers their own version of digital investment robo-advisor. Merrill Edge Guided Investing.

This style of investment management has the goal of outperforming the general stock market.

Merrill Edge Guided Investing uses a mix of proprietary software and human guided investment strategies. They do make use of low cost index-based ETFs, which are passive by their very nature. But those funds is managed on an active basis.

The Merrill robo-advisor strategy is driven by their investment management committee, Managed Account Advisors, LLC, which is an affiliate of Merrill Lynch.

MEGI uses what it refers to as Tactical Strategic Shifts. Asset allocations are established when your portfolio is first created, but management will make changes based on shifts in the financial markets. For example, if management believes emerging markets will outperform US based stocks, they’ll increase exposure to emerging markets, while reducing the position in US stocks.

Learn: 6 Best Robo-Advisor Investing Apps – For Growing Your Wealth

This style of investment management has the goal of outperforming the general stock market.

6. Elm Partners

This active management advisor was founded by former hedge fund manager, Victor Haghani as a strategy to manage his families wealth. The strategy combining value and momentum investment strategies became popular among Haghani’s friends and relatives and emerged into a robo-advisor solution for high net worth investors.

With a miniscule 0.12% management fee the Elm Partners robo-advisor is managed with a dynamic global asset allocation. The investment approach adjusts between value and momentum strategies, depending upon the market climate. The portfolio increases allocation to undervalued and momentum asset classes and decreases exposure to highly valued, low-momentum asset classes. Elm partners doesn’t employ leverage, shorting or stock-picking and implements their strategy by investing in low fee exchange traded funds.

Read the Elm Review

Should I Choose an Active Management Robo-Advisor?

Titan Invest, Empower Advisors, Alpha Architect, T.Rowe Price ActivePlus Portfolios, Elm Partners and Merrill Edge Guided Investing are only a few of the actively managed robo-advisors on the market today, and the numbers are likely to keep growing. In the future, it might be difficult to not choose a robo-advisor with active management!

With the frequent access to human advisors, the actively managed robo-advisor is a low cost strategy to attempt to beat the market.

Although you might not want your entire investment portfolio in an active management robo-advisor, it’s nice to be able to use this approach for a portion of your investments. You can attempt to beat the market, for a lower fee than the average 1.02% of AUM charged by financial advisors.

Since the market fluctuates and changes so frequently, investors are looking for ways to beat the market and make the best trades at the best possible moment. By combining robo-advisors with active management strategies, these actively managed robo-advisors are offering a service that will likely only increase by popular demand.


Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t  believe is valuable.

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Barbara A. Friedberg, MBA, MS

Barbara Friedberg, MBA, MS brings decades of finance and investing experience to Robo-advisor Pros. She is a former investment portfolio manager and taught Finance and Investments at several universities. Barbara Friedberg's published work includes Personal Finance; An Encyclopedia of Modern Money Management (Greenwood Press), Invest and Beat the Pros-Create and Manage a Successful Investment Portfolio and How to Get Rich; Without Winning the Lottery. Follow her on twitter