7 Best Robo-Advisors for Millennials
Why 20 to 30 Year Olds Should Invest With a Robo-Advisor NOW!
By staff columnist, Alexandra Deluise
As much flack as they’re getting for their breakfast choices (avocado toast, anyone?), millennial’s are much better with money than they get credit for. In fact, millennial’s might need to be even more aware of where their money goes than previous generations. And that’s why investment companies are flooding the market with robo-advisors for millennials. We winnowed the growing list of digital investment apps to these 7 best robo-advisors for millennials.
Yet, millennial’s are up against a few hurdles to financial success including increasing tuition and inflation rates along with Social Security longevity worries.
Sure, a lot of millennials are drowning in student loan debt—but it’s not all bad news.
Millennials are making smart choices when it comes to investing, and they can make meaningful contributions toward retirement! In fact, a robo-advisor for millennials might be just the thing to help with these long-term (or even short-term) goals.
Millennial Investing Sensibilities: What’s Important?
Before moving on to specific robo-advisors for millennials, it’s helpful to understand what unique needs millennials are bringing to the investing table. Millennials are hard to classify, because the generation is at different stages in the career process. However, the general consensus is that there are 4 things we need to know about millennials and their financial decisions.
1. Millennials make financial decisions based on their values.
A robo-advisor for millennials would need to be designed with this important factor in mind. Millennials want to put their money where their values lie. Investment options that support this preference might include robo-advisors with ethical investment options in sustainable or developing companies, or allow customized and diverse portfolios.
2. Millennials tend to work a myriad of job types.
With the gig economy in full swing, many millennials make money from untraditional jobs. Still others with more traditional jobs may not receive the same retirement benefits as their baby boomer parents.
A robo-advisor for millennials would help fill in the gaps that many millennials notice in their retirement options.
3. Millennials are constantly on the go.
No banker’s hours here. Technology is embedded in the millennial life and is helpful in getting things done around unconventional work schedules.
Millennials need financial services that match their 24-7 lifestyle. Robo-advisors are great for this need; they are available after that 2am bar shift or before the early-morning board meeting.
4. Millennials do it themselves.
With the help of Pinterest and HGTV, more and more millennials are DIY-ing it up. Sure, part of this comes from the satisfaction doing something yourself brings. The other part is out of necessity: DIY tends to be cheaper than hiring help, and robo-advisors are no exception.
What Makes a Good Robo-Advisor for Millennials?
Robo-advisors are great investment tools for most people, but choosing a specific robo-advisor for millennials must to meet the needs mentioned above and offer customizable, flexible, readily-available options that allow millennials to invest based on their values.
Top 7 Robo-advisors for Millennials for Investing
Betterment has no minimum investment amount, which makes it appealing for millennials who want to start investing but are short on extra cash. While eventually Betterment offers free account management—for those who reach account values over $2 million, anyway!—those with smaller accounts can expect to pay 0.25% or 0.40% AUM based on whether they use the digital or premium version (with human financial advisors). Regardless of your version, all users can text financial questions to financial pros.
And Betterment offers SRI or socially responsible investing portfolios for millennials seeking to invest with their values.
Betterment is goals-based. Based on your answers to the sign-up questions, Betterment automatically recommends three goals. You get a chance to review those goals, and determine whether they accurately match real life investing goals. This is a helping hand for those who might need assistance in choosing how to proceed with investing.
WiseBanyan is a good robo-advisor for millennials for so many reasons, not the least of which because of its incredibly low minimum investment requirement (just $1!) and its free account management.
That’s right—you don’t need to pay account management fees for WiseBanyan.
Now, there are some paid features in WiseBanyan, so if you want to move beyond the basics— the Tax Protection Package which will run you 0.25% in fees—you will need to spend some money. And, the new Portfolio Plus option gives you access to 30 distinct investment options, for a rock bottom $3.00 monthly fee. So, as far as robo-advisors go, WiseBanyan is a great starter.
Canadian Wealthsimple launched their U.S. platform in 2017 with something for every millennial. This digital investment management robo-advisor, covers everything from portfolio allocation to automatic rebalancing, dividend reinvesting, SRI or socially responsible and Halal investing. With financial advisors for all, Wealthsimple is suitable for a range of millennial investors.
With no investment minimum, Wealthsimple manages your first $5,000 for free. (Although with the Robo-advisor Pros discount, you’ll get your first $15,000 managed for free). After your first $15,000 fees are reasonable; 0.50% of AUM up to $100,000. For accounts valued over $100,000, 0.40% of AUM.
Stash is an app that’s listed #22 on the top 28 robo-advisors of 2018 list. For just $5, clients can start investing in a Roth IRA or a brokerage account.
While Stash offers 30 ETFs, there is a level of customization; millennials who want to put their money where their values are will be happy to see that Stash encourages users to invest according to their values. Investors who care about the environment can invest along side those who want to invest in startups—both knowing that their money is supporting a cause or business type they care about.
5. Schwab Intelligent Portfolios
The Schwab Intelligent Portfolios has a higher minimum investment than some of these other robo-advisor options, but they also have billions of assets under management (AUMs), which makes them a tried and true option for millennials with a bit more money to invest. Although you need $5,000 to begin investing, the robo-advisor management fee is zero. That’s right, it’s free!
As you increase your investments with Schwab, you will get extra benefits. Accounts valued at a minimum of $25,000 can pay a small fee (0.28%) to have access to a human financial plannter. For accounts valued at $50,000, tax-loss harvesting becomes an option.
Schwab offers a variety of accounts, including trusts, brokerages, and retirement accounts.
Acorns is an app that helps investors make small investments over time instead of requiring large up-front deposits. Acorns takes your spare change from everyday purchases and invests the money in ETFs (exchange traded funds). This “spare change” feature means Acorns boasts no minimum investment amount.
Acorns is affordable, too; fees are only $1 per month for accounts worth less than $5,000, or 0.25% for accounts over that amount. Students get management fees waived when they sign up with a valid .edu email address.
Although other apps also allow you to save spare change, Acorns allows an unlimited number of debit or credit cards to be linked. If you use store-specific credit cards to earn bonus points, this means not missing out on saving your spare change.
As a robo-advisor for millennials, Acorns offers easy-to-use, quick investment strategies, set-it-and-forget-it investing, low-cost management, and seamless integration into daily life.
Wealthfront is a robo-advisor with a relatively low minimum investment of only $500. Wealthfront’s investment management fee is competitive at 0.25% of your account value.
Wealthfront offers ETFs that range from renewable/natural energy to those dealing with real estate, thus giving you a choice in where your investments are focused.
Wealthfront also offers a unique digital investment advisor that strives to mirror the benefits of a human financial planner.
Which is the Best Robo-Advisor for Millennials?
Depending on what you value, any one of the above robo-advisors would be a good choice for a millennial investor. There is some overlap, too.
WiseBanyan and Schwab are some of the top free robo-advisors, making them great choices for someone looking to get started without overpaying on portfolio management.
If you like a human touch to your robo-advisor, Betterment and Wealthsimple offer the best of both worlds.
Of course, you might also try getting started with less than $500 to give robo-advising a low-stakes test run. If you’re looking for a robo-advisor for millennials that also lets you start with a small amount of money, you might try Betterment, Acorns, Stash, or WiseBanyan.
And finally, if you feel called to make socially conscious investing choices, Betterment, Stash and Wealthsimple are only a few of the robo-advisors that let you guide your investments to the funds that best represent your values.
Staff columnist Alexandra DeLuise combines her banking experience with real-world financial advice to provide simple money tips to everyday people.