Robo-advisors With the Most Assets Under Management (AUM)
Robo Advisors with the Most AUM in 2018
In the financial advisory world, assets under management, or AUM, is a very important metric. Most advisors, both traditional and robo-advisors, earn their income as a percentage of AUM. Experts estimate that robo-advisors could see their assets under management increase by over $800 billion over the next five years as they continue to plow investors’ money into electronically traded funds (ETFs) according to a recent report by PricewaterhouseCoopers. A.T. Kearney estimates that digital advice could grow to over $1 trillion by 2020, a 68% increase over current levels.
As robo-advisors continue to grow in popularity, it’s interesting to track the growth of robo advisors’ AUM. Notice that the two top robo-advisor AUM leaders trend towards large investment brokerage houses with ample existing clients under roof.
Robo-Advisors With the Most AUM - August, 2018
|Personal Capital||$7.5 billion AUM|
|Wealthfront||$10 billion AUM|
|Betterment||$14 billion AUM|
|Schwab Intelligent Portfolios||$33.3 billion AUM|
|Vanguard Personal Advisor Services||$112 billion AUM|
Below is a synopsis of the top five most popular robo advisors with the most assets under management, how much money investors have entrusted them (their current AUMs), and a differentiating features that set each apart from the others.
Assets managed as of August 2018: Over $7.5 billion AUM
Personal Capital is an automated investment manager with a free investment management platform. The free money management software offers a complete view of your financial picture all in one place. The site provides a way to view bills, income, debt, investments, and more from a single location. Personal Capital allows its customers to link their existing banking accounts to the site, which gives clients the ability to track their spending, retirement savings and their portfolio’s performance. The site also offers digital advice based on your investments and financial accounts. Their free retirement planner allows users to test various scenarios to find out how their assets and income holds up.
Although the basic level of the service is free, the company offers Personal Capital Advisors, a paid comprehensive automated investment advisory service with dedicated financial advisors. The paid service requires a $100,000 minimum account balance. Their investment management approach is unique, with a sector based asset allocation and access to individual stocks. They also provide typical rebalancing and tax-loss harvesting along with dedicated Certified Financial Planners for all clients with managed accounts. Personal Capital provides perfomance data since 2012, and shows better annual returns than their target benchmarks.
Personal Capital’s fees start at .79% for accounts up to $3 million and decline as AUM fall.
Assets managed as of March 2018 (the latest available data): Over $10 billion in AUM
Wealthfront is a low-cost leader in the robo advisory space. They offer great research, low fees, and index matching returns based on individuals’ unique risk profiles. The site offers daily tax-harvesting, direct indexing, and automatic rebalancing. Path, is Wealthfront’s all digital financial advisor.
Wealthfront allows you to see exactly how much to save and invest for the future. It also shows you how life events and changes will impact your account. The platform provides a complete financial planning picture and answers your financial questions without having to talk to a traditional financial advisor. The service is free for accounts valued at $5,000 or less. Wealthfront charges 0.25% AUM for account values over $10,000. Like most robo advisors, Wealthfront invests clients’ funds in exchange-traded funds that track 11 major asset classes and offers multiple account types.
Assets managed as of August 2018: Over $14 billion AUM
Like most of the leading robo-advisors, Betterment offers investors automated tax-loss harvesting, rebalancing, and tax-efficient techniques. A unique Betterment feature is the opportunity for all clients to text questions to and receive answers from a human financial advisor.
Betterment is at the forefront of robo-investing by offering not only access to financial advisors but socially responsible, smart beta and income portfolio investment options.
There is no minimum account balance required for Betterment investors who use the company’s digital plan. Betterment charges only 0.25% AUM for accounts valued up to $2 million for its Digital Plan, with zero management fees for additional assets. Betterment also offers a Premium Plan, which requires a $100,000 minimum investment and charges a 0.40% AUM. Betterment Premium offers access to Certified Financial Planners.
Schwab Intelligent Portfolios
Assets managed as of June 30, 2018 (the latest available data): Over $33.3 billion in AUM
Schwab was the best performing robo-advisor for 2017. With six-month asset growth of 33% and zero management fees, it’s no surprise that Schwab is one of the top AUM robo-advisors. Of the largest robo-advisors, Schwab has the lowest fees – ZERO.
The service earns management fees from its own ETFs and other third-party funds that it recommends to its customers. The minimum balance to open an account with Schwab Intelligent Portfolios is $5,000. The site offers clients investments in individual retirement accounts (IRA), 401k retirement plans, 401k rollovers, taxable accounts, and trusts.
Like other robo advisors, Schwab Intelligent Portfolios offers tax-loss harvesting, rebalancing, and other features. Additionally, Schwab Intelligent Portfolios also provides human advisor-assisted services although not dedicated financial advisors like Personal Capital or Betterment Premium.
Vanguard Personal Advisor Services
Assets managed as of June 30, 2017 (latest available data): Over $112 billion
Unlike other robo advisors, humans lead Vanguard Personal Advisor Services. Financial professionals and their clients create, manage, and rebalance their investment portfolios based on the customer’s needs and financial situation.
Vanguard Personal Advisor Services requires a $50,000 minimum account balance, which accounts for the hands-on approach not typically seen in the robo advisory community. Vanguard charges a 0.30% AUM fee, and there may be additional commissions or other fees depending on the investments you and the advisor choose. For accounts that have less than $500,000 invested, clients have access to a team of advisors instead of a dedicated financial planner to work with you.
Takeaway – Does Robo-Advisor AUM Matter
Each digital financial manager differs in their offerings. There are robo-advisor advantages and disadvantages for each investor. To decide which robo-advisor is best, it’s important to categorize what services you’re seeking, how much money you have to invest, and whether you need access to human advice, or not.
Despite their distinctions, robo-advisors share many of the same features:
- Account rebalancing
- Relatively low initial investment amount
- Low fees to manage the account
- A variety of investment options – in line with investors’ risk levels
Use this robo-advisor AUM data in conjunction with other research, to guide your digital investment advisor decision.
As the assets under management in robo-advisors continue to rise, more companies will enter the market, and both investment and advisory choices will increase as well. The growth in robo advisors’ AUMs continues to spur an increase in competition and offerings. Investors ultimately benefit.