Which is the Best Robo Advisor?

In the space of only a little more than 10 years, robo advisors have reshaped the financial technology landscape, making investing — along with concepts such as tax-loss harvesting and asset allocation — available to everyone. With low minimums and fees way lower than you’ll find with a traditional advisor, robo advisors are especially great for new investors. But which one should you pick?
Betterment is the granddaddy of the industry. But since its debut in 2008, a whole host of other robo advisors have popped up. Some are continuations on the Betterment theme, while others take fresh and interesting approaches to investing. Ellevest and M1 Finance both bring something new to the table. Let’s find out if one of these robo advisors is right for you.

About Betterment

Launched in 2008, Betterment was the first robo advisor on the market. It’s also the largest independent robo advisor, managing more than $16 billion in assets as of 2019.
Betterment includes tax-loss harvesting for all accounts and estimates a benefit of 0.77% per year in your after-tax returns.
Over time Betterment has continually released new options and services through its platform, including advice from financial planners, tools to learn about investing, and tools to adjust your investments.
With its robo-advisor services, Betterment creates and then implements a portfolio based on your risk tolerance and goals. It also provides investors with regular asset reallocation, can reinvest your investment dividends and can even utilize tax-loss harvesting on taxable accounts.

About Ellevest

Founded in 2015 by Sallie Krawcheck, Ellevest was built specifically and definitively to cater to women’s investing needs. Krawcheck previously worked as CEO for Merrill Lynch and Citi Private Bank and believes that the traditional investing advice and plans don’t work for women.
Ellevest has a gender-specific investing algorithm that aims to close the investing gap between men and women. The robo advisor reports that traditional investing advice costs women $320,000 over the course of their lifetime. Ellevest wants to change that.
About M1 Finance

M1 Finance, on the other hand, is more like a hybrid of a robo advisor and a traditional stock broker. Based in Chicago, M1 Finance has offered robo-advisor services since 2015. Unlike many other robo advisors, M1 gives you the option to invest in whole shares or fractional shares. This robo-investor service offers more than 6,000 stocks and funds to choose from while building what M1 calls “Pies.” The Pies are created using Modern Portfolio Theory (MPT). You also have the option to choose your own investments for your Pies, as you would at a traditional investment brokerage.
Most robo advisors use MPT in their algorithms. Contrasting sharply with other robo advisors, at M1, there is no intake form to determine your investment risk tolerance.
With M1, you have the option to:
Build your own portfolio
Copy a portfolio designed by Wall Street experts
Use a robo-advised model portfolio
Combine portions of all the above strategies
M1 is built for long-term strategic investors and doesn’t cater to the active trader. Its platform helps people invest and put their money to work — with no fees or much time commitment.
How Are They the Same?
All three services offer many features. First, let’s take a look at how they’re similar.
Minimum Investment
None of the three robo advisors require a minimum investment.
Investment Account Types
All three offer individual taxable, Roth IRA, traditional IRA, Rollover IRA and SEP IRA accounts.
Investment Types
All three services allow you to invest in exchange traded funds (ETFs).
Portfolio Rebalancing
All three robo advisors provide portfolio rebalancing.
Mobile Apps
All three services emphasize investing with an Android or Apple mobile device.
How Are They Different?
Betterment strives to be a complete investing experience and offers many tools to that end. For example, its Financial Advice Packages are individualized advice packages that zero in on specific life events, such as children or death. Betterment includes personalized action plans to meet these life events, general educational tools to help people get prepared on their own, and tailored help from a certified financial planner or licensed financial expert who’s familiar with your specific plans.
Ellevest is perhaps the most different, since it specifically targets women investors. Its algorithm takes into account things like the wage gap, women leaving the workforce to have or raise children, and the fact that women live longer than men (on average).
M1 Finance toes the line between a traditional investment brokerage firm and a robo advisor. It offers a wide array of services and investing options, which is appealing to many people.
Unique Features
Features Unique to Betterment
Betterment is a fiduciary, meaning it has to operate in its client’s best financial interests, even if that means the company doesn’t earn as much money. Fiduciaries have to follow the Advisor’s Act, a law that lays out what an investment advisor is and what they’re supposed to do.
Betterment offers tax-loss harvesting, which neither Ellevest nor M1 Finance does.
Features Unique to Ellevest
Ellevest is also a fiduciary, like Betterment. However, what makes Ellevest unique is that it is the only one of these three companies to be founded by a woman and to cater to women. The robo advisor’s algorithm is gender specific, taking into account women’s financial needs.
Ellevest uses a “gender specific salary curve” to determine its users’ investing portfolios.
Features Unique to M1 Finance
M1 Finance offers M1 Borrow, a line of credit that allows users to borrow up to 35% of the value of their portfolio.
M1 Finance also offers M1 Plus, a chance to do your banking with the company. Its checking and savings accounts come with higher interest than most of its competitors. As of July 2019, the checking account offered 1.5% APY, the debit card offered 1% cash back on any purchase, access to a second trading window for your investments, and a 0.25% discount on any loans through the M1 lending program. M1 Plus costs $125 per year.
Minimum Investments
Neither Betterment nor Ellevest nor M1 Finance requires a minimum deposit to get started. That makes all three accessible to new investors.
Winner — It’s a three-way tie, since Betterment, Ellevest and M1 Finance don’t require a minimum investment.
Annual Fees
Betterment’s annual fee for its Digital platform is 0.25% of total investments. For the Premium platform, you’ll pay 0.40% of total investments.
Ellevest charges the same for its Digital platform as Betterment (0.25%). A Premium plan will run you 0.50% of total investments.
M1 has no annual fee for its robo-advisor services.
Winner — M1 Finance wins for not charging an annual fee.
Standout Features
Betterment is almost continually releasing new features, which makes it a robo advisor to watch. Most impressive, however, are its Charitable Giving program and its Socially Responsible Investing portfolio.
The Charitable Giving program allows investors to donate directly from their investment portfolios to charities. This is an innovative way for investors to make donations, since it’s easy to do and also a way to avoid capital gains tax on the donated shares.
The Betterment Socially Responsible Investing Portfolio is an option for those who are concerned about what their money funds. The robo advisor offers ETFs with a socially responsible bent, like removing oil and gas companies and focusing on companies that have made an effort to create socially responsible actions on their own.
Ellevest Premium offers one-on-one executive coaching from the company’s career team. This service aims to help women beyond just their investing potential by addressing their earning potential, with tools to use in their careers (like negotiation).
M1 Finance
M1 Finance also acts like a stock broker, you can use the service to select your own investments — including fractional shares — and apply your selection to its automated portfolio management. With no annual fees and no minimum deposit required, this makes M1 Finance a great choice for new investors who want to be a little more hands on.
Winner — Betterment is constantly improving its services by offering new features. That makes it a winner.
Customer Service
Betterment has phone and live chat service five days a week and email service seven days a week, although the hours are limited on weekends. The company also offers help on tax issues via its tax center, an online portal devoted to taxes.
Ellevest offers customer support via phone and live chat Monday through Friday during normal business hours. You can also email the customer service team.
M1 Finance provides phone customer support Monday through Friday from 9 a.m. to 5 p.m. Central Time, along with email.
Winner — Betterment offers more opportunities to reach customer support.
Betterment has an entire page devoted to the steps it takes to keep your information secure, including two-step authentication, allowing third-party apps (like Mint) view-only access, and background checks on all employees.
Ellevest accounts are SIPC insured up to $500,000, has customized password requirements, and uses third party Folio for all transactions.
M1 participates in FINRA’s BrokerCheck, a program that allows investors to research the background of investment advisors.
All three robo advisors offer smart solutions for privacy concerns.
Who Are They Best For?
Betterment is best for brand-new investors. This service is best suited for people who want to learn about investing but are more inclined to set it and forget it after they’ve established their portfolio.
Ellevest is designed by women, for women. Its devotion to women and their specific needs is admirable, and it is leading robo advisors into the territory of niche investing advice.
M1 Finance is best for long-term investors and those who want to have portfolio flexibility. The amount of customization that is possible in its investment offerings is impressive.

Which Is the Best?
Here at Investor Junkie, we recommend all three services as among the best robo advisors on the market. Betterment might have a slight edge, however, since it was the first robo advisor and the one that has shown the rest of the industry “how it’s done.” However, the company continues to innovate and offer great features that should appeal to investors of all stripes.

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