Discover the Pros and Cons of Robo-Advisors for Retirees
The best robo-advisor for retirees is the one that fits your needs.
With the robo-advisor digital investment manager becoming an increasingly popular choice among early- and mid-career investors, baby boomers approaching retirement might wonder whether they should make the switch to robo-advising and what are the best robo-advisors for retirees.
Life has changed drastically over the last few years. Better medical technology means that most people are living longer than their relatives two generations back, which leads to more time spent in retirement. That means that your money needs to last longer in retirement.
As lifespans improve, so do investment management choices. And that’s why you might benefit from a robo-advisor in retirement.
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But what exactly is a robo-advisor?
A robo-advisor is a broad category of digital financial advisors. These money and financial managers create diversified investment portfolios guided by sophisticated computer algorithms.
The investments are automated by the robo-advisor to fit specific investment criteria and are typically based on sound and well-respected modern portfolio management theory.
Many robo-advisors offer not only computerized financial management, but also access to financial advisors.
What are the benefits of robo-advisors for retirees?
One of the great things about robo-advisors is that they are customizable. Retirees benefit from the ability to rev up the aggressiveness in their portfolios, or tone it down to preserve capital for the long term.
Even better: most robo-advisors are cheaper than traditional investment advisors, making them a great choice for those nearing (or already in) retirement and looking to minimize investment fees.
- Some robo-advisors like SigFig and Future Advisor will manage your investments in your existing accounts.
- While most will transfer your existing assets to their platform, in a manner that will minimize tax liabilities.
- Some robo-advisors provide access to human financial advisors.
- Robo-advisors typically manage your money with lower fees than human financial advisors.
- Robo-advisors take the guesswork out of picking your own investments.
Before making any investment decisions, it’s always important to consider your unique situation. Below are some pros and cons of robo-advisors for retirees, as well as four excellent choices, to help you choose a the best robo-advisor to manage your retirement funds.
Best Robo-advisors for Retirees
1. Personal Capital: Free Retirement Planner and Investment Manager
Personal Capital Features at a Glance
|Overview||Digital investment management robo-advisor in concert with human financial advisors.|
|Minimum Investment Amount||Zero minimum for access to free investment management tools. $100,000 minimum for managed accounts.|
|Fee Structure||0.89% for investments of $1M to $2.9M. Fees decline as assets increase. Low 0.49% for accounts over $10 M.|
|Top Features||Free investment and retirement management tools for all.|
For paid users: Certified Financial Planners, full financial plan, individual stocks, diverse asset classes, tax-loss harvesting and cash management.
|Free Services||The most comprehensive suite of financial planning tools including cash management, investing and retirement planning tools.|
|Contact & Investing Advice||24/7 email access. Phone, video and chat with financial advisors (for paid users).|
|Investment Funds||Individual stocks, ETFs, low fee bond and alternative asset ETFs. Individual bonds for accounts +$1M.|
|Accounts Available||Individual & joint investment accounts. Roth, traditional, SEP & rollover IRAs. Trusts.|
|Promotions||Free financial, retirement, and portfolio tracking tools.|
Personal Capital is a two-fer for your investing and retirement. First are the free retirement planner and money management tools.
Regardless of whether you choose Personal Capital Advisors to manage your retirement savings or not, you must check out the FREE investment management tools.
With a few clicks, you’ll know exactly where you stand relative to your retirement goals. From there, you can view how changes will ultimately impact your financial future.
Additionally, the free Personal Capital software offers these free financial management tools:
- Net Worth Tracker
- Cash Flow Analyzer
- Investment Checkup
- Retirement Planner
- Retirement Planner and Fee Analyzer
- College Education Planner
Next, Personal Capital Advisors is one of our favorite digital plus human advisor – robo advisors.
Personal Capital Advisors
For retirees, Personal Capital is more than just a free retirement and money management tools. The full-service Personal Capital Advisors investment manager offers a personalized investment strategy for investors with $100,000 or more.
Guided by your personal certified financial planner, the advisory option creates a balanced portfolio by sector, geography and market capitalization. The investments are geared for your personal risk level and align with your goals.
Personal Capital Advisors also offers individual stock investing and cash management.
Your individual portfolio is monitored and rebalanced regularly, and your financial planner is available for regular consultation.
Personal Capital is best for the investor who wants a full service financial planning and investment management platform for a fee less than typical financial advisors.
Read the Personal Capital Review
2. Betterment: A Host of Features and Advice Options
Betterment Features at a Glance
|Overview||Goals-based digital investment manager with access to financial advisors.|
|Minimum Investment Amount||No minimum for Betterment Digital. $100,000 minimum for Betterment Premium.|
|Fee Structure||Digital-0.25% AUM up to $2 million; 0.15% fee over $2 million|
Premium-0.40% AUM up to $2 million; 0.30% fee over $2 million.
|Top Features||Digital and hybrid investment management (with financial advisor access) options. All investors can text with financial advisors. SRI, income and smart beta portfolios available.|
|Free Services||Free portfolio review.|
|Contact & Investing Advice||Phone and email support 7 days per week.|
|Investment Funds||Low fee exchange traded funds from diverse asset classes.|
|Accounts Available||Single and joint taxable brokerage. Roth, traditional, rollover and SEP IRA. Trust.|
|Promotions and Website||Free account management special promotion.|
One of the earliest robo-advisors, Betterment began as a computerized investment manager and has evolved into a complete money management platform. The Betterment today offers financial advisors, cash management and diverse investment styles.
Betterment’s two service levels are:
Betterment Digital – Low fee computerized investment management with opportunity to text with financial advisors.
Betterment Premium – Full service digital and human financial planning services for investors with $100,000 minimum investment amount.
- All the benefits of Betterment Digital
- Human financial advice on all investments, within and outside of Betterment accounts. That includes managing 401(k)s, real estate, stocks and more.
- Unlimited access to CFP® credentialed financial advisors for all life planning decisions that impact your money; retirement, having a child, getting married and more.
Betterment services are ideal for retirees as you can choose the advice level that best fits your needs. If you select Betterment Digital, you can get financial advisor advice through texting with financial advisors or by purchasing an a la carte financial planning package. Betterment Digital has a very low investment management fee of 0.25% of AUM (assets under management), nearly 1 percent less than the typical financial advisory fee.
Betterment Retirement Planning Package – This package reviews all client financial accounts and guides clients towards retirement-readiness. In addition to a 60-minute call with a CFP, the investors receive one month of free email access to Betterment financial experts for follow-up questions and advice. Fee – $299
The Betterment platform strives to maximize your investment returns at every risk level. That means, if you’re a conservative investor, the Betterment robo-advisor will give you the opportunity for the highest returns with the least amount of risk.
Betterment Cash Reserve – The Betterment cash management solutions offer retirees the opportunity to have all their finances under one roof. Further, your cash will earn more than the national average.
Betterment is one of favorite robo-advisor due to the availability of diverse investment options and styles, various ways to access financial advisors and low fees. Add sound investment management and Betterment could be a sound retirement robo-advisor.
Betterment is best for fee-conscious investors.
Read the Betterment Review
3. United Income: A Robo-Advisor for Retirees With Options Galore
United Income Features at a Glance
|Overview||Automated investment management robo-advisor platform with financial advisors, designed for retirees.|
|Minimum Investment Amount||Premium, $10,000; Private Wealth, $300,000|
|Fee Structure||Premium 0.50% AUM; Private Wealth 0.45%-0.80% AUM.|
|Top Features||Platform is designed specifically for those aged 50+, and includes numerous related services; also attempts to outperform the market, not just match it. United Income paycheck distributes a monthly check to you (from your account).|
|Free Services||Initial consultations, via phone or email, are free.|
|Contact & Investing Advice||Phone and email, for customer service and investment advice|
|Investment Funds||Diversified, low-cost index funds from US and global stock and bond markets. Individual stocks and bonds.|
|Accounts Available||Individual and joint taxable accounts; traditional and Roth IRAs; Trusts|
Owned by Capital One, United Income provides holistic financial advice.
“We provide a comprehensive planning service for everything from cashflow management to estate planning, all of which is integrated into a single decision-making engine that optimizes the set of decisions you face.” ~United Income website
An advantage of investing with United Income is that it is the only robo-advisor specifically created for retirees. So, the services are geared to solve older Americans retirement concerns.
United income offers a host of services including:
- Asset diversification,
- Legacy planning, trusts,
- Account sequencing
- Supplemental health insurance guidance
- Managing required minimum distributions
- Refinancing and downsizing recommendations
- Medicare and Social Security advice
United Income stands out with a feature to turn wealth into an income stream in retirement.
We like all the retirement-focused services, although the fee is steeper than Betterment, but lower than the Personal Capital Advisor services.
Choose a robo in under one minute: ROBO-ADVISOR SELECTION WIZARD
United Income is best for investors who want a robo-advisor designed specifically for retirees and their concerns.
Read the United Income Review
4. SigFig: Balancing the Pros and Cons of Robo-Advisors for Retirees in One Place
SigFig Features at a Glance
|Overview||Automated investment management robo-advisor that lets you keep your investments in an existing brokerage account.|
|Minimum Investment Amount||$2,000 for the Managed Portfolio|
|Fee Structure||0.25% of AUM above $10,000|
|Top Features||Can work with your existing brokerage accounts; 24/7/365 customer contact; Full suite of tax-advantaged investment strategies, including tax-loss harvesting|
|Free Services||$10,000 managed for free. Offers free Portfolio Tracker; Mobile app – iPad, iPhone and Android|
|Contact & Investing Advice||Available by email 24/7, live chat, or phone, during normal business hours. Financial advisors available for managed account holders.|
|Investment Funds||Low-cost, commission-free ETFs primarily from Vanguard, iShares and Charles Schwab|
|Accounts Available||Individual & joint investment accounts. Roth, Traditional, SEP, Simple & rollover IRAs.|
|Promotions||First $10,000 is managed for free|
SigFig manages your investments owned within Schwab, Fidelity and TD Ameritrade.
SigFig Free Portfolio Tracker
Like Personal Capital, SigFig also offers a free portfolio tracker. The free SigFig portfolio does what it says and tracks your portfolio.
Here’s what the SigFig Portfolio Tracker offers:
- Weekly email summaries of your investment performance
- News that impacts your holdings
- Notifications about gainers and losers
- Risk analysis and diversification advice
- More portfolio insights
- Additionally, all accounts valued at up to $10,000, receive free investment management.
SigFig Managed Portfolio
The SigFig Managed Portfolio professionally manages your investments held within either Fidelity, TD Ameritrade, or Schwab investment accounts.
When you think about robo-advisors for retirees, you need to consider taxes. Since many people nearing retirement have already set up retirement accounts, it can be overwhelming to consider moving everything from a traditional account to a robo-advisor and paying a large capital gains tax bill.
That’s where SigFig comes in.
If your retirement funds are already at Charles Schwab, TD Ameritrade Institutional, or Fidelity, SigFig can manage your investments where they are.
The SigFig managed account charges 0.25% AUM for all accounts valued over $10,000 and offers financial consultant access. This is a fair price for a robo-advisor that also offers financial advisors.
The SigFig managed account lays out a personalized investment portfolio based on your goals and risk tolerance. The platform also analyzes external investments, not held with SigFig.
SigFig managed services include all the offerings of the Free SigFig portfolio tracker plus:
- Live chat and phone support
- Access to investment advisors
- Personalized portfolio in line with your goals and risk level
- Automatic rebalancing and reinvesting
- Tax-optimized sales
- Tax-efficient migration to the SigFig investment recommended portfolio
SigFig is best for retirees who don’t want to move their assets to another platform.
The fact that SigFig allows you to keep your investments in your Schwab, Fidelity, or TD Ameritrade accounts makes this a sound robo-advisor for retirees.
Read the SigFig Review
5. FutureAdvisor: A Robo-Advisor for Retirees Who Value Diversification
FutureAdvisor Features at a Glance
|Overview||Automated online investment management robo-advisor platform|
|Minimum Investment Amount||$5,000|
|Fee Structure||0.50% of AUM, charged quarterly as 0.125%|
|Top Features||The service uses funds that you already own through TD Ameritrade or Fidelity Investments, or helps you to transfer and open accounts at these institutions. FutureAdvisor then adds additional ETFs when necessary to achieve the desired asset allocation; you can maintain certain investment positions in your portfolio alongside the recommended allocations.|
|Free Services||FutureAdvisor can analyze your existing investments before you commit |
to using the service.
|Contact & Investing Advice||Contact form available via website 24/7. Financial advisors available.|
|Investment Funds||Diversified index funds from 14 different asset classes|
|Accounts Available||Individual and joint taxable accounts; traditional, Roth, and rollover IRAs|
Like SigFig, FutureAdvisor is a robo advisory firm that manages your existing investment accounts held at TD Ameritrade or Fidelity Investments. With FutureAdvisor, you don’t need to transfer your assets to their platform! The service automatically monitors, re-balances and tax manages your current investments. Low-cost index funds are added where necessary to strengthen your portfolio.
FutureAdvisor’s algorithms are designed with retirement in mind, and place value on both diversification and calculated money movement.
FutureAdvisor is a subsidary of BlackRock, the world’s largest investment management firm.
FutureAdvisor, will analyze your existing investments, whether you’re a client or not.
Like all of robo-advisors for retirees, FutureAdvisor also offers access to financial advisors.
The FutureAdvisor investment strategy combines human oversight with a computerized investment strategy. Like most robos, your investment mix will depend on your risk tolerance and goals.
FutureAdvisor also offers several levels of service.
Sign up for free and get personalized account-by-account recommendations for your portfolio and a comprehensive retirement analysis.
When determining the pros and cons of a robo-advisor, retirees should keep in mind that algorithms aren’t all the same. FutureAdvisor has all the makings a good robo-advisor for retirees because its algorithms take costs, such as capital gains taxes and transaction fees, into consideration when it decides whether your portfolio needs to be rebalanced or not.
The FutureAdvisor Managed portfolio services include rebalancing, tax-loss harvesting, a retirement planner and financial advisor access. One of the more interesting features of FutureAdvisor is that the platform allows you to hold a small amount of personally selected securities in your account.
Although similar to SigFig, the FutureAdvisor management fee is 0.50% of assets under management, higher than SigFig and Betterment.
These fees put FutureAdvisor up with United Income in terms of cost; however, the easy-to-navigate website and comprehensive advice provided make this one of the best robo-advisors for retirees.
FutureAdvisor is our second choice for investors who prefer to have their investments managed in their existing accounts. SigFig is our first choice for these investors.
Read the FutureAdvisor Review
Robo-Advisor for Retirees Wrap up
Before making any moves to or between robo-advisors, be sure to consult your existing investment agreement. You may have some transfer fees. Still, since robo-advisors are often more affordable than their human counterparts you might find these transfer fees insignificant in comparison to the money you’ll save on reduced money management fees.
A final positive feature of robo-advisors for retirees: most come with human support to help you navigate the shift. The best robo-advisors for retirees, after all, are those that will help make this process easy and headache-free.
Ultimatley, investing in a robo-advisor in retirement is a step towards lower fees, greater wealth, and a simpler life.
*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 personally believe is valuable.
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