The Actual Cost of Robo Advisors Fees – What Are the Annual Fees?

Daniel Penzing
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Cost Comparison

If you think about investment platforms that are managed by a robot, you are probably very skeptical about them. Well, existing financial technologies do offer a plethora of platforms and these platforms are the predecessors of the robos. Many of them focus on making the life of a day trader and even the experienced stock broker much easier. And we have to admit that being able to get investment advice from a robot is cool. However, their fees can be a bit confusing so we’ll take a look at common fees like management fees and transaction fees, and try to clarify any cloudiness that might exist in these terms.

Fee for Financial Advice from a Human

Although the concept of robos has been around for a long time, its popularity has grown leaps and bounds in the past 5 years (which is when the first automated financial advisor was launched). Thanks to these robo advisors, we no longer have to shell out thousands of dollars in financial advisory fees or to pay for an advisor who charges a percentage of our assets that we invest in. And that’s not to say that the cost of using robo advisors is something we should be moaning about!

The one advantage that people tout over the humans is that they are cost efficient since they are a one time investment which would typically be a fraction of the costs of a lifetime of working with a human advisor.

Robo Advisor Fees Criteria

Before we explain why robos are worth their lower fees and why you should care about the annual costs, let’s take a look at the different criteria that you can use to compare the top robo advisor fees. You should also check out our ETF vs Robo Advisor comparison to learn about the major differences between robo advisors and ETFs.

A. Allows for You to Purchase Individual Stocks and ETFs … On the cheap

There are 2 main reasons why robos are able to offer lower fees. The first is that traditional advisor models do charge a percentage of the assets under management (AUM). Since robo advisors are not human, that cost is 100% eliminated. In addition that same cost is also lower in most robo advisor portfolios due to the use of low cost index mutual funds and exchange traded funds (ETFs).

B. Is Smart (the technology does most of the work to find and buy the stocks)

One of the biggest differences between traditional human advisors and robo advisors is that traditional advisors don’t actually work that hard. Not only do they cost 1% or more a year for nothing more than access to their network (with the exception being access to phone calls), they do very little to actually help you.

$5,000 Deposit

$35,000 Deposit

For an Guaranteed Liquid Portfolio?! (That’s the top of a robo advisor menu, not advice from your broker)

Robo-advisors are a new and different kind of financial advisor, but they have a lot in common with financial advisors in terms of how they categorize their investment portfolios.

If you are wondering, “What are the annual fees of robo advisors?, you are not alone. Most investors want to know how much they have to pay when they sign up with a robo advisor company. We will tell you what fees are charged by the most popular robo advisors.

In our assessment of robo advisors, we only looked at companies we would recommend to our readers. This is not an exhaustive list.

First, let’s do some quick definitions.

A portfolio is a collection of investments.

The fees associated with a portfolio are broadly categorized as either advisory fees or investment fees.

A typical advisory fee is 1% per year, but it can be as low as 0.25% or as high as 2%. Most robo-advisors charge between 0% and 1% per year.

An annual management fee is the advisory fee charged by the robo advisor. Fees charged by other parties, such as the fund company, are included in the fund expense ratio, which is a different topic.

$125,000 Deposit

What is the average robo advisor fee rate?

$500,000 Deposit

Latest Robo Advisor Launch — Betterment for Business

To be able to recommend its robo-advisors for use with retirement accounts, Betterment’s products are tied into the corporate retirement-savings services provided by Natixis Global Asset Management. Betterment Business clients are able to access and manage their rollover assets through the OneWealth team.

The fees for Betterment's services are clearly outlined on its website, with two tiers of pricing … OneWealth’s are individualized to each client.

For more on how Robo Advisors and Betterment for Business can profit your business, get in touch with us!

Click here To Speak To A Robo Advisor Expert.


According to a study by Texas Tech University , only 8.2% of investors with over 20 years of investment experience were successful. Furthermore, the study found that the longer an investor held a security, the worst his/her performance was likely to be. Therefore, says the Texas Tech study, it is best for the individual investor to do some homework and talk to a financial planner before deciding which stocks or mutual funds to invest in.

Charles Schwab's Cash Allocation

The expense ratio for Charles Schwab's Cash Allocation ETF (SCHZ) as of Q4 2016 is 0.03%.


Learn about robo advisor annual fee upfront vs account based fees

Robo Advisors have always been touted for saving investors on management costs. Capitalizing on using autonomous algorithms that manage a portfolio based on a clients goals, savings, age, etc, vs a human advisor; and increasing the automation of the process to where it can be done quite efficiently automatically. The fees from using a company like this have always been touted as “lower than the average human financial advisor fee, typically 0.25-0.5% compared to 1-2% average human advisor fee.

Is this a marketing gimmick or the truth?

Indeed, while robo advisor fees do start off lower compared to the average financial advisor; most start off with some sort of free trial period; and then quickly build in a fee structure that has multiple levels of fees.

Instead of just one flat set of charges compared to a human advisors fees your robo advisor will actually charge based on account value or transactions.