Top Robo Advisors by AUM
In the financial advisory world, assets under management, or AUM, is a key metric. Most financial advisors, both traditional and robo-advisors, earn their income as a percentage of AUM. The largest robo advisors by AUM, in most cases, are or will become the most profitable.
Although global in scope, the US robo-advisor market-share is nearly 75%, dominated by the biggest names. It is no surprise that the largest robo-advisor AUM growth hails from one of the largest investment brokerage firms with ample existing clients: Vanguard.
Normally, the Vanguard robo-advisor clearly trumps the competition. However, this year’s second place robo-advisor, Empower, is closing in. Formerly known as Personal Capital, Empower held the fifth place spot in our 2022 rankings but has rapidly moved up to second place, largely because it is now part of the Empower Advisory Group which boosted the company’s overall AUM.
Despite the new name, Empower also remains the leader in free investment management tools.
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*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.
Third place goes to Schwab Intelligent Portfolios this year, while fourth and fifth place go to the oldest stand-alone robo-advisors: Betterment, which takes fourth this year, and Wealthfront in fifth.
Experts estimate that robo-advisor AUM growth will continue to increase, due to low management fees and sound investing strategy. Statista estimates $1.17 trillion US robo advisor AUM in 2023. With a projected annual growth rate of 14.52%, digitally managed assets in the US should reach $2.02 trillion by 2027.
Largest Robo-Advisors by AUM
In this updated 2023 “Robo-Advisors with the Most AUM” article the top 5 robo-advisors remains the same as last year, although most have grown their users and assets!
Below is an overview of the top five most popular robo advisors with the most assets under management, as well as differentiating features that set each apart from the others.
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Next, we will include information about seven additional popular robo-advisors and their assets under management.
5. Wealthfront
Assets managed as of March 9, 2023: $23.079 billion in AUM
While early 2022 promised some interesting changes for Wealthfront – largely due to a projected acquisition by UBS – Wealthfront entered 2023 as an independent company when the acquisition was mutually terminated.
This doesn’t seem to hurt Wealthfront’s prospects, however, as the company remains steadily in the top five on our list of robo-advisors with the most AUM. In fact, Wealthfront users top 443,000 client accounts, which is quite impressive for an “all-digital” robo-advisor.
Wealthfront is the top all-digital robo-advisor. Path, their unique online financial planner, sets the company apart. This program helps clients see where they are now, as well as steps toward their ultimate goals. The Path comprehensive digital financial planning tool is designed to answer 10,000+ money and investment questions. It’s the best among the all-digital financial planning tools that we have covered.
Wealthfront’s low fees and index matching returns based on your unique risk profile, combined with daily tax-harvesting, direct indexing, and automatic rebalancing, make this a solid choice for those comfortable with digital investment management. Wealthfront also offers hundreds of ETFs so clients can customize their existing portfolios — or create new portfolios.
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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. After lining up all of your financial accounts, the platform provides a complete financial planning picture and answers your financial questions without having to talk to a traditional advisor.
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Like most robo advisors, Wealthfront invests clients’ funds in exchange-traded funds that track 11 major asset classes and offers multiple account types. Larger accounts qualify for direct indexing or the opportunity to invest in individual stocks. As mentioned above, all users can customize existing portfolios by adding additional ETFs to Wealthfront’s suggestions, or create their own ETF mix for Wealthfront to manage.
Wealthfront charges 0.25% AUM for accounts valued over $5,000. Investors will need at least $500 to get started.
Wealthfront also offers lending and high yield cash management solutions. The current Wealthfront Cash Account interest rate is 4.55%. The rate will vary based upon market interest rates.
Sign up for Wealthfront Cash – It’s FREE
Click on the link below to get free investment management for your first $5,000.
4. Betterment
Assets managed as of May 1, 2023: $36.631 billion AUM
The fourth largest robo-advisor, Betterment, offers digital investment management and financial advisors. Like most of the leading robo-advisors, Betterment offers investors automated tax-loss harvesting, rebalancing, and tax-efficient techniques. Betterment Digital users can sign up for low-cost financial advice packages which enable everyday investors to meet with a professional to review their investments, plan for college, or other discuss money questions.
As of May 2023, Betterment accounts top one million!
In addition to Betterment’s growing AUM are its innovations. This digital advisor 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.
Not one to relax, Betterment consistently releases new financial products to better serve their clients, including a low-cost a la carte financial planning packages, a checking and high yield savings account, an Innovative Portfolio option and the Goldman Sachs Smart Beta portfolio.
Betterment offers two services that set it apart from other standalone robo-advisors: a high-yield cash reserve account and cryptocurrency investments.
The current Betterment cash reserve interest rate is 4.50% APY.** The rate will vary based upon market interest rates.
Formerly known as Makara, Betterment’s cryptocurrency robo-advisor, Crypto Investing, is available to customers for a 1% annual advisory fee.
For customers who want more traditional investment options, there are two plan types: Betterment Digital and Betterment Premium.
Betterment Digital
There is no minimum account balance required for Betterment investors who use the company’s digital plan. Betterment charges only 0.25% AUM. The basic fee is on par with Wealthfront’s annual management fee.
Betterment Premium
Betterment’s Premium Plan requires a $100,000 minimum investment and charges a 0.40% AUM. This fee drops to 0.30% AUM for accounts valued over $2 million. Betterment Premium offers unlimited access to Certified Financial Planners – a nice perk for those who want more human-to-human correspondence than an all-robo investment platform can offer.
3. Schwab Intelligent Portfolios
Assets managed as of December 21, 2022: $66.080 billion in AUM
Sitting squarely in the middle of our top five is a robo-advisor from powerhouse Charles Schwab. This is the only one of the top five that offers a Portfolio option with zero management fees: the basic Schwab Intelligent Portfolios.
Schwab Intelligent Portfolios
The basic, digital investment manager doesn’t charge management fees. The minimum balance to open an account with Schwab Intelligent Portfolios is $5,000.
Like other robo advisors, Schwab Intelligent Portfolios offers tax-loss harvesting, rebalancing, and other features. They also require a small cash allocation to all portfolios.
The service earns management fees from its own ETFs and other third-party funds that it recommends to its customers. The site offers clients investments in individual retirement accounts (IRA), 401k retirement plans, 401k rollovers, taxable accounts, and trusts.
Bonus: Robo-Advisors with Human Financial Advisors
Schwab Intelligent Portfolios Premium
For investors seeking more personalized services, the Schwab Intelligent Portfolios Premium also provides unlimited human financial advisor consultations like Empower’s portfolio management and Betterment Premium. Other add-ons include a comprehensive financial plan and interactive online planning tools.
This service requires $25,000 AUM and charges a one-time $300 planning fee; they also charge a monthly subscription fee of $30 for account management. For larger account holders, the fee is quite reasonable.
We also appreciate the opportunity to stop into a branch to discuss account related questions – a feature which is unique to robo-advisors backed by brick and mortar companies.
2. Empower (formerly Personal Capital)
Assets managed as of June 14, 2023: $99.8 billion AUM
Though Empower’s acquisition of Personal Capital began in 2020, rebranding was only completed very recently in February 2023. While this acquisition has certainly helped Empower to move up on our top 5 list, we have only considered Empower’s AUM for individual accounts. Empower at large actually administers $1.4 trillion for over 18 million customers.
One of our favorite parts about the former Personal Capital is the free financial tools – something which Empower has kept since the acquisition. Their free tools span net worth calculators, budget planners, retirement planners, and other long-term planning tools. You can click below to gain access to them.
Personal Capital Free Financial Management Tools
The free money and investment management tools provide a way to view bills, income, debt, investments, and more from a single location. Empower 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 hold up.
Empower also offers three tiers of paid wealth management services: Investment Services, Wealth Management, and Private Client.
Investment Services
In this first tier, clients will need at least $100,000 for an initial investment and can expect to pay 0.89% AUM for account management. This fee seems steep compared to the other robo-advisors on this list, but Empower’s unique blend of digital investment advice and human oversight means that clients can expect more support from financial advisors.
For example, Investment Services offers clients unlimited advice and financial planning sessions with their financial advisors. This is something that not all robo-advisors can offer.
Wealth Management
This tier is designed for customers who have between $250k and $1m to invest. Clients will still pay 0.89% AUM for account management, though this fee will drop as their investments grow and they become eligible to move into the Private Client tier.
The benefits of investing at this level are that clients gain access to individual stock investments, as well as the support of not one, but two dedicated financial advisors. Clients will also be able to speak to financial advisors who specialize in alternative investments, such as real estate.
Private Client
For clients who can invest over $1 million, Empower offers their most exclusive investment management service yet. The Private Client level provides investors with priority access to their team of specialists and their Investment Committee, in addition to the two financial advisors Wealth Management clients can also expect.
At this level, clients also gain greater support from retirement and wealth planning specialists. Those who invest over $5 million will also gain options for private equity investment.
Despite all the perks to this tier, clients will not see their fees rise. Instead, Private Client investors will see their account management fees drop as their investments rise:
- The first $3M is managed for 0.79%
- The next $2M is managed for 0.69%
- The next $5M is managed for 0.59%
- Over $10M is managed for 0.49%
1. Vanguard Personal and Digital Advisor Services – The Winner
Assets managed as of December 31, 2022: $118.993 billion
Holding the first place spot for the last five years is Vanguard Personal Advisor and Digital Services. Vanguard is a product of legendary John Bogles’ index fund house.
This is Vanguard’s second year with a loss, however. Between 2020 and 2021, Vanguard’s robo-advisor offerings dropped to $190 billion down from over $200 billion AUM. This year, the drop is more substantial. The reason for this continued drop is unclear.
Similar to Schwab and Betterment, the Vanguard robo-advisor offers 2 investment options: Vanguard Digital Advisor and Vanguard Personal Advisor Services.
Vanguard Digital Advisor
Vanguard Digital Advisor is similar to the traditional robo-advisors and provides investors with low-fee investment management driven by your risk level and goals.
Like its competitors, the digital advisor creates a well-balanced investment portfolio that reflects your goals, age, and risk level. At present, its best differentiating features are a low 0.20% investment management fee for index portfolios or 0.25% fee for active portfolios, the use of low-fee Vanguard ETFs, and access to the well-established Vanguard brand. There is a $3,000 minimum investment, however, which might be steep for new investors.
Vanguard Personal Advisor Services
At this level, clients can expect a hybrid robo-advisor, as the Personal Advisor Services robo-advisor integrates computerized investment management with human financial advisor guidance.
Financial professionals and their clients create portfolios that best meet the clients’ needs; from there, the professionals, together with the digital investment tools, manage and rebalance those investment portfolios based on the customers’ unique 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’s AUM fees change based on how much you invest, though they do provide an easy-to-use calculator on their website to help you predict your yearly expenses. There may be additional commissions or other fees depending on the investments you and the advisor choose.
Vanguard Personal Advisor Services Review
Largest Robo-Advisor AUM – Runners Up
Just because a digital investment manager oversees a large amount of investment dollars doesn’t make that company the best robo-advisor for you. I have accounts with several robo-advisors, not all on the top 5 list. AUM is only one metric for determining the best investment platform for your needs.
In addition to the largest robo-advisors listed above, the following seven other important robo-advisors that chose to report their AUM data. For more information about any of the robo-advisors, click on the link to read the complete review.
Robo-Advisor Global AUM Growth
There’s no doubt that robo-advisors are here to stay. Many of the robo-advisors on this list grew exponentially over the last year; those that didn’t were few and far between.
In terms of trends, we note that robo-advisory growth is leaning towards those digital investment advisors that also offer human financial advisor access. We have also noticed more acquisitions over the last few years, leading to more diverse offerings from traditionally all-digital platforms and stronger backing for smaller robo-advisors.
Statista reports in August 2022, that the top five global robo-advisor regions by aum are:
- United States – $1,164.00 billion
- China – $112.90 billion
- Japan – $7.78 billion
- United Kingdom – $29.42 billion
- Italy – $24.40
Although less meaningful, Statista estimates that the average assets under management per user is $16.01k in 2023. This number is less valuable without the context of the entire distribution of account size ranges.
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Takeaway – Does Robo-Advisor AUM Matter?
Each digital financial manager differs in their offerings, and 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.
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Despite their distinctions, most 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
As such, use this robo-advisor AUM data in conjunction with other research to guide your digital investment advisor decision.
*Updated: (All data is most current robo advisor AUM and account available.)
Sources:
- Most data are sourced directly from the robo-advisors SEC required filings, such as the ADV. If unavailable, company contacts provided additional data.
- Further company AUM information from SEC site: https://adviserinfo.sec.gov/
- https://www.statista.com/outlook/dmo/fintech/digital-investment/robo-advisors/worldwide#key-market-indicators
- https://www.prnewswire.com/news-releases/robo-advisory-market-to-reach-41-07-billion-globally-by-2027-at-31-8-cagr-allied-market-research-301225876.html
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 believe is valuable.
I have accounts with Schwab Intelligent Portfolios, Empower (free tools), and M1.
*Betterment is not a licensed tax advisor. Tax Loss Harvesting+ (TLH+) is not suitable for all investors. Read more at https://www.betterment.com/legal/tax-loss-harvesting and consider your personal circumstances before deciding whether to utilize Betterment’s TLH+ feature. Investing involves risk. Performance not guaranteed.
**Cash Reserve is only available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are conducted through the clients’ brokerage accounts at Betterment Securities. For Cash Reserve (“CR”), Betterment LLC only receives compensation from our program banks; Betterment LLC and Betterment Securities do not charge fees on your CR balance. Checking accounts and the Betterment Visa Debit Card provided and issued by nbkc bank, Member FDIC. Checking made available through Betterment Financial LLC. Neither Betterment Financial LLC, nor any of their affiliates, is a bank. Betterment Financial LLC reimburses ATM fees and the Visa® 1% foreign transaction fee worldwide, everywhere Visa is accepted.
*Betterment is not a licensed tax advisor. Tax Loss Harvesting+ (TLH+) is not suitable for all investors. Read more at https://www.betterment.com/legal/tax-loss-harvesting and consider your personal circumstances before deciding whether to utilize Betterment’s TLH+ feature. Investing involves risk. Performance not guaranteed.
**Cash Reserve is only available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are conducted through the clients’ brokerage accounts at Betterment Securities. For Cash Reserve (“CR”), Betterment LLC only receives compensation from our program banks; Betterment LLC and Betterment Securities do not charge fees on your CR balance. Checking accounts and the Betterment Visa Debit Card provided and issued by nbkc bank, Member FDIC. Checking made available through Betterment Financial LLC. Neither Betterment Financial LLC, nor any of their affiliates, is a bank. Betterment Financial LLC reimburses ATM fees and the Visa® 1% foreign transaction fee worldwide, everywhere Visa is accepted.
