Automated investing has gone mainstream. Robo-advisors deliver diversified portfolios, ongoing rebalancing, and tax-aware features at a fraction of traditional costs.

Yet “cheap” isn’t automatically “best.” Choosing wisely means looking beyond glossy apps to how each platform builds, maintains, and optimizes your money—without ignoring your comfort level.

Know the Fees

Advisory fees vary widely. Some robos charge around a quarter-percent of assets; others layer on premium tiers or advice packages. That headline fee is only part of the bill. Ask how often fees are debited, whether there’s a platform charge, and if services like tax-loss harvesting or advisor access sit behind additional pricing.

Minimums Matter

Many platforms let investors start with little or no minimum, while others require a few hundred dollars or more. Minimums aren’t just about access—they shape how quickly your portfolio becomes fully invested instead of sitting in cash. If emergency savings aren’t solid, prioritize that cushion before opening an investing account.

Fund Costs

Robos typically use low-cost index ETFs or mutual funds, but underlying expense ratios still affect performance. Confirm the range of fund costs and whether the platform favors in-house products. Look for transparency around “cash drag” too, since outsized cash allocations can quietly reduce returns during rising markets.

Goal Fit

Great robos translate goals into portfolios. Retirement, a 529 for education, a home down payment—each has distinct time horizons and tax considerations. Ensure the platform supports multiple objectives, assigns separate portfolios to each, and adjusts glide paths as timelines shorten. Bonus points for account-type guidance to maximize tax advantages.

Tax Features

In taxable accounts, tax-loss harvesting can soften capital gains. Ask how frequently the algorithm scans for opportunities, whether it uses multiple ETF “pairs” to avoid wash-sale issues, and if it coordinates across accounts. For tax-advantaged accounts, harvesting isn’t useful; instead, seek smart asset location and dividend reinvestment settings.

Personalization Depth

Most robos start with a risk questionnaire. The best go further, letting you tweak stock-bond mixes within limits, exclude specific asset types, or incorporate values-aligned screens. Look for guardrails that keep you diversified while honoring preferences. If the proposed plan feels off, the platform should allow adjustments—without breaking the strategy.

Track Record

No robo can promise outperformance, but you deserve clarity on how its model portfolios have behaved through different markets. Seek multi-year, net-of-fee comparisons against appropriate benchmarks and clear explanations of rebalancing rules. Process matters: a consistent, research-backed methodology will outlast short-term fads.

Life Complexity

Robos excel at portfolio construction and maintenance. Complex needs—equity compensation, business ownership, detailed tax planning, or estate strategies—often benefit from human guidance. Some platforms offer hybrid advice for an added fee. If your financial picture spans more than investments, confirm whether comprehensive planning support is available.

Human Help

Even digital natives sometimes want a person. Check service channels: live chat, scheduled video calls, or email support from licensed professionals. Understand service-level expectations—response times, who you’ll speak with, and whether advice is fiduciary. In turbulent markets, access to a steady human voice can be priceless.

Behavior Check

Robo-advisors automate discipline, not emotions. Benjamin Graham, an investor and author, writes, “The individual investor should act consistently as an investor and not as a speculator.”

Consider your tolerance for watching balances fluctuate without handholding. If market swings trigger panic selling, choose a platform with behavioral nudges, goal-based dashboards that focus on projected income rather than account value, and optional guardrails that reduce risk as goals approach.

Security Basics

Your money and data need strong protection. Look for bank-level encryption, multifactor authentication, and segregation of client assets at reputable custodians. Confirm SIPC coverage for securities, FDIC coverage for any sweep cash programs, and transparent disclosures on order execution, securities lending, and third-party data sharing.

Operational Details

Small frictions compound. Ask about transfer times, trading windows, fractional share capabilities, and how dividends are handled. Rebalancing rules matter too: threshold-based rebalancing can reduce taxes and trading costs versus rigid schedules. If you plan to consolidate accounts, check ACATS support and any outgoing transfer fees.

Final Take

A quality robo-advisor should be low-cost, tax-aware, and goal-driven—while giving you enough flexibility to stay invested through thick and thin. Match the platform’s strengths to your needs: simple goals and steady saving thrive on automation; complex lives may benefit from hybrid advice. Choose the mix of cost, features, and support that keeps you steady when markets test your resolve.