Robos charge fees as a percentage of the amount of assets managed, and typical fee rates range between .25% and .50%. Hybrid accounts typically charge between .31% to .91% a year in annual fees.
Freedom Debt Relief recommends robo-investors to those who are only looking for portfolio advice and who are happy investing their money in index funds- they’re not useful for those with more personalized goals like saving for retirement.
If you have something specific that you’re saving for or if you already understand the basics of tracking stocks and making estimations on the market, you may be better off managing your own accounts and saving money on the fees these services charge to keep a look after your portfolio. However, while robos were invented to manage smaller accounts, their potential is growing; some robos now manage accounts that hold over seven figures worth of assets.
So, is a Robo Right for You?
The answer depends on your individual needs. You’ll have to think about whether or not you’re ready to invest the time and effort that managing a portfolio requires- if the answer is “no,” a robo might be a right choice for you.