Robo 101

What will it cost me?

Cost is often one of the most important factors in deciding who will manage your finances. Unfortunately, there are may salesman out there who charge way too much, yet due to a lack of transparency, they remain in business. Without a doubt, robo advisors are some of the cheapest options for managed money in the marketplace today.

Total cost may vary from firm to firm, but robo advisors will likely be one of your cheapest options available.While some robo advisors are completely free such as Schwab, others place yearly fees. Generally, costs are measured as a percentage of your AUM, or assets under management. A 1% annual fee on a $100,000 account would be $1,000 per year. While it may not seem like much, these costs can significantly cut into your long-term returns. The average cost for a robo advisor usually varies between free (yes - some options such as Schwab are free!) to 0.50%. Even the high end at 0.50% is generally much lower than traditional investment management firms.  

Whether you choose to invest with a robo advisor or not, be sure to always look at your overall costs associated with the portfolio. Be wary of any advisor who is not readily willing to give you a breakout of there costs.

Top Articles

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The List

There are many roboadvisors to choose from; each with distinct characteristics and a wide variety of services offered. We break down the similarities and differences between these firms here at The List.