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What Are Online Financial Advisors?
A financial advisor is a catch-all term that includes financial planners and investment advisors. Most online advisors offer investment management — whether it's carried out by a human or a sophisticated computer algorithm — and financial planning services or tools.
Types of Online Advisors
The main types of online financial advisors are:
- Robo-Advisors: Automated investment platforms (aka robo-advisors) use algorithms to generate a custom investment portfolio based on an individual's risk tolerance, goals, and time horizon. Robo-advisors typically offer low-cost ETFs as a cost-effective way to instantly diversify an investor's asset allocation and mitigate risk.
- Human Advisors (Virtual): Financial advisors that offer personalized financial planning and investment advice online through virtual meetings, email, and other virtual communication channels.
- Hybrid Models: Some online brokerages offer hybrid financial advice, combining automated investment advice and management through a robo-advisor and one-on-one consultation from a human advisor.
Top Online Financial Advisors: Business Insider's Picks
For this list, we didn't consider online advisors that match clients and advisors for comprehensive financial planning services, such as Zoe Financial or Facet Wealth. Instead, we focused on tech-driven firms where you can access an automated and personalized portfolio and consult a professional for advice when needed.
Here are our top picks for the best online financial advisors as picked by Business Insider editors in 2024.
SoFi Automated Investing
Best For: Low Fees
SoFi Robo Investing offers individual and joint taxable brokerage accounts, traditional IRA, Roth IRA, and SEP IRA.
SoFi® only has a 0.25% advisory fee, one-on-one consultations with CFPs, portfolio diversity, and goal-planning features. SoFi builds a personalized investment portfolio based on your risk tolerance, goals, and time horizon. Additional SoFi membership perks include loan discounts and career counseling.
Cons: SoFi doesn't have tax-loss harvesting features and limited portfolio diversity.
Betterment
Best for: Diversified Investing
Betterment Investing offers individual and joint taxable brokerage, traditional IRA, Roth IRA, SEP IRA, inherited IRA, and trust.
Betterment is a robust trading platform offering premium plans with unlimited access to CFPs through phone or email. Investors can use the platform's goal-setting feature, ESG investing, automatic rebalancing, and easy-to-use financial dashboard.
Cons: Accounts with a $100,000 balance can upgrade to get advisor access, but the annual fee increases from 0.25% (an industry low) to 0.40%
Wealthfront
Best for: College planning and saving
Wealthfront Investing offers individual and joint taxable brokerage, traditional IRA, Roth IRA, SEP IRA, trust, and 529 savings plan.
Wealthfront is one of the best online financial advisors for college education savings and cryptocurrency trusts. You can borrow up to 30% of your investment balance at a low interest rate with a portfolio line of credit. Wealthfront also offers personalized recommendations with smart financial planning software.
Cons: On-staff financial advisors don't offer personalized advice
Ellevest
Best for: Financial Planning and Personal Development
Ellevest offers individual taxable brokerage, traditional IRA, Roth IRA, and SEP IRA (all held at Folio Investments).
Ellevest is a comprehensive financial advisor and trading platform built around women's unique needs and challenges. Investors get access to an extensive library of content and advisor-led workshops. Additionally, Ellevest offers a socially responsible investment portfolio and monthly progress reports.
Cons: Financial coaching costs extra (but members get 30%- 50% off). Access to retirement account management requires an upgrade.
Ameriprise Financial Investments
Best for: Retirement Saving
Ameriprise Financial Investments offers three managed account options that can be opened as an individual brokerage account, traditional IRAs, Roth IRAs, Simple IRAs, SEP IRAs, 401(k)s, 403(b)s, 529 plans, and Coverdell education savings accounts (CESA).
Ameriprise Financial Investments is one of the largest registered investment advisors in the US and is best for experienced investors looking for advanced charting and investing features. You'll get access to fiduciary financial advisors for consultations or account management.
Cons: Ameriprise 's managed account fees are high, and it has a complex fee structure.
Ameriprise Financial Services review
Wealthramp
Best for: Vetted fiduciaries
Wealthramp is a personalized advisor matching service that helps people find reliable money advise. After answering a series of questions about your financial situations and goals, Wealthramp generates advisor matches based on your preferences.
Wealthramp's fiduciary advisors are fee-only and offer various general investing and estate planning services. You can find specialized financial planning, like tax, divorce, estate, and legacy, LQBTQ+ financial planning, and special needs planning.
Cons: Wealthramp is not a brokerage and does not directly offer trading or investment services.
How Much Do Online Financial Advisors Cost?
Financial advisors providing financial advice often charge by the hour, typically between $100 to $300. Advisors creating a comprehensive financial plan tend to charge a flat rate between $1,000 and $3,000.
If you hire an advisor to manage your investment portfolio, you'll be charged a percentage of your account balance, typically between 1% and 3% annually. In comparison, that's much higher than the fees that the best robo-advisors charge; you get the added benefit of building a relationship with a trusted source who can adjust your strategy as needed, provide personal recommendations, and answer questions when they arise.
How to Choose the Best Online Financial Advisors
The best online financial advisor for you depends on your goals, risk tolerance, investments, and time horizon. If you're a new investor interested in passive investing, an online robo-advisor is likely a good place to start. On the other hand, if you're looking for professional insight and a customized financial plan, you're better off with access to a human advisor through phone or video calls.
You can also meet with an expert in person for financial guidance. So if you prefer to meet face-to-face, here are some tools to find some in your area:
- CFP Board's Let's Make a Plan
- This is a database of all CERTIFIED FINANCIAL PLANNER™ professionals authorized to use their CFP® marks by the CFP® Board and are accepting new clients.
- Using the advanced search function, you can choose from over 40 focus areas you want help with and include your current amount of investable assets.
- Click here to visit the CFP Board website.
- XY Planning Network
- This database helps connect young professionals — those in generations X and Y (millennials) — with individual advisors.
- Every advisor holds the CFP® certification, is a fiduciary, does not require a minimum net worth to take on new clients, and does not earn commissions.
- Click here to visit XY Planning Network.
- The National Association of Personal Financial Advisors
- This platform maintains a database of fee-only financial advisors, not specifically CFP® certificates, who commit to a fiduciary oath once a year.
- You can filter by location to see a list of advisory firms in your area.
- Click here to visit the National Association of Personal Financial Advisors website.
Benefits of Using Online Financial Advisors
Online financial advisors allow you to ditch the in-person hassle and access expert financial guidance from your phone or home computer. Online financial advisors leverage investment technology and are generally low-cost compared to traditional in-person consultants.
Not only does it make investing more affordable for many individuals, but clients can more easily adjust and monitor their investments on their own time. Robo-advisor and hybrid online advisors typically offer online dashboards and tools for convenient managing and monitoring.
FAQs
Whether a financial advisor is worth it depends on your goals. Not everyone needs a financial advisor — human or otherwise. However, you should consider paying a financial advisor if you need specific advice on your finances or investment strategy or if you're too overwhelmed or confused by your money to plan for retirement or invest in the stock market.
One way to choose a good financial advisor is to consider whether they are a fiduciary, meaning they operate in their clients' best interest and are fee-only. This means client fees are their only compensation, and they don't earn a commission when they invest in certain funds or buy financial products.
The cost of an online financial advisor varies from platform to platform and advisor to advisor. The cost largely depends on the services, licensing, account balance, and complexity. Robo-advisors typically charge lower fees than human advisors.
Why You Should Trust Us: Our Methodology
We Reviewed the best online financial advisors using Business Insider's methodology for rating investment platforms. We compared a long list of Registered Investment advisors (RIAs), considering fees, investment selection, access, ethics, and customer service. The best online advisors have top marks in all five categories. Investment platforms are given a rating between 1 and 5.
Sofi Active Invest: Investments are not FDIC-insured - Are not bank-guaranteed - May lose value - Automated investing is offered through SoFi Wealth LLC, an SEC-registered investment adviser.
