THE RIGHT ROBO ADVISER FOR YOU

We guide you through a crowded field to find the best fit.

- KIM CLARK

Though the investment markets continue to be scary, there’s some good news for anybody who is ready to put some money to work. Thanks to fierce competition among robo-adviser firms, even beginning and small investors can now get top-notch portfolio advice and management at vanishingly low prices—in some cases, for free.

Robo firms have developed sophisticated computer programs to assemble and manage portfolios tailored to individual investors’ risk tolerance and investing horizons. Many are also now racing to offer extras, such as even more portfolio personalization, stepped-up tax strategies, access to alternative assets and more of a human touch. As a result, individual investors of all stripes “can get great service and a soundly constructed portfolio that fits your risk tolerance at low costs,” says Amy Arnott, portfolio strategist at Morningstar, the investment research firm.

Robos might even outshine their human counterparts in some areas. “They can eliminate biases,” says Sophia Duffy, associate professor of business planning at the American College of Financial Services. Such biases might lead to suboptimal portfolios for women or other groups, she says. However, although robo advisers are supposed to follow the Securities and Exchange Commission’s fiduciary rule and act in clients’ best interest, in reality, computer programs are only as trustworthy and capable as the humans who program them, Duffy observes. “Platforms can be built to recommend what’s in the best interest of the firm, not necessarily the client,” she says.

Before you commit your money, make sure you cover the basics with any prospective adviser: