Runner-Up: Personal Capital
Honorable Mention: Betterment
The best digital planning experiences continue to be offered by independent robo advisors. Wealthfront and Personal Capital stand above their peers by offering robust planning tools to clients and prospective clients alike. Both of these tools can handle complex, multi-goal plans that show users the interaction of all their goals in a single unified plan. These free digital planners also leverage automated account aggregation and provide users with a comprehensive view of their financial picture, regardless of where their assets are held.
Wealthfront provides tools to model six different planning scenarios: retirement, saving for college, buying a home, large one-time expenses, income windfalls, and taking extended time off work to travel. Whenever adding a new goal, Wealthfront has built a robust tool that walks users through the variables that are included in their analysis, projecting how the new goal will impact each of their other investment and spending goals. For example, their extended travel goal considers your current income, net worth, and estimated travel costs, to help users determine the potential impact on their holistic financial plan. Once set up, all goals are plotted along the net worth timeline for easy visualization.
Like Wealthfront, Personal Capital’s planning tool can model a broad set of goals in a unified plan. They are able to factor seven different types of income events and ten different spending goals into their analysis. While Wealthfront guides users through the planning process, providing recommendations along the way for each goal, Personal Capital’s tools are primarily driven by user input. For example, Personal Capital’s home purchase tool takes in the down payment and age at which the purchase will occur, but does not adjust spending to account for a change in the cost of living due to mortgage payments, property taxes, etc. In contrast, Wealthfront’s tool considers a user’s current housing costs, income, where they want to purchase, the length of the mortgage, and other variables to give users a range of home values they can afford. Once selected, Wealthfront then shows how homeownership will affect a user’s net worth over time by plotting it into a unified plan. Therefore, while Personal Capital offers a wider breadth of planning options, we gave the edge to Wealthfront as the Best Robo for Digital Financial Planning due to their more dynamic, data-driven planning tools.
While their digital planning tools may not be as powerful, Betterment also deserves an honorable mention in this category. With Betterment, investors can build multiple financial goals with different risk tolerances that factor in assets held in outside accounts. Betterment then provides recommendations to help investors achieve each independent goal. In our opinion, Betterment lags behind Wealthfront and Personal Capital because: One, there is no way to view a unified plan taking into account the interaction between each independent goal; and two, Betterment’s tools are only available to paying clients.
The Robo Ranking™ is the only comprehensive ranking of robo advisors that includes not only the features and services, but also portfolio performance, sourced from real accounts tracked by Backend Benchmarking. The Robo Ranking™ goes well beyond performance and grades the robos across more than 45 specific metrics. We scored each robo on various high-level categories, such as features, financial planning, customer experience, access to live advisors, transparency and conflicts of interest, size and tenure, account minimums, costs, and performance. Each metric where we grade the robos is specific and unambiguous. See the full scoring rubric here