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Methodology

  1. The survey used publicly available information for each robo-advisor in fall of 2018. We used Morningstar to collect the financial performance and cost data from December 1, 2017 to December 1, 2018 (the “Review Period”) of the underlying ETFs held in the surveyed robo-advisor portfolios. The cost data reflects that most recent total expense ratio of the underlying ETFs as provided in their annual report and collected by Morningstar.
  2. Nummo weighted several factors such as the number and quality of services the robo-advisor offered, the fees charged, and the performance data of the portfolio during the Review Period in creating a composite score. The weightings were as follows:
  1. Rankings for Taxable Accounts by Portfolio Style (General Investing)

    Score = 20.00%*(Year Return) + 20.00%*(Total Cost) + 10.00%*(Minimum Deposit) + 15.00%*(Tax Services) + 5.00%*(Automatic Deposits) + 5.00%*(Access to a Financial Planner) + 5.00%*(Access to a CFP) + 5.00%*(Fractional Share Investing) + 5.00%*(Automatic Dividend Reinvesting) + 5.00%*(Socially Responsible Investing Strategy) + 5.00%*(Automatic Rebalancing)

  2. Rankings for Retirement Accounts by Portfolio Style (Retirement Strategies*)

    Score = 20.00%*(Year Return) + 20.00%*(Total Cost) + 15.00%*(Minimum Deposit) + 6.43%*(Automatic Deposits) + 6.43%*(Access to a Financial Planner) + 6.43%*(Access to a CFP) + 6.43%*(Fractional Share Investing) + 6.43%*(Automatic Dividend Reinvesting) + 6.43%*(Socially Responsible Investing Strategy) + 6.43%*(Automatic Rebalancing)

  3. Lowest Total Cost Robo-Advisors

    Score = 60.00%*(Total Cost) + 10.00%*(Minimum Deposit) + 9.00%*(Tax Services) + 3.00%*(Automatic Deposits) + 3.00%*(Access to a Financial Planner) + 3.00%*(Access to a CFP) + 3.00%*(Fractional Share Investing) + 3.00%*(Automatic Dividend Reinvesting) + 3.00%*(Socially Responsible Investing Strategy) + 3.00%*(Automatic Rebalancing)

  4. Lowest Total Cost Robo-Advisors

    Score = 60.00%*(Total Cost) + 10.00%*(Minimum Deposit) + 9.00%*(Tax Services) + 3.00%*(Automatic Deposits) + 3.00%*(Access to a Financial Planner) + 3.00%*(Access to a CFP) + 3.00%*(Fractional Share Investing) + 3.00%*(Automatic Dividend Reinvesting) + 3.00%*(Socially Responsible Investing Strategy) + 3.00%*(Automatic Rebalancing)

  5. Best Services for Investors with Small Opening Amounts

    Score = 13.00%*(Total Cost) + 60.00%*(Minimum Deposit) + 8.00%*(Tax Services) + 3.00%*(Automatic Deposits) + 2.00%*(Access to a Financial Planner) + 2.00%*(Access to a CFP) + 3.00%*(Fractional Share Investing) + 3.00%*(Automatic Dividend Reinvesting) + 3.00%*(Socially Responsible Investing Strategy) + 3.00%*(Automatic Rebalancing)

  6. Best Robo-Advisors for Socially Conscious Investors

    Score = 20.00%*(Year Return) + 20.00%*(Total Cost) + 15.00%*(Minimum Deposit) + 15.00%*(Tax Services) + 5.00%*(Automatic Deposits) + 5.00%*(Access to a Financial Planner) + 5.00%*(Access to a CFP) + 5.00%*(Fractional Share Investing) + 5.00%*(Automatic Dividend Reinvesting) + 5.00%*(Automatic Rebalancing)

  1. For rankings a and b, performance and cost data were normalized between 0 to 1 based on the taxable or retirement portfolios in each risk group. Thus, the normalized performance value for a taxable growth portfolio is normalized based on the return data from other taxable growth portfolios.
  2. The minimum deposit required was similarly normalized between 0 to 1, with a minimum deposit of $50,000 or greater being removed for normalization purposes and assigned a zero for weighting purposes.
  3. Cost data metrics for robo-advisors that charge flat fees were calculated assuming the investor deposited the median minimum deposit of all similar taxable or retirement portfolios.
  4. Points for Tax Services were given according to the following methodology:
  1. No tax services offered received 0 points
  2. Tax conscious allocation strategy received 50% of the applicable weight
  3. Tax loss harvesting received 75% of the applicable weight
  4. Stock level tax loss harvesting received 100% of the applicable weight
  1. For rankings c through e, the complete robo-advisor service is reviewed based on collected portfolio data.
  2. For ranking c and d, the Total Cost measure was calculated as an average of the Total Costs of all the robo-advisor’s portfolios on record. Additionally, the services Acorns, Stash and 200Deep were removed for normalization purposes because their uncharacteristically high costs skewed the data. They were assigned a 0% for the total cost weight because their fees were much higher than other portfolios.
  3. For rankings c and d, points for offering an SRI strategy were given for whether the robo-advisor provided a strategy and not necessarily whether Nummo had data on the specific SRI portfolio.
  4. For ranking e, only robo-advisors whose SRI portfolios Nummo had collected data for were considered. The performance and total cost measures are averages of the SRI portfolios for each robo-advisor.

Limitations

  1. Cost Data. Because the expense data provided through Morningstar are the total expense ratios (“TERs”) provided by ETFs in their past annual reports, the TERs may not accurately reflect the actual expense ratios for the Review Period. The cost data does not include any additional fees (e.g., transaction fees) that may be charged at either the robo-advisor or ETF level that isn’t included in the robo-advisor’s management fee or the ETF’s TER.
  2. Performance Data. The historic return data reflects the return on the underlying ETFs within a robo-advisor portfolio, assuming all dividends are automatically reinvested in the issuing ETF and net of fund level fees. The return data does not account for management fees charged at the robo-advisor level.
  3. Portfolio Allocations. Robo-advisors may adjust which ETFs they hold in different portfolios. Nummo periodically updates the ETF holdings of the robo-advisor portfolios. Upon updating, financial data from Morningstar is pulled based on the ETFs that are included in the portfolio at that time. The historic performance and cost data used in this report may be calculated based on an underlying ETF that was not present in the robo-advisor’s portfolio during the entire Review Period. The historic performance and cost data assumes that the robo-advisor consistently held the same portfolio allocation Nummo has identified throughout the Review Period. This is likely not the case – and thus the true return on a robo-advisor portfolio will be different than the historic performance and cost data suggests. Additionally, a robo-advisor portfolio may not continue to hold the same ETFs that Nummo has identified in the future.
  4. Risk Levels. Higher net returns are positively correlated with higher equity holdings. As a result, the equity cut offs Nummo selected for deciding the risk categories for the portfolios likely affected which robo-advisor portfolios had the highest performance measures at each risk level and thereby affect the final composite score for rankings a and b above.
  5. Weights. Some services may be more important to certain investors than others. The weights for each factor were set by Nummo based on its opinion of which factors may be more useful to the average investor.
  6. Reliance on Publicly Available Data. Nummo was only able to review certain robo-advisors that made information about their portfolio holdings and processes publically available. As a result, the report does not include every robo-advisor currently operating today. Nor does it include data on portfolios whose portfolio allocations are not publically available.

Disclaimer

  1. This report is not intended to provide legal, tax or financial advice. It is strictly educational in nature and is provided with the understanding that Nummo is not engaged in rendering accounting, investment, tax, legal, or other professional services. Nummo makes no representations, warranties, or guarantees, express or implied, regarding the results or savings that may be obtained through your use of any of the reviewed robo-advisor services. The report is intended only to assist you in your banking decision-making and financial planning and management, and is provided without complete knowledge of your financial situation. If legal, financial, or other professional advice is required, the services of a competent professional person should be sought.
  2. Historic cost are not indicative of future costs. Investment markets have inherent risks and historic performance does not assure future results. The report is intended for a general audience and does not purport to be, nor should be construed as, specific advice tailored to any individual.
  3. There may be omissions or inaccuracies in the information. Nummo relies on publically available information regarding the robo-advisors and some robo-advisors do not make the scope of their services public. While Nummo took care to try and include all accurate available information, some information may nonetheless be inaccurate. You are advised to use this ranking as merely one tool of many when evaluating whether a particular financial product would be right for you. Additional information on these robo-advisors, and others, are available on Nummo.com.

* Certain weights used to calculate the composite score for retirement accounts contained decimals. The weights presented here are rounded to the nearest whole value.