In a year marred by volatility, robo-advisors that manage to provide stability while offering more than just strong returns have a leg up on the competition.
The
(Scroll down to see a list of the rankings)
According to the report, robos are growing increasingly attractive to investors due to their lower minimums and costs. And because many of these products are still relatively new to the landscape, investors have little information available to help them pick the right robo.
With the goal of bringing transparency to the world of digital financial advice, the Condor Capital ranking grades robo-advisors across more than 45 metrics. Each robo is then scored in the categories of features; financial planning; customer experience; access to live advisors; transparency and conflicts of interest; size and tenure; account minimums; costs; and performance to earn a total score out of 100.
Thomas Leahy, senior financial analyst of Condor Capital Wealth Management, told Financial Planning that each graded metric is specific and unambiguous, making the ranking useful tool for investors who are mulling the decision of turning to a digital advisor.
But make no mistake, the human touch is still present among most of the highest-ranking robos. And Leahy said it's one of several factors not directly tied to performance or returns that separates the best from the rest.
"We really value if you're able to call in with your digital platform open in front of you. And maybe via a screen share or something similar have someone else look at it with you, start to educate you on how it works, what you own and make some major planning decisions," he said. "Although from a tech perspective a lot of them are similar, access to an advisor is one big differentiator."
Looking forward, Leahy said he expects the top robos to be the ones that do the best job of enhancing digital planning, noting a Wealthfront feature called "
"From a digital perspective, those advisors who have an all-in-one holistic plan where you can see everything all at once, including even outside accounts … it really gives you just a great way of seeing your full picture," Leahy continued. "We want to see more levers. We want to see the ability to change hypothetical inputs such as contributions or life events, and so I think that digital planning is definitely going to be a key aspect.
"And if I may, just on performance, if rates move higher, some of these robos that are very tech-heavy could get hit pretty hard. Companies without a lot of earnings now that are projected out into the future got hit very hard this year, so I am a little bit concerned about some of the robots that don't have enough value exposure in the portfolio."
The ranking was part of the
exposure to a rise in interest rates in mind were king.
For the period ending June 30, a vintage Wealthfront portfolio, an inflation-conscious Morgan Stanley portfolio and a Personal Capital portfolio were the strongest.
"In general, robo-advisors with a higher allocation to value stocks outperformed year-to-date,
while those with a higher allocation of growth stocks performed better over long periods," the report said. "Wealthfront was able to outperform growth-oriented robo-advisors in all periods thanks to a 10% allocation to energy, which has been exceptionally valuable as the conflict in Russia/Ukraine pushed prices much higher. Furthermore, our Wealthfront portfolio was allocated significantly to municipal bonds, which also held up particularly well."
Scroll down to see how the top 15 robos of 2022 fared in the overall rankings, followed by the top performers in the sub-rankings of best low-cost robo; best robo for first-timers; best robo for digital financial planning; and best robo for complex financial planning.
