Robo-Advisors That Hold Online Investors’ Hands

By Matt Krantz

If you’d like to tap the wisdom of a financial robot, but you’re not willing to hand over the keys completely to the HAL yet, Robo-Advisors that make recommendations might be for you. These Robo-Advisors allow you to enter your portfolio goals and then spit out a recommended portfolio of exchange-traded funds (ETFs). It’s up to you to actually make the decisions and execute the trades.

A few examples of Robo-Advisors that make recommendations, but don’t actually carry them out, include

  • MarketRiders is aiming to not only design your asset allocation, but also to choose the specific ETFs that can put the plan in motion. You enter some basic information about you and your financial goals, and the site generates an asset allocation plan and recommends ETFs. If your asset allocation falls out of balance — say if one type of investment does better than the others — the site tells you which ETFs to sell and which ones to buy to get back in balance. You still need to log on to your brokerage account and do the buying and selling as suggested by MarketRiders’ instructions, though. You also pay a fee, 0.2 percent, of your assets.

  • Invest-it-Yourself.com brings an à la carte approach to ETFs. You can choose from three menus of portfolios: standard, advanced, and premier. The standard portfolio recommends four asset classes and four corresponding ETFs, while the advanced portfolio recommends eight ETFs, and the premier recommends nine ETFs.

    The system is free, but you’ll be offered additional advisory services that do cost money. Just as with MarketRiders, you need to log onto your brokerage account and do the buying and selling of the ETFs recommended by Invest-it-Yourself.com, unless you sign up for more personalized assistance.

  • iShares isn’t an ETF recommendation service, but it has some aspects that give it the same level of hand-holding, if not more, for investors. iShares provides several asset allocation ETFs — single funds that buy all the ETFs you need for you.

    For instance, you can buy iShares’ S&P Aggressive Allocation fund, with the symbol AOA, and that fund buys all the additional ETFs you need to have an aggressive asset allocation. You find several asset allocation ETFs, including a Conservative Allocation Fund (symbol: AOK), Moderate Allocation Fund (symbol: AOM), and some ETFs that are designed to meet your goals by a specified year in the future.