What is a robo-advisor, and is it worth it?
An automated service that builds a portfolio of index funds for you based on a questionnaire, then rebalances it. Convenient for people who want zero decisions; costs a bit more than doing it yourself with one or two funds.
A robo-advisor is software that manages a portfolio for you. You answer a few questions about your age, goals and comfort with risk, it puts your money into a mix of low-cost index funds, and it keeps the mix on target over time. Betterment and Wealthfront are the well-known standalone ones; most large brokers now offer their own.
The appeal is that it removes every decision. You do not pick funds, you do not rebalance, you do not wonder whether you should have more bonds. Money goes in, the software handles it. For someone who would otherwise never get started, that is worth a lot.
The cost is usually around 0.25 percent a year on top of the funds’ own fees, sometimes less. On $10,000 that is $25 a year, which is modest. On $500,000 it is $1,250 a year for something you could do yourself with a target-date fund or two index funds and an annual rebalance.
Some also offer tax-loss harvesting, selling losing positions to offset gains, which can partly cover their fee in a taxable account. Whether the whole package is worth it comes down to one question: will you actually manage it yourself? If the honest answer is no, a robo-advisor is a good deal.
Informational only, not financial advice. Updated September 4, 2026.
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