Here we graded the platforms on the quality of financial planning services offered. Robos that allowed users to build or create single or multi-goal financial plans were awarded points. Other financial planning tool features that earned points were those that allowed for “what if” scenarios; helped users calculate retirement spending needs, including social security benefit estimates; allowed for the inclusion of pension or other retirement income; and offered suggestions on appropriate monthly saving goals. In this issue of the Ranking, points were awarded if their planning tools had specific functionality. For example, if the single-goal planning tool could: One, model future account values or spending; two, accept a user input of an account value or spending goal; and three, show either a likelihood of success or changes to improve goal outcomes, then all points were awarded. If only some of these features were present, then partial points were awarded.

Here we evaluated the user interface and the digital customer experience. We looked at the ease of getting to basic account information and general accessibility of the site. We measured the number of clicks required to access basic account and portfolio information, and used third-party software to produce an “accessibility score.” Points were also awarded to platforms that had good content and articles on basic personal finance and investing topics. During onboarding, we looked to see if the onboarding questionnaire took into account a user’s comfort with investing and inquired or mentioned whether the user has an emergency fund. We also scored robos that had the ability to aggregate held-away accounts for a holistic financial picture. Availability of live chat options and mobile apps also helped robos score higher in this category.

Robos were awarded points for different types of features. Tax-loss harvesting, tax efficiency, tax location strategies, smart dividend reinvestment, ability to trade fractional shares, cash management features, types of accounts offered, access to impact or other themed portfolios, and the ability of a robo to customize a portfolio to a specific customer situation were the features we looked for in this category. We also included a field for unique and additive features that were not explicit in our scoring. This unique and additive features criteria was a small portion of the overall features score.

In this category, we looked for things like whether or not a user could easily compare their portfolio to relevant benchmarks to help them understand performance. We also awarded points for platforms that made their models available before account opening or becoming a client, and further points if they also published the performance of their models publically to prospective customers. Availability of white papers and other information on how portfolios are constructed were also awarded points. We also awarded points to those portfolios that did not rely entirely on proprietary products or chose no proprietary products when constructing their portfolios.

Robos with access to live advisors, or the ability to upgrade to a product that has live advisors, earned points. Advisors need to be able to advise or provide financial planning guidance on customer-specific questions to score points. Live customer service and operational support is not sufficient for us to consider it a live-advice relationship. Robos earned more points if there was a dedicated live advisor option, if they required their advisors to hold CFPs, and the minimums at which live advisors are made available.

Robos earned points for having lower investment minimums.

We scored costs on the sum of the management fee and average-weighted expense ratio rather than scoring these two components separately. This method better reflects the true cost incurred by clients. Additionally, we consider a cash allocation as a cost if the cash holding is earning less than a competitive rate which is set based on prevailing market rates for each ranking. The cash allocation had a much smaller impact than management fees and weighted expense ratios.

We used two metrics to grade a robo’s performance. The first was the Sharpe ratio, which is a measure of risk-adjusted returns. The second was their return above/below the Normalized Benchmark. This measurement method reduces the impact of different equity/bond allocations in the portfolio. The method of using a Normalized Benchmark was created by the team at the Robo Ranking and is explained in detail in the Normalized Benchmarking section on the website. The performance time period analyzed is consistent across all robos in each ranking.

This score is based on the AUM and age of the robo advice products. Large amounts of AUM and older products are less likely to be discontinued in the future, forcing a client to change providers or products, which can be disadvantageous to the client. Robos that do not publish their AUM specific to the robo advice product only received the points available for the age of the robo. We encourage robo advisors and their parent companies to release AUM data for their different products in the interest of transparency to the investor.