These Are the Top-Performing Robo-Advisors Over the Past 2 Years

The fourth quarter of 2017 appears to be a milestone in the robo-advisory industry, according to the latest industry report from BackEnd Benchmarking.

Not only did Morgan Stanley and Wells Fargo launch their own digital advisory services during the quarter, but seven leading robos have been in business long enough for The Robo Report to compare their latest two-year performance in addition to quarterly and one-year numbers. (Some leading robos have been in business longer than two years.)

The report, published by BackEnd Benchmarking, also anticipates offerings from Goldman Sachs and JPMorgan Chase.

Despite the growth in the number of robo-advisors and the amount of their assets under management, however, two primary misconceptions about the industry continue, according to the report:

• that investment selection and asset allocation are fully automated
• that digital advisors are attracting mostly mostly younger clients with limited assets

“Although robo-advisors are digitizing and automating many parts of the investment process [including onboarding and tax-loss harvesting], it appears most providers are relying on real people, not just algorithms, in the construction of the model portfolios and asset allocation,” the report states.

It also notes that “robo advice is proving most popular with investors who haven’t had a professional advice solution before,” no matter what their age or size of assets.

The report compares the performance of taxable accounts and IRA accounts among different digital advisors. Seven firms were included in the two-year comparison of taxable accounts that are generally invested in a 60/40 mix of stocks and fixed income and/or cash.

Schwab was the No. 1 performer, with a 27.7% return, followed by SigFig and Personal Capital, which posted gains of 16.3% and 25.1%, respectively.