Automated investing: how robo-advisors work, what they cost and how to choose one
BotIndex editorial team · Updated 6 Nov 2026 · Editorial policy
Automated investing means software builds and manages a portfolio for you, usually from a questionnaire about your goals and risk. Robo-advisors such as Wealthfront and Betterment rebalance ETF portfolios, invest recurring deposits and may harvest tax losses, for about 0.25% a year or a small monthly fee. They are not trading bots, and most only accept US residents.
What is automated investing?
Automated investing means software builds a portfolio for you and keeps it on track without you placing each trade. The best-known form is the robo-advisor: you answer questions about your goals and risk, and the service picks a mix of funds, invests your deposits and adjusts the mix over time.
The SEC defines a robo-adviser as “an automated digital investment advisory program.” In most cases it collects your goals, time horizon, income, other assets and risk tolerance through an online questionnaire, then “creates and manages an investment portfolio for you” (SEC Investor Bulletin: Robo-Advisers). Many use exchange-traded funds (ETFs), and some offer little or no contact with a human.
The goal is long-term investing for something like retirement or a house deposit. It is not trying to profit from short-term price moves. That is the main thing separating it from the trading bots BotIndex reviews.
What a robo-advisor actually does
Most automated investment platforms combine the same four jobs.
Goal-based portfolios. Your questionnaire answers map to a model portfolio, usually a mix of stock and bond ETFs. A longer horizon or higher risk tolerance usually means more stocks. The SEC points out that the recommendation is only as good as the information the robo-advisor asks for, and that keeping it up to date is often your job.
Rebalancing. Markets move your mix away from its target. The service sells some of what grew and buys what lagged to bring it back. The SEC notes that rebalancing can have tax consequences in a taxable account, so ask how often it happens and what triggers it.
Recurring deposits. You set a transfer, for example every payday, and the service invests it automatically. This is the same idea as dollar-cost averaging (DCA): fixed amounts at regular intervals instead of trying to time the market. Our DCA calculator shows how regular buys add up.
Tax-loss harvesting. In a taxable account, the service sells investments that are down to realize a loss that can offset gains, then buys something similar. The SEC warns that the value depends on your tax situation that year and that wash-sale rules can apply, so you may want a tax adviser’s view.
Our data lists these features for the robo-advisors we track:
| Service | Automation listed in our data | Assets |
|---|---|---|
| Wealthfront | Robo-advisor, auto-rebalancing, tax-loss harvesting, direct indexing, dividend reinvestment | ETFs, stocks |
| Betterment | Robo-advisor, auto-rebalancing, tax-loss harvesting, recurring investments, glide path | ETFs, stocks |
| M1 | Auto-invest, dynamic and one-click rebalancing, recurring investments, custom portfolios (“Pies”) | Stocks, ETFs, crypto |
| Composer | AI and no-code strategy builder, backtesting, auto-trading, automatic rebalancing | Stocks, ETFs |
M1 and Composer sit between a robo-advisor and a trading tool. On M1 you choose the holdings and it automates deposits and rebalancing. On Composer you build or pick a rule-based strategy, backtest it and let it trade in your account.
Automated investing vs trading bots vs “autopilot” apps
The words “automated”, “robo” and “autopilot” get used for very different products. The table sorts them by who decides what to buy.
| Type | Who decides | Typical time frame | Examples in our data |
|---|---|---|---|
| Robo-advisor | The firm’s model portfolio, based on your questionnaire | Years | Wealthfront, Betterment |
| Automated DIY portfolio | You pick holdings; software deposits and rebalances | Years | M1 |
| Strategy automation | Rules you build or copy run automatically | Days to months | Composer |
| Trading bot | Rules you set (grid, DCA, signals) trade on an exchange via API | Minutes to weeks | See what a crypto trading bot is |
| Copy / autopilot app | Another person’s trades are mirrored in your account | Varies | See copy trading |
| AI signal app | A model rates stocks; you usually place the trades | Varies | Tickeron, Danelfin |
Robo trading and autopilot trading apps
“Robo trading” and “autopilot trading app” usually mean something more active than a robo-advisor: software or a copied trader that buys and sells frequently. That is a trading product, with higher turnover, more fees and more risk than a rebalanced ETF portfolio. Our guide to automated trading covers how those systems work.
Apps that follow politicians’ stock trades
Several apps copy or track the trades that members of Congress disclose. House rules require a Periodic Transaction Report for reportable trades over $1,000, due by the earlier of 30 days after the member learns of the trade or 45 days after it happened (House Committee on Ethics). So you may be copying a trade made more than a month ago, without knowing why it was made. These apps are copy trading, not automated investing, and BotIndex has no data on them.
AI investing apps
Searches for an “AI investing app” or “best AI investment apps” mix two things. Robo-advisors invest for you using rules and model portfolios. AI rating and signal apps score stocks but often leave the trading to you: Tickeron’s own FAQs say its robots are not connected to client brokerage accounts, and Danelfin does not trade for you, according to our reviews. Any outperformance or accuracy figure these apps publish is the provider’s own claim, not a verified result. Our AI stock trading guide looks at the evidence.
How much does automated investing cost?
Robo-advisors charge in one of two ways: a percentage of your balance per year (the advisory fee), or a flat subscription. Fund costs come on top. The SEC tells investors to check “other costs” such as the management fees of the ETFs bought for your account, because a cheap adviser using expensive funds can still cost a lot overall.
| Service | Platform fee (our data) | Minimum |
|---|---|---|
| Wealthfront | 0.25% per year advisory fee | $500 account minimum |
| Betterment | $5/month or 0.25%/year (Digital plan); $0 trading commissions | No account minimum; $10 minimum deposit |
| M1 | $3/month, waived over $10,000 | $100 first deposit ($500 for an IRA) |
| Composer | One automated strategy free; paid plans from $10/month | $50 minimum deposit |
All figures come from each provider’s pricing and help pages, linked in our reviews. Check them before you sign up, because pricing changes.
Percentage fee vs subscription: a worked example
Example, with made-up round numbers: you have $10,000 invested.
- A 0.25% yearly advisory fee costs $25 a year. At $100,000 it costs $250.
- A $5 monthly subscription costs $60 a year whatever your balance.
- A $3 monthly fee waived over $10,000 costs nothing at that balance.
A flat fee is expensive on a small account and cheap on a large one; a percentage fee is the reverse. Work out the yearly cost at your actual balance, and add the funds’ expense ratios. Our fee calculator helps with the same maths for trading tools.
Are robo-advisors regulated?
In the US, yes. The SEC describes robo-advisers as registered investment advisers that use “computer algorithms to provide investment advisory services online,” and its 2017 staff guidance covers their disclosure, suitability and compliance duties under the Investment Advisers Act (SEC press release 2017-52). The investor bulletin adds that, although automated, they must comply with the securities laws for SEC- or state-registered advisers.
Two checks take a few minutes:
- Adviser registration. The SEC bulletin points to its Investment Adviser Public Disclosure database on Investor.gov, and to each firm’s Form ADV brochure for services, fees and conflicts.
- The broker that holds your money. A robo-advisor is often paired with a broker that executes the trades. Look that firm up on FINRA BrokerCheck. Composer, for example, is a SEC-registered broker-dealer and FINRA/SIPC member, according to our review, and it receives payment for order flow.
Registration does not mean your portfolio can’t lose money. It means the firm has duties and you can see its record.
Where can you use automated investing apps?
Mostly in the US only. Every robo-style service in our data limits accounts to US residents:
- Wealthfront: its terms say it “is only available for use in the United States.”
- Betterment: its help centre says it cannot accept customers residing outside the United States, and requires a permanent US address and a Social Security Number or ITIN.
- M1: requires a current US residential address and US citizenship or permanent residency.
- Composer: live trading “is not currently available to international users outside of the US.”
Our United States page lists what else is available to US residents. Outside the US, look for a robo-advisor registered with your own country’s regulator.
Is there automated investing for crypto?
Not from these firms in the same form. The closest thing in our data is Stoic AI, which runs automated crypto portfolio strategies on your own exchange account through API keys, from $24 a month with a $500 minimum. It is a crypto portfolio bot, not a registered investment adviser, and any past returns on its pages are the provider’s own claims.
How to choose an automated investing platform
The SEC bulletin is a good checklist. In short:
- Decide how much control you want. Hands-off ETF portfolio (Wealthfront, Betterment), your own picks with automated upkeep (M1), or rules you design (Composer).
- Check the account types. Taxable, IRA, Roth IRA, 401(k) rollover, joint account. Not every service offers all of them.
- Look at what the questionnaire asks. If it ignores debts, other savings or your actual goal, the portfolio may not fit you.
- Compute your yearly cost. Advisory fee or subscription at your balance, plus fund costs, plus any transfer-out fees.
- Ask about human help. The SEC notes some robo-advisors only offer technical support, and others offer advisers only above a balance threshold.
- Verify registration on Investor.gov and BrokerCheck, and read Form CRS and Form ADV.
- Be wary of performance marketing. The SEC notes some firms may show hypothetical performance, and robo portfolios may not have been tested in stressed markets.
Our ranking of the best automated investing apps applies these criteria to the services we track. BotIndex’s main focus is crypto trading bots; if you want something more active than a robo-advisor, start with how to choose a trading platform.
FAQ
What is the best automated investing app?
It depends on how much control you want. A classic robo-advisor such as Wealthfront or Betterment picks and rebalances an ETF portfolio for you; M1 lets you choose the holdings and automates the deposits and rebalancing; Composer runs rule-based strategies you build. Compare the yearly cost on your balance, the account minimum, the account types you need and whether the firm is registered.
Is there an AI investing app that invests for you?
Robo-advisors invest for you, but they work from rules and a questionnaire, not from a model that predicts prices. Apps marketed as AI investing often only give ratings or signals that you act on yourself; Tickeron's own FAQs say its robots are not connected to client brokerage accounts. Treat any performance or accuracy figure as the provider's own claim.
Can I open a robo-advisor IRA or Roth IRA?
Many robo-advisors manage retirement accounts as well as taxable ones, and the SEC suggests asking which account types a robo-advisor manages before you sign up. In our data, M1 lists a $500 minimum first deposit for an IRA versus $100 for a regular account.
Are apps that follow politicians' stock trades a good idea?
They copy trades that members of Congress disclose, and House rules let those reports be filed up to 45 days after the trade. By the time you copy one, the price and the reason for the trade may have changed. It is a form of copy trading, with the same risks.
Are robo-advisors safe?
In the US they must follow the securities laws for SEC- or state-registered investment advisers, and you can look a firm up in the SEC's adviser database or FINRA BrokerCheck. Registration does not protect you from market losses; your portfolio can still fall in value.
Sources
- SEC Investor.gov — Investor Bulletin: Robo-Advisers ↗checked 6 Nov 2026
- SEC — Press release 2017-52: SEC Staff Issues Guidance Update and Investor Bulletin on Robo-Advisers ↗checked 6 Nov 2026
- FINRA — BrokerCheck ↗checked 6 Nov 2026
- House Committee on Ethics — Periodic Transaction Report Calculator ↗checked 6 Nov 2026
Not financial advice. Trading bots do not remove market risk.