SoFi Invest, SigFig and E*Trade came out on top in the latest ranking of robo-advisors by Backend Benchmarking, a robo rating agency based in Martinsville, N.J.
In the same reports, the company criticized Schwab for putting investors in a portfolio that underperformed.
The information was contained in the 20th edition of the Robo Report and the 7th edition of the Robo Ranking, both released today. The report covers the second quarter in a continuation of an ongoing study that monitors well-known robo-advisors. Seventy-seven accounts from 43 providers were included in the report.
At the end of last year, robo-advisors managed about $785 billion in assets, up from $631 billion at the end of 2019, the firm said. Of the $785 billion, $77 billion was invested with independent fintech providers and $395 billion was managed by employer plan providers, while financial institutions managed about $313 billion.
“SoFi narrowly edged out SigFig for the top spot for Best Overall Robo Advisor in this edition of the Robo Ranking,” David Goldstone, manager of research and analytics for Backend Benchmarking, said in a statement.
Goldstone added, “SoFi’s first-place finish can be attributed to its top performance grade, access to financial experts, and exceptionally low total cost.” E-Trade finished third in the overall ranking.
For the second and third place finishers, BackendBenchmark said, “SigFig continues to stand out with stellar long-term performance, low cost, and unique portfolio tools like the Portfolio Tracker. E*Trade’s balanced platform offers different themes, thorough tools, and a top-tier track record. Although investors will benefit most from selecting a robo advisor based on their own specific needs, these are some of the best picks overall.”
“While AUM growth had a tailwind of positive market returns for the year, a 25% growth in AUM for a maturing industry is strong,” Goldstone said.
Ken Schapiro, CEO of backend Benchmarking, said in a statement, “More than 10 years after the first direct-to-consumer robo advice platforms launched, the industry is entering a more mature phase. As the industry matures, platforms are expanding services and features.” For instance, SoFi, which was originally a lender, now offers banking, self-directed investing, managed accounts, proprietary funds, and is even offering some clients the ability to invest in IPOs.
The report said Schwab’s high cash allocations cost investors more than $500 million in lost portfolio growth during the past six years.