how robo advisors get paid
the primary way that most robo advisors get paid is through a wrap fee based on assets under management aum while traditional human financial advisors typically charge 1 or more of aum per year many robo advisors charge around 0 3 of aum per year 910another revenue stream is payment for order flow pfof this payment typically fractions of a penny per share results from directing trade orders to a particular market maker pfof can potentially result in better execution prices for clients typically robo advisors bundle various trade orders together into large block orders executed just one or two times a day finally robo advisors can earn money by marketing targeted financial products and services to their customers such as mortgages credit cards or insurance policies this is often done through strategic partnerships rather than advertising networks if the costs of your robo advisor outweigh returns on your investments then you may be better off not using one the best in class robo advisorsthere are hundreds of robo advisors available in the u s and worldwide more of them launch every year they all provide some combination of investment management retirement planning and general financial advice here s a look at our list of the best robo advisors see how we picked them by reading our methodology 