Robo VS Human, page 5

Published: Apr 27, 2015 9:14 a.m. ET

Slide 5 of 11

Smaller, different: With $520 million in investor money, FutureAdvisor isn’t as big as Wealthfront, Betterment or Schwab. But the San Francisco–based robo isn’t timid, with spokesman Chris Nicholson stressing it can differentiate itself from rivals by sending its algorithms out to a customer’s multiple existing accounts, rather than making the user move money to a new account.

Robots like more funds: The portfolio recommended to MarketWatch would have 12 ETFs instead of the 10 shown, Nicholson said, if the 35-year-old had $100,000 rather $40,000. “Normally we recommend that investors diversify across 12 different funds,” he said in an email. The four robo advisers generally used more funds than the four humans, recommending 11 on average versus six on average by the nonrobots. Pinnacle’s Kitces said a higher number of funds allows a robot to do tax-loss harvesting and tilt portfolios toward value, dividends or other factors that are “reasonable.”

Fees: Investors pay a management fee of 0.5% to FutureAdvisor, or users can get free recommendations, then make the suggested trades on their own.

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