Socially responsible robo advisors will build a portfolio to invest in companies that contribute to a more ethical and sustainable world with socially responsible robo advisors. We’ve considered the best robo advisors based on commissions, account services, portfolio management, and overall quality.
Provides hedge fund style investing strategies
Titan is an active investment manager, giving you the benefits of a hedge fund-like platform for a fraction of the cost.
What we like
- Investments managed by experts
- Provides investment education
- Tools to track goals
- Modern investing experience
- Zero performance fees
- Several investment strategies
Automated portfolios built around your goals
Axos Managed Portfolios offers automated investment with a low fee and customizable portfolio. Investors can easily track their goals and adapt milestones at any time. Plus, Axos rebalances your portfolio to keep your asset allocation on track with your goals at no extra cost.
What we like
- Low management fees
- Portfolio tailored to your specifications
- Unlimited and automatic rebalancing
- Automated platform
- Adaptable portfolios
- Set personalized goals
What we don't
- Limited account types
- Minimum deposit of $500
- Lack of education tools
Portfolios designed to suit various investment profiles
M1 Finance allows you to invest all your money in any portfolio, or customize it to suit your needs. It then manages your account by maintaining your allocations within the selected Pie through automatic rebalancing. Although it doesn’t offer tax-loss harvesting, it has a feature called ‘tax minimization’ that enables you to sell asset positions in a tax-favorable way.
What we like
- Automated investing with a high level of customization
- No trading or management fees or commissions
- No initial minimum deposit
- You can trade fractional shares
- Socially responsible investing portfolio option
What we don't
- No tax-loss harvesting
- No access to mutual funds, futures, forex, or options investing
- No financial advisors available
Free access to certified financial advisors
Based on your selection, SoFi’s robo advisor uses algorithm-generated investment data to assist you with your investment goals.
What we like
- No account management fees from SoFi
- Access to financial advisors
- Excellent customer support
- Automatic rebalancing of portfolio
- Wide range of investment portfolios
What are socially responsible robo advisors?
Socially responsible robo advisors are designed for investors who want to align their investments with social good. Climate change is one of humanity’s most pressing issues, and you might want to invest in renewable energy companies or companies that promote sustainability practices. You might also avoid companies that contribute to climate change through their activities or products.
How do socially responsible robo advisors work?
A socially responsible robo advisor uses an algorithm to evaluate your investment portfolio and make changes as needed. The goal is to improve your financial well-being while also having a positive impact on society. Robo advisors can be used by anyone from millennials who want to invest but don’t know where to start to retirees who want help managing their money in retirement.
Socially responsible robo advisors use the same investment strategies as other robo advisors but ethically apply them. They may avoid investments in companies that support or engage in activities that are harmful to society, such as tobacco companies or fossil fuel producers. Also, these robo advisors tend to avoid investing in companies that you disagree with, such as firearms manufacturers and gun retailers.
What can socially responsible robo advisors help you with?
Here are some ways that robo advisors can help you with:
- Wealth management: Robo advisors help you manage your wealth by providing investment advice, portfolio management, and financial planning. They can help you achieve your financial goals by advising on asset allocation, diversification, and rebalancing. They also provide insights into how you are doing against your goals and suggest improvements for better returns.
- Tax optimization: It can help you optimize taxes by ensuring you have the optimal exposure in tax-favored accounts such as 401(k), 403(b), IRA, and Roth IRA. Minimizing taxes on your investments helps you make more money from investing. Also, some robo advisors also practice tax loss harvesting by offsetting losses with your gains.
- Risk management: These automated advisors utilize the Modern Portfolio Theory (MPT) to construct optimized portfolios to reduce risk while maintaining high returns over time. This is achieved through an algorithm that looks at historical data to determine the optimal mix of stocks, bonds, and other assets that will give you the best chance at achieving your investment goals.
- Portfolio rebalancing: If you’re unsure how often you should rebalance your portfolio or what it is and why it’s essential, Robo advisors can walk you through this process. They’ll also ensure that your portfolio is adequately diversified across asset classes.
- Automated asset allocation: This is another feature that some Robo advisors offer. Instead of choosing your allocation — stocks, bonds, and cash — the Robo advisor will automatically invest the right amount of money in each category based on your risk tolerance, life cycle, and age.
Who are socially responsible robo advisors best for?
Socially responsible investing (SRI) can be for anyone who wants to support sustainability, a particular cause, etc. Some of these include:
- Social justice activists: While SRI goes beyond the scope of just social justice, activists in this area can benefit from a broader perspective regarding the companies they invest in. Adopting an SRI strategy can help ensure their money is invested responsibly.
- Religiously devout: For people whose faith dictates how they conduct themselves. SRI can be vital to ensure that your investments match your values.
- Socially conscious: Suppose you’re concerned about issues like climate change or animal cruelty, or you want to advocate for better treatment of factory workers worldwide. In that case, SRI can allow you to invest in companies working towards making the world a better place.
What are the benefits of socially responsible robo advisors?
Here are some benefits of socially responsible Robo Advisors:
- Allows you to invest in what you believe in: When it comes to investing, most people want to know that they are positively impacting the world. Social responsibility investing is one way to invest in companies that align with your values. This form of investment allows you to invest in ethical companies that follow responsible business practices. These include companies that offer equal pay for women, have sustainable products or services, and those work to promote social justice and equality.
- Allows investors to reward ethical companies: Robo advisors also allow investors to reward ethical companies by investing their money into those businesses. Investors can invest in companies that align with their values and help support businesses with ethical solid policies and practices. This helps ensure that the world continues to evolve into a better place for everyone involved.
- Gives you a sense of fulfillment: When you invest with a socially responsible robo advisor, you are not only helping the environment but also helping people. You will be contributing to their lives with your investments. This is why choosing an investment firm that actively supports social causes and charities within your community or country is essential. It gives you a sense of fulfillment knowing that you have helped someone in need.
- Helps you diversify: Robo advisors offer diversified portfolios that are balanced between stocks and bonds and other investments such as commodities, real estate, and ETFs. This way, if one asset class gets affected by some external factor, there is still another asset class that would potentially compensate for its losses.
- Allows you to invest according to your values: Investing according to one’s values is essential for several reasons. It allows investors to align their investments with their personal beliefs, which helps them sleep better at night knowing that they’re making decisions that align with their principles.
- Helps bring desirable change to the planet: In addition to aligning your investments with your personal beliefs and values, investing in companies that have a social impact can help bring change to the planet by contributing to a better future for all living beings — humans, animals, and plants. These organizations typically have a positive impact on society.
How to choose the best socially responsible robo advisors
Here’s what you should look for when selecting an socially responsible robo advisor:
- Low investment-expense ratios: You should first consider how much it will cost to invest your money. Many robo advisors charge fees based on the amount invested in their portfolios. Others charge an annual fee regardless of how much money is invested. The lower these fees are, the better deal you’ll get on your investments — and more money will go towards building wealth for you.
- Specialty portfolio options: Suppose you want to invest in companies involved in activities like renewable energy or organic farming, some robo advisors offer specialty portfolios that let you do that easily. These individual portfolios may have higher expense ratios than non-specialty portfolios — but they’re still usually lower than traditional mutual funds or other managed funds.
- Investor tools and educational resources: Look for educational resources on their website, a mobile app that helps you learn about investing, track your investments, and manage your portfolios. These resources should include information on how to set goals, create an investment plan, understand risk tolerance, and more.