Robo-Advisor Fees Explained: What 0.25% Actually Costs
Last updated August 2026
Short answer
A robo-advisor charges an advisory fee, commonly around 0.25% of assets a year, and you also pay the expense ratios of the funds it puts you in, typically another 0.03% to 0.20%. A realistic all-in cost is closer to 0.33% than to 0.25%. On $100,000 that is about $330 a year, charged whether the market rises or falls. Platforms advertising no advisory fee still earn, usually by requiring part of your portfolio to sit in cash. Walnut is not a robo-advisor and is not an investment adviser.
Robo-advisor pricing is honest and it is also easy to underestimate, because the headline number is a percentage and percentages are hard to feel. This page converts it into dollars, adds the layer most comparisons leave out, and explains what a platform charging nothing is earning instead. If you want the decision framework rather than the arithmetic, start with how to choose a robo-advisor.
The four layers of cost
| Layer | Typical range | Shown on the pricing page? |
|---|---|---|
| The advisory fee | Commonly around 0.25% of assets a year; some platforms charge nothing on a base tier, and human-plus-software services run far higher | Yes, stated on the pricing page |
| Fund expense ratios | Roughly 0.03% to 0.20% a year on the ETFs the portfolio holds, weighted by allocation | Only if you look up the funds |
| A required cash allocation | Zero on most platforms; a meaningful share of the portfolio on some that advertise no advisory fee | Stated in the portfolio description, not the pricing page |
| Getting out | Often nothing to transfer out in kind; some charge a transfer fee, and some sell your holdings rather than transferring them | In the account agreement |
Only the first layer is quoted when platforms are compared. The other three are real, and the third and fourth are the ones that surprise people.
The advisory fee
Typical range. Commonly around 0.25% of assets a year; some platforms charge nothing on a base tier, and human-plus-software services run far higher
Usually deducted automatically from your balance, so you never write a cheque and rarely notice it leaving.
Fund expense ratios
Typical range. Roughly 0.03% to 0.20% a year on the ETFs the portfolio holds, weighted by allocation
You pay this on top of the advisory fee. It is charged inside the fund, so it never appears on a statement as a fee at all.
A required cash allocation
Typical range. Zero on most platforms; a meaningful share of the portfolio on some that advertise no advisory fee
Money held in cash is money not invested. On a long-horizon portfolio that is a real cost even though it is never billed.
Getting out
Typical range. Often nothing to transfer out in kind; some charge a transfer fee, and some sell your holdings rather than transferring them
In a taxable account, being sold out of positions realises gains on the platform's timing rather than yours.
What the advisory fee costs in dollars
The advisory fee alone, at the category-standard 0.25%, before any fund costs. The ten and twenty year columns assume a steady balance, so they understate the figure for anyone still contributing.
| Your balance | Per year | Over 10 years | Over 20 years |
|---|---|---|---|
| $10,000 | $25 | $250 | $500 |
| $25,000 | $63 | $625 | $1,250 |
| $50,000 | $125 | $1,250 | $2,500 |
| $100,000 | $250 | $2,500 | $5,000 |
| $250,000 | $625 | $6,250 | $12,500 |
| $500,000 | $1,250 | $12,500 | $25,000 |
The shape of that table is the whole argument. The rate is identical at every row; the amount is not. A quarter of a percent is genuinely cheap on a starter balance and is a meaningful annual number by the time the account matters to you.
Adding the layer most comparisons skip
Here is the same $100,000 with the fund costs included, using a mid-range weighted expense ratio for a diversified ETF portfolio:
| What you pay | Rate | On $100,000 |
|---|---|---|
| Advisory fee | 0.25% | $250 |
| Fund expense ratios (weighted, mid-range) | 0.08% | $80 |
| Total you actually pay | 0.33% | $330 |
The fund layer is not a criticism of robo-advisors: you would pay expense ratios buying the same ETFs yourself. It matters because it is left out of nearly every comparison, so the number people carry in their heads is the advisory fee alone, and the real one is about a third higher.
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What “no advisory fee” actually means
Several well-known platforms charge no advisory fee, at least below a balance threshold. That is a real saving and it is worth understanding what replaces it. The usual routes are a required cash allocation where the platform keeps some of the interest, placing you in the firm's own funds so the revenue moves to the fund layer, or earning on how orders are routed.
None of that is concealed. It is disclosed, just not on the page with the big zero on it. The practical test is simple: read the portfolio description for a stated cash percentage, and look up the expense ratios of the funds. If both are low and the fee is zero, it is genuinely cheap. If a long-term portfolio is required to hold a meaningful slice in cash, price that in.
Why the fee is charged the way it is
A percentage of assets is not the only way to price this, and it is worth understanding why it won. It bills itself automatically out of the balance, so there is nothing to collect and nothing to cancel. It scales revenue with markets rather than with headcount. And it aligns the platform with the balance growing, which is a genuine improvement on the commission model it displaced.
What it does not do is track the work. The cost of running your account is essentially identical whether the balance is $20,000 or $2,000,000, because it is the same allocation, the same rebalancing rule and the same software. The fee is a hundred times larger. That gap is not dishonest, it is just the model, and it is the reason the arithmetic above turns from trivial to significant as the account matures.
How this compares to the alternatives
A human financial advisor commonly charges around 1% a year, roughly four times the standard robo rate, for a service that includes things software does not do. See what a financial advisor costs.
Buying index ETFs yourself in your own brokerage account skips the advisory layer entirely: you pay the fund expense ratios and nothing more. What you give up is automatic rebalancing and tax-loss harvesting, which are worth something if you would not otherwise do them. That trade is covered in alternatives to a robo-advisor.
Walnut sits in that second column and charges no percentage of assets, because it never takes custody of your money. That is not a claim to be better: nothing rebalances for you either. It is a different trade, and the honest version of it is on the robo-advisor roundup, where Walnut is listed third as the option for people who do not want a robo-advisor at all.
FAQ
When does the advisory fee come out of my account?
Usually monthly or quarterly, calculated on the average balance for the period and deducted directly, which is why most people never notice it leaving. It is charged whether the portfolio rose or fell, because it is a fee on assets rather than on performance.
Does the fee scale with the work the platform does?
No, and that is the structural criticism of the model. Running a $20,000 account and a $2,000,000 account involves the same allocation, the same rebalancing rule and the same software, while the fee on the second is a hundred times larger. The model bills for assets, not effort.
Are robo-advisor fees tax deductible?
Investment advisory fees are not deductible for individuals under current federal rules, having been suspended along with other miscellaneous itemised deductions. That treatment has changed before and could change again, so confirm the current position with a tax professional rather than assuming either way.
How much do robo-advisors charge?
The advisory fee is commonly around 0.25% of assets a year, and several platforms charge no advisory fee on a base tier. On top of that you pay the expense ratios of the funds the portfolio holds, usually somewhere between 0.03% and 0.20% a year weighted across the allocation. A realistic all-in figure for a standard robo-advisor is therefore closer to 0.30% than to 0.25%.
What does 0.25% actually cost me?
It is 0.25% of the balance, every year, whether the market is up or down. On $10,000 that is about $25 a year. On $100,000 it is about $250. On $500,000 it is about $1,250. Held steady for ten years those become roughly $250, $2,500 and $12,500. The percentage does not change as you save more, so the dollar amount grows with the balance for the same service.
Do I pay fund fees on top of the robo-advisor fee?
Yes, and this is the most commonly missed part. The robo-advisor invests your money in ETFs or mutual funds, and those funds charge their own expense ratios, deducted inside the fund. You pay both. Ask for the weighted average expense ratio of the portfolio you would be placed in, then add it to the advisory fee to get your real annual cost.
Is a robo-advisor with no advisory fee really free?
No advisory fee is not the same as no cost. A platform still has to earn, and the common routes are holding a required share of your portfolio in cash and keeping part of the interest, placing you in the firm's own funds, or earning on order flow. None of that is hidden, but none of it shows up as a line item either. A required cash allocation on a long-horizon portfolio can cost more than a transparent 0.25% would have.
Why does a cash allocation count as a cost?
Because it is money that is not invested. If a platform requires a portion of a long-term portfolio to sit in cash, that portion is not exposed to the market you opened the account to get exposure to, and the platform typically earns interest on it. You are not billed for it, which is exactly why it is easy to miss when comparing.
Are robo-advisor fees cheaper than a financial advisor?
Usually by a wide margin. A human advisor commonly charges around 1% of assets a year, four times the standard robo rate, though flat-fee and hourly advisors exist and can be cheaper for a one-off plan. The comparison is not like for like: a human advisor does tax planning, estate questions and behaviour coaching that software does not.
How do robo-advisor fees compare to doing it yourself?
Buying a handful of index ETFs in your own brokerage account costs the fund expense ratios and nothing else, so you skip the advisory layer entirely. What you give up is the automation: nobody rebalances for you and nobody harvests losses. Whether the advisory fee is worth it depends on whether you would actually do those things, and on how large the balance is.
Does the fee come out of my returns or my balance?
It is deducted from your balance, usually monthly or quarterly, which is why it is easy not to notice. It is charged on the balance regardless of performance, so in a year the portfolio falls you still pay it.
Do robo-advisor fees fall as my balance grows?
The rate sometimes steps down at higher balances, but the dollar amount almost always rises, because a smaller percentage of a much larger number is still a larger number. Some platforms invert this by charging no advisory fee below a threshold and starting to charge above it, which means the fee appears exactly as your balance becomes significant.
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Walnut is informational and is not an investment adviser. Rates quoted are widely published category figures used to illustrate the arithmetic, not quotes for any particular provider; the dollar figures are simple multiplication and assume a steady balance. Fees, minimums and portfolio composition change, so verify current terms on the provider's own site.