Ally Invest Managed Portfolios offers a mix of valuable features that make it a fit for an array of hands-off investors wanting to put their investments on cruise control. Its low account minimums, cash management features, and portfolio selection are a few standouts. In this Ally Invest Managed Portfolios review, we'll take a deep dive into the company's robo-advisor service. We'll look at the pros and cons, cost structure, and discuss what types of clients might be good candidates to invest through the platform.
$0 per trade, management fee 0.30%, expense ratio 0.05%-0.20%
This robo-advisor is a good fit for: People wanting to take the guess work out out of their investments. Investors that are seeking competitive fees, are starting with small account sizes, and even people preferring conservative strategies, will all find this to be a valuable robo-advisor.
Ally Invest Managed Portfolios has two different options. The cash-enhanced account has no management fee whatsoever and keeps 30% of the portfolio in a high-yield savings account and the other 70% in a customized investment portfolio. The underlying investment funds in your portfolio will have small fees (known as expense ratios), but that's it. On the other hand, the market focused portfolio option invests nearly all of the account's value, but charges a 0.30% annualized advisory fee. This isn't the lowest fee in the industry, but it's certainly competitive with many of the best robo-advisors.
Ally Invest Managed Portfolios requires a $100 minimum investment to get started. Some competitors require a $500 minimum investment or more.
All robo-advisors that we know of rebalance portfolios over time, but some only do it at certain time intervals, such as annually or quarterly. Ally Invest rebalances portfolios as needed, in response to market fluctuations.
Many robo-advisors have dedicated customer service hours, and others only provide support through chat or email. Ally Invest has a customer support line that allows you to speak with a person 24 hours a day, seven days a week.
Ally's cash-enhanced option keeps 30% of the portfolio, but at a higher yield than you're likely to get by keeping cash with most other brokers.
In addition to customizing an investment portfolio for you, Ally Invest allows you to choose from one of four portfolio options to best meet your needs. These types are core (highly diversified), income (designed for people at or near retirement age), tax-optimized, and socially responsible.
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Ally Invest Managed Portfolios can be opened as standard brokerage accounts (individual or joint), IRAs (traditional, Roth, or rollover), or as custodial accounts (UGMA/UTMA). The platform doesn't currently support accounts such as SIMPLE IRAs, SEP-IRAs, solo 401(k)s, Coverdells, 529 savings plans, or trusts, just to name a few.
There are some competitors that offer access to human financial planners, which can help with advice on things like retirement strategies, saving for college, and buying a house. Ally doesn't offer this option -- all of its financial advice is automated.
Several robo-advisors offer automatic tax-loss harvesting, which is a strategy that can save investors lots of money on their tax bills. To be fair, Ally offers a tax-efficient portfolio option, but it's not quite as powerful as an active tax-loss harvesting strategy. If you are opening a large taxable account, or are otherwise in a high tax bracket, you may want to look at a competitor that offers this.
If you want to cut the management fee: SoFi Automated Investing charges no management fee. Importantly, the low costs don't come at the expense of a watered-down feature suite. SoFi Automated Investing is one of the few robo-advisors that offers unlimited access to registered investment advisors. On the downside, it doesn't offer tax-loss harvesting.
If you want tax-loss harvesting with a competitive management fee: Wealthfront offers accountholders tax-loss harvesting and its costs go toe-to-toe with top robo-advisors. Compared to Ally Invest Managed Portfolios, though, Wealthfront does have a higher $500 account minimum.
Like most robo-advisors, Ally Invest Managed Portfolios starts the process by asking prospective clients to fill out a questionnaire. (Note: You don't need to commit to opening an account to fill out the questionnaire and see your investment recommendations.)
You'll answer a series of questions about your investment objectives, time horizon, your assets, risk tolerance, and more. From there, you'll pick the type of portfolio (core, income, tax-optimized, socially responsible) that best fits your objectives, and Ally will suggest an ideal asset allocation strategy for you.
Note that the default option is the cash-enhanced portfolio, which permanently keeps 30% of your portfolio in cash. This has no management fees, which is a big differentiator, but it does create a far more conservative investment strategy than many investors want or need -- especially younger investors with long time horizons to ride out the ups and downs of the stock market.
In addition to creating customizable investment portfolios for clients, Ally Invest Managed Portfolios offers some unique services. Automatic rebalancing whenever an account needs it is one example. And the concept of a 30% cash buffer (which is also included in portfolio rebalancing) is an Ally differentiator, intended to help investors better absorb the ups and downs of the stock market.
The two main types of fees you might pay when investing through a robo-advisor are management fees and fund expense ratios.
When it comes to management fees, Ally Invest has two options:
In addition, Ally invests client funds in exchange-traded funds, or ETFs. These funds are not managed by Ally, and all have their own fees (known as expense ratios). Ally doesn't publish the underlying expense ratios of its funds, but annualized fees in the 0.05%-0.20% range are typical of the funds used by most robo-advisors.
There are two types of support that clients of a robo-advisor could need -- investment advice from a human being and help with technical issues. So let's take a look at how Ally Invest Managed Portfolios stacks up.
Unfortunately, Ally Invest doesn't offer live financial advice to its robo-advisory clients. All of the financial advice offered by the platform is of the automated variety.
On the other hand, account support is an area where Ally Invest shines. Unlike many rivals, which offer phone support only during limited hours (or not at all in some cases), Ally Invest has a phone support number that is staffed by real, live people, 24/7.
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