Marcus Invest Review: A Robo-Advisor That Can Help You Beat The Market

Marcus Invest is a relatively new robo-advisor from the consumer banking division of Goldman Sachs. It uses proprietary Goldman Sachs ETFs and investment strategies to automate customers' investment portfolios. It is worth a look for anyone who not only wants to match benchmark returns, but beat them over time.

This robo-advisor is a good fit for: Investors who want to put their investments on autopilot and who want to not only match, but beat the performance of benchmark index funds over time.

Top perks

Marcus Invest is a solid robo-advisor and has some strong characteristics that may make it worth considering:

Automatic rebalancing

Marcus Invest portfolios are monitored daily. And they are rebalanced regularly to ensure they continue to be aligned with clients' goals.

Three unique investment strategies to choose from

After analyzing clients' risk tolerance and goals, Marcus Invest will recommend a risk level (conservative, growth, etc.). Then, investors can customize their portfolio by choosing one of three options:

• Core: Standard index fund investing (the typical robo-advisor approach).
• Impact: Socially-responsible exchange traded funds (ETFs) that track market benchmarks.
• Smart Beta: Smart Beta ETFs are Goldman Sachs proprietary ETFs. They seek to deliver index-beating performance over time, not to just match benchmarks like the S&P 500. To be clear, this is one of the more unique features of the Marcus Invest platform. Few robo-advisors offer clients portfolio options that are designed to beat the benchmark indexes over time.

Lots of portfolio options

Marcus Invest doesn't just limit its risk assessments to standard categories (conservative, moderate, aggressive). Instead, there are 50 different possible portfolios based on clients' assessed risk level.

Tax-smart management

When investors cash out a portion of their account, Marcus will seek to sell portions of the portfolio with the lowest amount of taxable gains. This can help customers save significantly on their tax bills.

High-rated mobile app

The Marcus mobile app serves as the mobile home for Marcus Invest. It also allows users to access Marcus' high-yield savings accounts and lending platforms in the same place. The Marcus app has a rating of 4.9 stars out of 5 on the App Store and 4.4 out of 5 stars on Android.

What could be improved

Of course, there's no such thing as a perfect robo-advisor for everyone, and Marcus Invest is no exception. Here are some of the things that might prompt you to look elsewhere:

Relatively high fees

Marcus Invest charges a 0.25% advisory fee for assets under management. This is slightly higher (although still competitive) than average for robo-advisors. Plus, the ETFs Marcus Invest uses charge their own management fees. However, for investors in Marcus Invest's Smart Beta strategy, one unique feature is that the firm credits back the fees charged by Goldman Sachs ETFs in clients' portfolios.

Not enough account types

Marcus Invest offers individual and joint investment accounts. It also has the three most common IRA accounts: traditional, Roth, and SEP IRAs. On the other hand, Marcus doesn't offer:

• SIMPLE IRAs
• Individual 401(k)s
• Trusts
• UGMA/UTMA accounts
• College savings accounts

No tax-loss harvesting

Marcus Invest offers tax efficient withdrawals. However, it doesn't actively employ tax-loss harvesting strategies in clients' accounts. Some of Marcus' competitors incorporate this feature to save their clients money every year on taxes. This is especially true for those with higher minimum balance requirements.

No human financial advisors

Marcus Invest does not offer any access to human financial advisors. Several of Marcus' competitors in the same pricing range offer access to a financial advisor.

Like most robo-advisors, Marcus Invest asks clients a series of questions. These include information about their age, goals, and other relevant characteristics. Marcus Invest then assesses its clients' risk tolerance and goals.

Using this information, the platform allocates capital into an appropriate portfolio of ETFs. Investment portfolios are monitored daily and are automatically rebalanced periodically in order to make sure they continue to be appropriate for each client's investment objectives.

Minimum investment

Marcus Invest has a $0 minimum initial investment requirement. This moves the robo-advisor closer in line with others we've seen that have a similarly nonexistent minimum initial investment to open an account. You need at least $5 to purchase an investment.

Services offered

Marcus Invest offers automated investment portfolios. By asking a series of questions to new clients, the robo-advisor assigns an appropriate risk level, and the client then chooses one of three investment strategies based on their personal preferences -- Core, Impact, or Smart Beta.

Unlike some robo-advisors, Marcus Invest doesn't offer investment or personal financial advice by human advisors.

Pricing and fees

Marcus Invest charges an annual advisory fee based on assets under management. Specifically, the fee is 0.25% based on the average daily value of assets in the account, charged at the end of each quarter.

For example, if the average daily value of your account for one quarter is $10,000, this would translate into a $250 annual fee, and one-fourth of this amount would be deducted at the end of the quarter.

In addition, since Marcus Invest portfolios are ETF-based, the underlying ETFs generally have small annual management fees. However, for any Goldman Sachs ETFs held in the portfolios, Marcus Invest applies a credit against the management fees to offset this.

Marcus Invest offers phone-based customer support Monday through Friday from 9 a.m. until 6:30 p.m. EST. There is also an investing-specific email address for support inquiries customers can use.

This is pretty good, but isn't nearly the best in the business. Other robo-advisors provide live chat, 24/7 phone support, and other ways to get in touch beyond "banker's hours."

• You want the potential to beat the benchmark indices over time, not to simply match them like most robo-advisors aim to do.
• You want your investments, savings, and possibly even your personal loans in one place.
• You have at least $1,000 to start investing.

RELATED: Best Robo Advisors For Beginners

At The Motley Fool Ascent, brokerages are rated on a scale of one to five stars. We primarily focus on fees, available assets, and account types; however, we also take into account features like research, education, tax-loss harvesting, and highly rated mobile apps. Our highest-rated brokerages generally include low fees, a diverse range of assets and account types, and useful platform features.

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