FutureAdvisor Review. FutureAdvisor is an online investment advisor that automatically manages your investments. It helps you do this in an advantageous way by using modern portfolio theory (or MPT) to build and maintain a portfolio to maximize your return based on certain levels of risk indicated by your investor profile.
FutureAdvisor is an easy-to-use Robo advisor that offers features such as tax-loss harvesting and managed 529 accounts. However, the fees are a bit on the high side and its asset allocation isn’t as flexible as that of other services.
FutureAdvisor competes with similar online investment advisory services such as Personal Capital, Wealthfront, and Betterment.
FutureAdvisor Review, How does it stack up against them? It depends on what services you’re looking for.
The company launched operations in March 2012. It’s led by a team of finance professionals, data scientists and software engineers backed by the same venture capital team that backed PayPal and Google.
The service offers direct management of taxable investment accounts — both individual and joint. It also offers direct management of IRAs, including traditional, Roth, rollover and SEP IRAs.
With direct management, you grant the service the authority to trade in your accounts on your behalf. Since the last update, FutureAdvisor has revamped some of their services and now has new features and offerings to help you reach retirement, personal and other life goals.
FutureAdvisor works with Fidelity and TD Ameritrade accounts. These firms charge their usual transaction fees for trades within the account, in addition to any fees you may pay to FutureAdvisor.
Once you sign up for a FutureAdvisor account, you can get started by linking your investing accounts or manually reporting your holdings. The service will analyze everything via the dashboard and then provide you with analysis and recommendations tailored to your portfolio and specific goals.
Your recommended retirement plan will be broken down into nine simple steps. The software will then determine how well you’re doing and where there’s room for improvement. The recommendations will show you exactly why FutureAdvisor recommends these changes, and the updates will be made in real-time.
Management includes the following services — depending upon the plan selected:
Minimum Investment | $10000 |
Fees | 0.50%/year |
Accounts | Taxable, Joint, Traditional IRA, Roth IRA, Rollover IRA, SEP IRA, Coverdell, 529, 401(k) Guidance |
401(k) Assistance | Yes |
Tax Loss Harvesting | Yes |
Portfolio Rebalancing | Yes |
Automatic Deposits | Daily, Weekly, Biweekly, Monthly, Bi-monthly and Quarterly |
Advice | Automated |
Smart Beta | No |
Socially Responsible | No |
Fractional Shares | No |
Access | Web Based, iPhone App, Android App |
Customer Service | Phone: M-F 8:30A-5P PT; Email |
FutureAdvisor charges a flat annual management fee of 0.5% of assets directly managed. This means that those investments and accounts that FirstAdvisor doesn’t directly trade in — such as your 401(k) — are managed for free.
FutureAdvisor’s portfolios are comprised of varying positions in low-cost index-based ETFs. It’s a balance of stocks and bonds, depending on your age and risk temperament. See their allocation chart to determine where you might fit.
Following are some of the stocks and bonds FutureAdvisor uses:
Sector | ETF | Ticker |
---|---|---|
U.S. | Vanguard US Total Stock Market | VTI |
U.S. | iShares S&P 500 Index ETF | IVV |
Foreign | iShares MSCI EAFE Value Index | EFV |
Foreign | Schwab Fundamental International Large Company Index | FNDF |
Real Estate | Vanguard REIT Index Fund | VNQ |
Real Estate | SPDR Dow Jones International RelEst ETF | RWX |
Sector | ETF | Ticker |
---|---|---|
U.S. | iShares Core U.S. Aggregate Bond | AGG |
U.S. | Schwab US Aggregate Bond | SCHZ |
Foreign Government | iShares International Treasury Bond | IGOV |
Foreign | Vanguard Total International Bond | BNDX |
Short-term U.S. Inflation-Protected Treasury Bonds | iShares 0-5 Year TIPS | STIP |
Short-term U.S. Inflation-Protected Treasury Bonds | PIMCO 1-5 Year U.S. TIPS Index | STPZ |
The buyout of FutureAdvisor by BlackRock Solutions proved that this robo advisor is here to stay. Currently, FutureAdvisor manages over $950 million in assets and will continue to serve both existing and new individual investors from its home base in San Francisco.
So why is BlackRock interested in FutureAdvisor? They plan to sell the company’s automated advisory services to other banks, securities firms and insurance companies that are customers of BlackRock.
This new company sells a system that allows financial institutions to place trades and assess how those trades will affect their portfolios’ risk profiles, among other features. This makes the buyout with FutureAdvisor a good match for both companies.
If you’re looking for a service to maintain your brokerage account, FutureAdvisor might be a great choice for you. It’s great for set-it-and-forget-it investors.
However, note that the fees can quickly add up, when you compound your annual FutureAdvisor fee with the fees that the brokerage service you use for each trade will charge.
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