FutureAdvisor is a robo-advisor with a bit of a twist: Several of the company’s services are free, including a comprehensive retirement analysis. The tool allows users to link their accounts and get specific recommendations tailored to their portfolio and goals.
The company’s paid offering, which charges 0.50% as a management fee and requires a balance of $10,000 or more, is comprehensive investment management with automatic rebalancing, tax-loss harvesting and access to a team of financial advisors. Accounts are held with two well-established brokers — Fidelity or TD Ameritrade — and eligible Fidelity 401(k) accounts are managed free of charge. FutureAdvisor currently manages over $900 million in assets.
January 5, 2017
- Management fee: 0.50%; several services are free
- Account minimum: $10,000
- Promotion: Three months of free management
FutureAdvisor is best for:
- Current Fidelity or TD Ameritrade account holders
- Investors who want 401(k) advice
- DIY investors
- Hands-off investors who want access to a financial advisor
FutureAdvisor at a glance
|Account management fee||FutureAdvisor Premium: 0.50%. Free portfolio analysis; free Fidelity 401(k) management|
|Investment expense ratios||ETF expense ratios average 0.15%.|
|Portfolio||Funds used vary based on where account is held; typically cover up to 12 asset classes.|
|Account fees (annual, transfer, closing)||Accounts are held at Fidelity or TD Ameritrade. Customers may incur transaction fees, particularly on initial rebalance.|
|Accounts supported||Accounts must be held at Fidelity or TD Ameritrade. Direct management of:
• Individual and joint non-retirement accounts
• Roth, traditional, rollover and SEP IRAs
• 401(k) accounts held by Fidelity and enabled with BrokerageLink.
|Tax strategy||Daily tax-loss harvesting on all taxable managed accounts|
|Automatic rebalancing||Free on managed accounts|
|Customer support||Access to financial advisors via chat, email and phone, 11:30 a.m. to 8 p.m. Eastern|
|Promotion||Three months of free management|
Where FutureAdvisor shines
Free tools and advice: FutureAdvisor has two main offerings: a free portfolio analysis service, and FutureAdvisor Premium, which is direct management of investments and carries a 0.50% management fee.
The DIY investor who wants a second opinion will love FutureAdvisor for the company’s free, personalized recommendations, which can be used on any account held at any broker. This platform analyzes your portfolio and gives you free trade recommendations based on modern portfolio theory, the same investing methodology used by the bulk of robo-advisors. You can then initiate trades through your online broker.
FutureAdvisor’s free service will also alert you of the need to rebalance. It doesn’t provide tax-loss harvesting opportunities to free customers, as they can be complicated to execute. However, tax-loss harvesting is included on all FutureAdvisor Premium accounts.
Free management of eligible Fidelity 401(k)s: The company will manage 401(k)s that are held at Fidelity and enabled with BrokerageLink free of charge; roughly 63% of Fidelity 401(k)s. To find out if your 401(k) is eligible, create a FutureAdvisor account, link your Fidelity 401(k), then email firstname.lastname@example.org for assistance. You do not have to have another account enrolled in FutureAdvisor Premium to take advantage of free 401(k) management, but your 401(k) must meet the $10,000 minimum balance requirement.
Note: The company used to manage college savings plans for free as well; that service was recently discontinued and new accounts are not being offered.
Use of popular online brokers: For FutureAdvisor Premium, accounts must be held at TD Ameritrade or Fidelity. If your accounts are already at one of those brokers, there is no need to move them; you’ll simply give FutureAdvisor management rights and the company will be able to trade on your behalf. That means you get all the perks of a robo-advisor at a trusted online broker, and giving the service a try is virtually risk-free, without the need to transfer funds.
If your accounts are elsewhere, this is potentially a disadvantage, as you’ll need to move them to one of those brokers. However, the company will help you do it (and the need to move accounts is typical of robo-advisors), and assets can be transferred in kind.
Financial advisor support: FutureAdvisor walks the line between a standard robo-advisor and a hybrid service: The company gives clients access to a team of financial advisors via chat, email and phone, five days a week. Users can set up an appointment with one of the advisors, and each trade within an account is also monitored by a real person in addition to the company’s investing algorithm.
Where FutureAdvisor falls short
Account minimum: In order to have your assets directly managed by the company — the FutureAdvisor Premium service — you’ll need an account balance of at least $10,000, which is high compared with the bulk of the company’s robo-advisor competitors. It’s worth noting, however, that this minimum is actually significantly lower than other services that offer access to financial advisors, like Personal Capital and Vanguard Personal Advisor Services. Personal Capital requires a minimum $25,000, and Vanguard requires $50,000.
Management fee: The cost here is high when compared with other robo-advisors: FutureAdvisor Premium carries an annual fee of 0.50%, which is in addition to investment expenses. The company notes that customers may also occasionally incur transaction fees, though it prioritizes the use of commission-free funds.
Maximum age restriction: This service will take you to retirement, but you’ll have to get through it on your own: The company doesn’t accept new Premium clients over age 68, due to allocations that are focused on return rather than income generation.
Is FutureAdvisor right for you?
FutureAdvisor is worth a test drive for its free offerings alone: The account analysis with rebalance reminders can give you valuable insight into how to manage your own portfolio, and free management of eligible Fidelity 401(k)s is unmatched by other advisors.
It’s also a good fit for clients who have accounts at Fidelity or TD Ameritrade and who don’t want to transfer funds in order to take advantage of a robo-advisor. Outside of that, other advisors may provide a similar level of service and account management for a lower management fee and a lower account minimum.