WiseBanyan Review 2017

Advisors, Investing

WiseBanyanWiseBanyan has dubbed itself the “world’s first free financial advisor,” and it delivers on that promise: The service is free of account management fees, and it requires no minimum account balance.

The caveat is that “premium” services — in particular, tax-loss harvesting — that are part of the package deal at other robo-advisors are charged for separately here. That may be at least partially why, despite its free offering, WiseBanyan owns just a small share of the online advisor market, with assets under management of $80 million.



WiseBanyan

Arielle O’Shea
January 1, 2017
4.0


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Quick facts

  • Management fee: $0
  • Account minimum: $0
  • Promotion: Get $20 for every successful customer referral.
Get started on its secure site

Compare WiseBanyan with other robo-advisors

WiseBanyan is best for:

  • Beginner investors
  • Investors seeking free management
  • Investors with low balances
  • Investors with IRA accounts

WiseBanyan at a glance

Overall

Account management feeNone
Investment expense ratiosETF expense ratios average 0.12%.
PortfolioETFs from nine asset classes. Additional ETFs may be used for tax-loss harvesting.
Account minimum$0
Account fees (annual, transfer, closing)$75 to transfer non-retirement account to another broker; $95 to transfer IRA. No other fees.
Accounts supported• Individual non-retirement accounts
• Roth, traditional and SEP IRAs
Tax strategyExtra fee for tax-loss harvesting: 0.25% of assets under management, with cap of $20/month
Automatic rebalancingFree on all accounts
Customer supportPhone support Monday-Friday 11 a.m. to 7 p.m. Eastern; email support.
PromotionRefer friends to WiseBanyan and you each get $20 added to your account.

Where WiseBanyan shines

Free management: A big draw of robo-advisors is that they offer financial advice and management for much less than a human financial advisor charges — but few offer their management services completely free, especially regardless of account balance. WiseBanyan’s founders say they wanted to build a company that didn’t have an incentive to earn money at the client’s expense.

So how does the company earn money? Well, it’s unclear how much it is actually making, but what it does bring in comes from its paid tax-loss harvesting service. We noted in last year’s review that the company had plans to add additional paid services in 2016; those did not launch publicly. Company founder Vicki Zhou says two new paid products are in private beta, expected to launch in 2017.

No account minimum: No account minimum means that anyone can take advantage of WiseBanyan’s free advice and portfolio management.

Investments: Like many robo-advisors, WiseBanyan’s investment philosophy is based on modern portfolio theory. The company automatically creates a portfolio for each client by asking a few questions. Those questions lead to a “risk score” that helps build the recommended portfolio of exchange-traded funds, weighted to reflect the amount of risk the investor is willing and able to accept. The company says clients can increase or decrease their risk score, and the investment recommendations will automatically update.

WiseBanyan’s ETF portfolio is similar to, but generally a bit smaller than, that of other robo-advisors. The company’s funds carry an average expense ratio of 0.12% and cover U.S., international and emerging market equities; U.S. government and corporate bonds; short-term high-yield bonds; Treasury inflation-protected securities; and real estate. Many of the ETFs are from Vanguard and iShares. The company does not include municipal bonds, emerging market bonds or natural resources in its asset mix.

Customers must liquidate their investments before transferring an account to WiseBanyan; the company does not support transfers in kind.

Milestones: Much like fellow robo-advisor Betterment, WiseBanyan has rolled out a goal-based approach to help investors create buckets for their money, called “milestones” here. Users can tell the service their goal, time horizon, income and net worth, and WiseBanyan will calculate a recommendation for how much should be invested toward that milestone. Investments can be auto-deposited separately into each milestone’s individual portfolio. Users can also adjust WiseBanyan’s recommended asset allocation for each milestone via a bar slider.

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Where WiseBanyan falls short

Account selection: Currently, WiseBanyan customers can open only individual taxable accounts or traditional, Roth or SEP IRAs. That’s a short list of choices, and it limits the number of clients who will be able to take advantage of the company’s free service. You can’t, for example, open a joint taxable account with your spouse, as you can at other robo-advisors and brokers, and you can’t open a trust or a custodial account for your children. The company says this limited selection is the result of a move to a new broker-dealer and clearing firm, and that it hopes to have additional account options available in 2017.

Paid tax-loss harvesting: This service, which the company calls WiseHarvesting, is the first paid add-on option launched by WiseBanyan and the center of its revenue model. The service automatically monitors the account for opportunities to reduce taxes.

Clients with taxable accounts can choose to opt in to the WiseHarvesting service for an annual fee of 0.25% of taxable assets. The fee is capped at $20 a month, so once an account grows past $96,000 it will start to pay a lower percentage of assets under management than the 0.25%.

At issue, of course, is that many other robo-advisors offer tax-loss harvesting as part of their base services, with no additional fee. WiseBanyan’s 0.25% fee for the service puts accounts that take advantage of it in line with the overall 0.25% management fees of Betterment and Wealthfront.

WiseBanyan vs. similar robo-advisors

Management Fee
0.0%
0.0%
Account Minimum
$0
$0
Promotion
None
None
no promotion available at this time
Management Fee
0.25%
0.25%
Account Minimum
$500
$500
Promotion
$15,000
$15,000
amount of assets managed with no fee
Management Fee
0.25%
0.25%
Account Minimum
$0
$0
Promotion
Up to 1 year
Up to 1 year
of free management with a qualifying deposit

Is WiseBanyan right for you?

You get what you pay for, though in this case, we’d say WiseBanyan’s offering is worth more than nothing. The bones of the free service are very much like any other paid robo-advisor, and it’s a strong choice for retirement investors who want free account management and goal-based guidance. We can’t recommend the service for taxable accounts, especially those that would benefit from tax-optimization services; better versions of those are offered by other robo-advisors for the same cost as WiseBanyan’s WiseHarvesting service.

 

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Arielle O’Shea is a staff writer at NerdWallet, a personal finance website. Email: aoshea@nerdwallet.com. Twitter: @arioshea.

Updated Feb. 1, 2017.