Ally Invest Managed Portfolios Review 2021: Pros, Cons and How It Compares
Ally Managed Portfolios is best for retirement investing and loyal Ally clients who want a one-stop shop for their investing and banking services.
Our Take
4.5
The bottom line: With a no-management-fee cash-enhanced portfolio option along with its standard investment options, Ally Invest Managed Portfolios is best for retirement accounts and current Ally customers.
Full Review
Ally Invest Managed Portfolios
Fees
0.0%
with Cash-Enhanced Managed Portfolio; 0.3% otherwise
Account Minimum
$100
Promotion
None
no promotion available at this time
Pros & Cons
Pros
Solid investment selection.
Integration for Ally bank and brokerage clients.
Cons
No tax-loss harvesting.
Compare to Other Advisors
 |  |  |
|---|---|---|
Fees0.25% management fee | Fees0% management fee | Fees0.15% per year (approximately) |
Account Minimum$0 | Account Minimum$0 | Account Minimum$0 |
PromotionUp to 1 year of free management with a qualifying deposit | PromotionFree career counseling plus loan discounts with qualifying deposit | PromotionNone no promotion available at this time |
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Full Review
Ally Invest Managed Portfolios offers a broad choice of investments, seamless integration with Ally's banking arm, and the potential to have your assets managed for free.
Investors can avoid advisory fees with Ally's Cash-Enhanced Managed Portfolio, which requires that they keep 30% of their portfolio in cash. (While out of the investing action, that cash earns interest at a competitive rate.) Customers who don’t want so much of their holdings in cash can opt for a lower allocation with Ally's Managed Portfolio, which charges an annual advisory fee of 0.3% of assets.
Either way, Ally Invest Managed Portfolios creates and maintains a diversified portfolio of exchange-traded funds, and boasts features such as Goal Tracker, a wealth-forecasting tool that simulates a range of possible investment outcomes based on various market returns. Existing Ally Bank clients can view their checking and savings accounts, Ally Invest brokerage account and managed account within one dashboard.
Ally Invest Managed Portfolios is best for:
Existing Ally banking or brokerage customers.
Hands-off investors.
Automatic rebalancing.
Ally Invest Managed Portfolios at a glance
Account minimum | $100 |
Account management fee |
|
Investment expense ratios | Average expense ratio of 0.07%. |
Account fees (annual, transfer, closing) |
|
Portfolio mix |
|
Socially responsible portfolio options | Clients can choose to invest in SRI portfolio options for no additional fee. |
Accounts supported |
|
Tax strategy | Tax-optimized investments in taxable accounts. No tax-loss harvesting. |
Automatic rebalancing | Free on all accounts. |
Human advisor option | Not offered. |
Bank account/cash management account | Clients can instantly transfer cash through One Ally Transfer to Ally Bank to access a savings account with a competitive APY. |
Customer support options (includes website transparency) | Chat, email and phone support 7 a.m. - 10 p.m. ET, 7 days a week. |
Where Ally Invest Managed Portfolios shines
Free-management portfolio option: Ally is offering free management for clients who opt into its Cash-Enhanced Managed Portfolio, which requires that investors keep 30% of their portfolio in cash, where the money earns interest at a competitive rate but is not invested. Ally targets new investors with this option as a "try-it-first experience" before potentially upgrading to the full-fee, fully invested service.
One big drawback: A 30% cash allocation is more typical for an investor closer to retirement who wants to protect their savings rather than those at the start of their investment journey. Investors who don't want to hold that much in cash can opt for a more traditional portfolio allocated based on their age and risk tolerance for a 0.3% management fee.
Investments: As at many other robo-advisors, Ally Invest Managed Portfolios’ investment portfolios are made up of exchange-traded funds. These ETFs cover 17 asset classes and 32 portfolios, with an average expense ratio of 0.07%, depending on the portfolio. Customers can choose among Core, Tax Optimized, Income and Socially Responsible allocations. Ally Invest Managed Portfolios are monitored and automatically rebalanced as needed. Unlike many other brokers, Ally does not have proprietary funds, so it does not use its own funds in its managed portfolios.
New customers take an assessment to determine their risk tolerance and goals. The questions gauge how comfortable investors are with large portfolio fluctuations and what their investment time horizon is. The assessment then suggests a portfolio and provides details about the asset allocation.
Integration with Ally: Current Ally account holders — both of the bank and brokerage arms — can open an Ally Invest Managed Portfolio account and easily view all of their accounts in one place. The platform is mobile-responsive and consistent across devices. You cannot, however, combine self-directed and managed investment accounts, and Ally Invest Managed Portfolios’ minimum balance requirements are separate from any other assets held at Ally.
For those who want a savings account option, Ally Invest customers can instantly transfer money to Ally Bank and earn a 0.8% annual percentage yield with a deposit account.
Customer service: Although robo-advisors are by definition hands-off investing, it's comforting to know human help is a phone call away if you've got a question about creating your account. Ally Invest Managed Portfolios customer support is available during extended business hours 7 a.m.-10 p.m. Eastern, seven days a week by phone, email and chat.
Where Ally Invest Managed Portfolios falls short
Tax-loss harvesting: The company doesn’t offer this feature, which is standard at many robo-advisors. In taxable accounts, tax-loss harvesting involves selling losing investments to offset the gains from winners. However, customers with nonretirement accounts can opt into a tax-optimized portfolio, which uses municipal bond ETFs to help reduce Uncle Sam's cut.
Is Ally Invest Managed Portfolios right for you?
That depends on what kind of account you’re interested in and which features matter most to you. The service is best suited to retirement accounts or loyal Ally customers who prefer a one-stop shop for a managed account, a trading account and their bank accounts.
While aimed at new investors, the 30% cash allocation of Ally Invest's Cash-Enhanced Managed Portfolio may be better suited for customers closer to retirement. The lack of tax-loss harvesting could pose an issue for investors with taxable brokerage accounts.
Disclosure: The author held no positions in the aforementioned securities at the original time of publication.
How do we review robo-advisors? Here’s our methodology.
NerdWallet’s comprehensive review process evaluates and ranks the largest U.S. brokers by assets under management, along with emerging industry players, using a multifaceted and iterative approach. Our aim is to provide an independent assessment of providers to help arm you with information to make sound, informed judgments on which ones will best meet your needs.
DATA COLLECTION AND REVIEW PROCESS
We collect data directly from providers, and conduct firsthand testing and observation through provider demonstrations. Our process starts by sending detailed questionnaires to providers to complete. The questionnaires are structured to equally elicit both favorable and unfavorable responses from providers. They are not designed or prepared to produce any predetermined results. The questionnaire answers, combined with product demonstrations, interviews of personnel at the providers and our specialists’ hands-on research, fuel our proprietary assessment process that scores each provider’s performance across more than 20 factors. The final output produces star ratings from poor (one star) to excellent (five stars). Ratings are rounded to the nearest half-star.
RATING FACTORS
Evaluations vary by provider type, but in each case are based upon the weighted averages of factors that include but are not limited to: advisory and account fees, account minimums and types, investment selection, investment expense ratios, trading costs, access to human financial advisors, educational resources and tools, rebalancing and tax minimization options, and customer support including branch access, user-facing technology and mobile platforms.
Each factor can involve evaluating various sub-factors. For instance, when gauging the investment selections offered by robo-advisors, 80% of the score is based on the potential for diversification (how well-diversified a resulting portfolio of investments could be) combined with the availability of specialty portfolios and level of customization for investors. Expense ratios form an additional 10% of the score, and low or no management fee the remaining 10%.
FACTOR WEIGHTINGS
The weighting of each factor is based on our team’s assessment of which features are the most important to consumers and which ones impact the consumer experience in the most meaningful way. The factors considered, and how those factors are weighted, change depending upon the category of providers reviewed.
INFORMATION UPDATES
Writers and editors conduct our broker reviews on an annual basis but continually make updates throughout the year. We maintain frequent contact with providers and highlight any changes in offerings.
THE REVIEW TEAM
The review team comprises seasoned writers, researchers and editors who cover stocks, bonds, mutual funds, index funds, exchange-traded funds, alternative investments, socially responsible investing, financial advisors, retirement and investment strategy on a daily basis. In addition to NerdWallet, the work of our team members has been published in The New York Times, The Washington Post, Forbes, USA Today, Bloomberg News, Nasdaq, MSN, MarketWatch, Yahoo! Finance and other national and regional media outlets.
The combined expertise of our Investing team is infused into our review process to ensure thoughtful evaluations of provider products and services from the customer perspective. Our writers and editors combine to have more than 70 years of deep experience in finance, ranging from a former Wall Street Journal reporter to a former senior financial advisor at Merrill Lynch.
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