Ally Invest Robo Portfolios Review 2024: Pros, Cons and How It Compares
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Our Take
4.7
Reviewed in: Oct. 2024
Period considered: Aug. - Oct. 2024
The bottom line:
Unpaid non-client promotion
Pros & Cons
Pros
Solid investment selection.
Integration with Ally Bank.
Free portfolio management with 30% cash allocation.
Cons
No tax-loss harvesting.
$100 account minimum.
Compare to Other Advisors
Fees 0.25% management fee | Fees 0.25% management fee | Fees 0.25% with a balance over $20K or qualifying recurring deposit. Otherwise, $4/month. |
Account minimum $50 | Account minimum $500 | Account minimum $0 $10 to start |
Promotion 1% match on rollovers and contributions Terms and conditions apply. Roll over a minimum of $20K to receive the 1% match offer. Matches on contributions are made up to the annual limits. | Promotion Get a $50 customer bonus when you fund your first taxable investment account | Promotion Get 1% match of your net Roth and traditional IRA contributions until December 30, 2024. Terms apply. |
Learn more on SoFi Invest's website | Learn more on Wealthfront's website | Learn more on Betterment's website |
AD Paid non-client promotion | AD Paid non-client promotion | AD Paid non-client promotion |
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Full Review
In this review of Ally Invest Robo Portfolios
Where Ally Invest Robo Portfolios shines
Free management: Ally Invest Robo Portfolios offers clients the potential to have their assets managed for free. But the 30% cash requirement for free management in Ally Invest's Cash-Enhanced Managed Portfolio may be better suited for customers closer to retirement or less willing to take risk.
Variety of investment options: Its platform offers a broad choice of investments, allowing clients to create and maintain a diversified portfolio of exchange-traded funds. It also boasts features such as Goal Tracker, a wealth-forecasting tool that simulates a range of possible investment outcomes based on various market returns.
Consolidated banking and investing: Loyal Ally customers can have a one-stop shop for a managed account, a trading account and their bank accounts.
Customer support access: If you need help, Ally Invest Robo Portfolios’ customer service has extended hours to help you when it’s convenient for you.
Where Ally Invest Robo Portfolios falls short
Tax strategies: The lack of tax-loss harvesting could pose an issue for investors with taxable brokerage accounts.
Limited access to human advisors: Investors need to reach an account minimum of $100,00 in investible assets to receive dedicated advice.
Alternatives to consider:
For free tax-loss harvesting: E-Trade Core Portfoliosand Axos Managed Portfolios
For access to financial planners: SoFi Automated Investing andTitan
What type of investor should choose Ally Invest?
Existing Ally banking or brokerage customers.
Hands-off investors.
Investors who want automatic rebalancing.
What the Nerds think 🤓
June Sham, lead investing writer
"Ally Invest Robo Portfolios' solid investment selection gives investors a wide variety of options to choose from when building out their portfolio. The integration with Ally Bank also makes it easy for existing customers to take the next step of growing their money through investing.
"There's also free portfolio management, although you need to have a 30% cash allocation for that, which can be high. Ally Invest also doesn't offer tax-loss harvesting, which might be a priority for investors using taxable accounts."
Ally Invest Robo Portfolios at a glance
Reviewed in: Oct. 2024.
Period considered: Aug. - Oct. 2024.
Account minimum | $100. |
Account management fee |
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Investment expense ratios | Average expense ratio of 0.05 to 0.07%. |
Account fees (annual, transfer, closing) |
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Portfolio mix |
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Socially responsible portfolio options | Clients can choose to invest in SRI portfolio. If held in cash-enhanced portfolios, SRI portfolios are free. |
Accounts supported |
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Tax strategy | Tax-optimized investments in taxable accounts. No tax-loss harvesting. |
Automatic rebalancing | Free on all accounts. |
Human advisor option | Investors with a minimum of $100,000 in investable assets get dedicated human advice. |
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 how easy it is to find key details on the website) | Customer support is available by phone, chat, and email. Specific portfolio specialists available Monday-Friday, 7 a.m.-10:00 p.m. Eastern time and on Saturday from 8 a.m.-8 p.m. Eastern. |
How to sign up for a Ally Invest Robo Portfolios account
To create an Ally Invest account, start with the "Create Your Plan" option on the Ally website. Here, you'll be able to answer a few questions to receive a customized portfolio recommendation based on your goals, risk preference, and timeline. To finish opening an Ally account, you'll provide your personal information, choose an account type (brokerage or retirement account), and then how you'd like to fund your account.
The last step is that Ally will review your application for approval before you can start trading.
How much does Ally Invest Robo Portfolios cost?
Account management fee
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, but is not invested or FDIC insured. This cash allocation acts as a buffer against the ups and downs of the market and cannot be accessed like money in a savings account.
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. However, it could also serve as a buffer during periods of high inflation when savings accounts offer higher interest rates for cash. 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 0.30% management fee.
Investment expense ratios
In addition to fees paid for account management, most mutual funds and exchange-traded funds have embedded investment costs called expense ratios. Expense ratios are expressed as a percentage of your investment and indicate the portion of your investment that goes to the manager of that particular fund. Expense ratios are charged by the investments, not the robo-advisor itself. Still, it’s important to compare the expense ratios from one robo-advisor platform with another because combining these fees with the account management fee and other account fees, provides your overall investment cost.
Ally Invest Robo Portfolios investment expense ratios average 0.05% to 0.07%, which is low compared with peers.
Account fees
There can be other ancillary costs an investor might need to pay, especially when closing your account. With Ally Invest Robo Portfolios, closing an IRA will incur a $25 closing fee, but there is no fee for closing a brokerage account. Transferring your securities out will cost you a maximum of $50.
Ally Invest Robo Portfolios' investment selection
Portfolio mix
As at many other robo-advisors, Ally Invest Robo Portfolios’ investment portfolios are made up of exchange-traded funds. These ETFs cover 17 asset classes and combine to form 32 portfolio offerings, with an average expense ratio of 0.05% to 0.07%, depending on the portfolio. Customers can choose among Core, Tax Optimized, Income and Socially Responsible allocations. 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 stock market fluctuations and what their investment time horizon is. The assessment then suggests a portfolio and provides details about the asset allocation.
Socially responsible portfolio options
People interested in socially responsible investing try to generate positive returns for their portfolio while using their dollars to support companies that align with their values.
Ally Invest Robo Portfolios allows you to select from four portfolio options to target your future goals. One option is its Socially Responsible portfolio, which invests in companies with ethical track records and actively focuses on sustainability, energy efficiency or other environmentally friendly practices. However, specific securities are not able to be excluded from your portfolio. The standard management fee will apply to SRI portfolios if they aren't held in a cash-enhanced portfolios.
Other key Ally Invest features
Accounts supported
Many investors have several account types, such as a taxable brokerage account, retirement accounts, trust accounts or 529 accounts to save for educational expenses.
Ally Invest Robo Portfolios can support taxable brokerage accounts (individual, joint and custodial) along with various IRAs (traditional, rollover and Roth).
Automatic rebalancing
As the markets move, the allocation within your portfolio will shift as well. When your allocation shifts too much, you may be taking on too much risk or not enough risk to produce the returns you’re looking to achieve. Many investment platforms can help monitor changes to your portfolio allocation and proactively buy and sell to bring your portfolio back in-line with your target allocation.
Ally Invest Robo Portfolios monitors clients accounts daily and automatically rebalances as needed with no additional fees.
Bank account/cash management options
Current Ally account holders — both of the bank and brokerage arms — can open an Ally Invest Robo Portfolios account and easily view all of their accounts (checking and savings accounts, Ally Invest brokerage account and robo account) within one dashboard. The platform is mobile-responsive and consistent across devices. You cannot, however, combine self-directed and robo investment accounts, and Ally Invest Robo 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 high annual percentage yield with a deposit account. There are no monthly maintenance fees or minimum balance requirements. You can also opt into Ally’s Overdraft Transfer Service to protect your checking account from overdraft fees using automatic transfers from your Ally savings or money market accounts.
And, there are many tools to help make saving easier — using buckets to save for specific goals and boosting your savings with recurring transfers, roundups (rounding purchases up to the nearest dollar and transferring into your savings) and surprise savings (analyzing your checking account for safe-to-save money and transferring it to savings on your behalf).
Customer support options
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 your account. Ally Invest customer support is available by phone, chat, and email support. Specific portfolio specialists can be accessed during extended business hours 7 a.m. to 10 p.m. Eastern time, Monday through Friday, and 8 a.m. to 8 p.m. Eastern on Saturdays.
Good to know about Ally Invest Robo Portfolios
Account balance requirement for human advisors
Sometimes, it can be helpful to work with a human financial advisor to ensure your investment portfolio is tailored to your needs. Some robo-advisor platforms offer access to human financial advisors, either included as part of their service offering or for an additional fee. Others do not, as robo-advisors are generally meant to be a no frills, automated investing service.
Ally Invest Robo Portfolios provides personalized investing advice and guidance to investors through a fiduciary advisor, but to access this service, customers must have a minimum of $100,000 in investable assets.
No tax-loss harvesting
When selling investments in taxable brokerage accounts, if the sale generates capital gains, you’ll get hit with a tax liability. There are various ways that investment platforms can help minimize your tax burden. One way is through tax-loss harvesting, which involves selling losing investments to offset the gains from winners.
Ally Invest Robo Portfolios doesn’t offer tax-loss harvesting, which involves selling losing investments to offset the gains from winners. This feature is standard at many robo-advisors. However, Ally Invest 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 safe?
Ally is a member of the Securities Investor Protection Corporation (SIPC), which provides insurance coverage for investment accounts up to $500,000, with $250,000 for cash only. This does not apply to investment losses.
Ally's clearing firm, Apex Clearing, also has an additional insurance policy with London Underwriters to further protect clients. This coverage steps in if SIPC limits are reached, and provides up to $150 million in protection for securities and cash .
Is Ally Invest Robo Portfolios worth it?
That depends on what kind of account you’re interested in and which features matter most to you. This 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.
Although some investors don’t mind having a buffer, the 30% cash allocation of Ally Invest's Cash-Enhanced Managed Portfolio may be better suited for customers closer to retirement or with lower risk tolerance. The lack of tax-loss harvesting could pose an issue for investors with taxable brokerage accounts.
