Ally Invest Managed Portfolios 2023 Review: No Advisory Fees
Robo-advisor platforms make investing automatic and more or less hassle-free. Another upside to investing online? Lower fees than you'd pay for a traditional financial advisor.
Already a major name in the online banking game, Ally also delves in investing with Ally Invest, which also provides a robo-advisory service called Managed Portfolios. If you've got at least $2,500 to invest, you can build a professionally managed portfolio automatically.
You can open an account to save for retirement, or set up a taxable account to go along with what you're already saving in your employer's retirement plan. Streamlined investment options take the guesswork out of building a portfolio.
Getting started with Ally Invest Managed Portfolios is easy. But how do you know if it's the right robo-advisory platform for you? Review the benefits and features to decide whether it's the best place to put your investment dollars.
Ally Invest Managed Portfolios is great for…
- Investors who prefer exchange-traded funds (ETFs)
- People who want a simple fee structure
- Someone who's already an Ally Banking customer
Ally Invest Managed Portfolios Pros & Cons
Types of Accounts Offered
Ally Invest Managed Portfolios accounts fall under two main umbrellas: taxable and tax-advantaged.
Taxable accounts can be individual or joint. You can also set up a custodial account to invest money for your kids.
Tax-advantaged account options include traditional, Roth, and rollover individual retirement accounts. There's no IRA option for self-employed savers, or for college savings.
You can get access to SEP and SIMPLE IRAs, and Coverdell Education Savings Accounts if you choose a self-directed investment plan with Ally. This is separate from Managed Portfolios. You don't get the advantage of professional management.
Are There Different Account Tiers?
With some robo-advisors, your account fees or benefits are tiered, based on how much you invest.
For example, you may only be able to unlock premium features once you hit $50,000 or $100,000 invested.
Ally doesn't tier their accounts. The same investment options, features, and low advisory fee apply whether you have $2,500 or $250,000 in your account.
There are a number of ways to build a portfolio, including stocks, bonds, mutual funds and ETFs. If you're new to investing, deciding where to put your money can be overwhelming.
Ally helps keep things simple by using only ETFs in its managed portfolios. So what's an ETF?
An ETF or exchange-traded fund is an investment vehicle that includes a mix of stocks, bonds, and cash. The main difference compared to a regular mutual fund is that ETFs are traded on an exchange just like stocks.
The two biggest advantages of investing in ETFs are simplified diversification and lower fees.
Diversification matters for keeping the right balance in your portfolio so you don't take more risk than you're comfortable with. Lower fees means you get to hang on to more of your investment returns.
Generally, the ETFs ally uses include a mix of:
- U.S. stocks
- International stocks
- U.S. bonds
- International bonds
There are five basic portfolios to choose from.
When you sign up for an account, Ally evaluates thousands of ETF options to decide which ones to include based on your investment goals, risk tolerance, and time frame for investing.
You can select any portfolio you want. But, Ally will recommend one for you, based on how you answer a short questionnaire after creating your account.
On average, the typical Managed Portfolio includes nine ETFs. What you ultimately end up with depends on how you answer the questionnaire.
What Fees Will You Pay?
Fees are definitely something you don't want to overlook as an investor. Higher fees nibble away at your returns, which means less growth in your portfolio.
Similar to investment options, Ally once again makes things easy with one low account management fee.
The annual advisory fee is 0.30%. So if you have $10,000 invested, you'd pay just $30 in management fees.
Compared to the industry average fee of 1.02%, you're paying a lot less to invest with Ally. That same $10,000 investment would cost you $102 elsewhere.
Is it the cheapest robo-advisor on the block? Not necessarily. There are other online investing platforms that charge less and in some cases, have no annual advisory fee at all.
But, Ally Managed Portfolios are a budget-friendly alternative to the stiff fees you might pay to a professional financial advisor.
One thing you need to know about fees: the advisory fee only covers account management services. Each ETF in your portfolio also charges its own expense ratio.
On average, the ETFs Ally uses have an expense ratio of 0.09%. This fee covers annual fund expenses.
Compared to other robo-advisors, Ally scores a win for using some of the lowest-cost ETFs.
Automatic Rebalancing and Tax Loss Harvesting
Investing with a robo-advisor is perfect if you want a hands-off experience. Certain features are nice to have if you want to be able to put your portfolio on auto-pilot.
One of those features is automatic rebalancing. Rebalancing simply means buying or selling assets so your portfolio matches up with your risk tolerance and goals.
With Ally Managed Portfolios, rebalancing happens automatically so you don't have to worry about your investments getting thrown off-kilter. The best part? This feature is absolutely free.
Ally routinely reviews your portfolio to see how much (or how little) risk you're taking and whether you're on track to meet your goals. If Ally determines that your asset allocation needs a tweak, they'll trade ETF shares for you.
Tax loss harvesting is another great feature to have when you're investing. Tax loss harvesting just means selling off losing investments to balance out the winners in your portfolio.
The goal of tax loss harvesting is to minimize the taxes you pay on gains in your taxable investment accounts.
Unfortunately, tax loss harvesting isn't available with Ally Managed Portfolios. It is, however, included at some of Ally's competitors.
If you want to go for maximum tax efficiency, that could sway your decision on where to invest.
Online and Mobile Experience
You can sign up for a Managed Portfolios account online. The interface is easy to use and navigate.
Design-wise, it's pretty straightforward. You can easily track your portfolio's performance over time and see at a glance your returns and what you've paid in fees over time.
Another feature that you might find useful is the Goal Tracker.
With this tool, you can set a specific goal, then tinker around with different scenarios to see how likely you are to reach it. For example, you can change up your monthly deposit amount or asset allocation to see how that impacts your goal progress.
Mobile access is much more limited. When you log in to your mobile account, all you can see is a summary of your portfolio showing your balance and holdings.
That aspect of Ally Managed Portfolios leaves a lot to be desired if you're looking for full functionality from your mobile device.
Are Research Tools Included?
If you're a newer investor, there's a steep learning curve that often goes along with getting started. Learning doesn't stop once you become a seasoned investor either.
Having research and investment tools at your fingertips is helpful when making investment decisions. With Ally, you don't get those kinds of extras.
The main tool available is the Goal Tracker, but that won't tell you whether a particular ETF is a good choice.
Whether this is a disadvantage to you depends on how comfortable you are doing your own investing research. If studying the market is a hobby, it may not matter much.
On the other hand, if you don't want to spend time searching up investment information, the lack of research tools could be a drawback.
Get Help When You Need It
One thing that's worth noting about Ally Invest is the customer service.
Ally's award-winning customer service support is available 24/7 by phone or chat. If you have a question about your account or you need answers about a particular investment, you can get help from an Ally specialist when you need it.
That's a huge bonus that not every robo-advisor offers.
Should You Invest With Ally Managed Portfolios?
Ally Managed Portfolios is open to all investors but it may be better suited to newbies who want to build a portfolio without doing a lot of heavy lifting.
The $2,500 minimum investment makes Ally more accessible than some robo-advisors, which set the minimum at $5,000 or more. While the advisory fee isn't the lowest, it's still competitive.
When comparing robo-advisors, think about what you want to invest in. If you're looking for more than just ETFs, you may want to try another online investing platform.