U.S. Bank Automated Investor 2024 Review: Best for Your Investment Portfolio?
Whether you’re an investing newbie or you have experience in the market, the process can be complicated and risky.
That’s especially the case if you don’t have the resources or time to manage your portfolio.
You can hire someone to manage your investments for you.
But financial advisors typically charge between 1% and 2% in fees per year, which eat into your return.
Robo-advisors make it both easier and cheaper to have someone else manage your investments. In this case, though, it’s through sophisticated computer programs.
U.S. Bank’s Automated Investor platform was launched to help customer invest based on their goals and investor profiles.
Unlike other robo-advisors, though, the service requires a high minimum opening deposit.
This can make it difficult for young investors and others who may not have thousands of dollars to set aside for the future.
U.S. Bank Automated Investor is good for:
- People who have a lot of money to invest
- Existing U.S. Bank customers who want everything under one roof
- Hands-off investors who want to save on fees
- Automatic rebalancing and tax-loss harvesting
- Taxable investing and tax-sheltered retirement savings
U.S. Bank Automated Investor Pros & Cons
Types of Accounts Offered
Automated Investor offers taxable brokerage accounts, including joint accounts for spouses and partners.
You can also invest in one of the service’s many tax-advantaged retirement accounts, including:
- Traditional IRAs
- Roth IRAs
- Rollover IRAs
- SEP IRAs
The service doesn’t offer SIMPLE IRAs or Solo 401(k)s, which make it less appealing to business owners who are interested in those options.
You also won’t be able to save in a 529 plan or Coverdell Educational Savings Accounts. Consider more traditional brokerages if you want to save using these types of accounts.
You can have Automated Investor manage your 401(k), but only if you’re no longer with the employer who sponsored it. Otherwise, you’ll need to keep your account with your employer’s plan administer.
Automated Investor doesn’t offer multiple tiers like some other robo-advisors.
It offers the same benefits and resources to all of its clients, regardless of how much you have invested with the platform.
Those benefits include:
- A personalized investment portfolio based on your time horizon, risk tolerance and investment goals
- Automatic portfolio rebalancing to keep you on track when the market changes
- Automated tax-loss harvesting without a minimum investment requirement
- No extra fees beyond the quarterly advisory fee
Automated Investor cuts cost by using exchange-traded funds, also called ETFs.
These low-cost funds are similar to traditional mutual funds with the exception that they can be traded on the market like stocks.
The service will choose a mix of ETFs to invest in on your behalf based on your goals and the level of risk you’re willing to take.
Your portfolio can include as many as 12 different ETFs with various assets, including:
- US Large Cap Growth
- US Large Cap Value
- US Small Cap
- Developed Foreign
- Emerging Foreign
- US Real Estate
- Foreign Real Estate
- High Yield Fixed Income
- Foreign Fixed Income
- Emerging Market Fixed Income
- Core Fixed Income
- TIPS (Treasury Inflation Protected Securities)
As you can see, Automated Investor includes domestic and foreign stocks, bonds and real estate. By investing in a mix of assets, the platform can help you achieve the maximum return for your desired level of risk.
Some robo-advisors don’t offer as many different asset options, preferring to focus on stocks and bonds.
While that approach can still help you achieve your goals, the Automated Investor platform can help you diversify your portfolio even more.
The service starts by asking you a few questions. Based on your answers, it determines where to invest your money.
You can even go through this process and have a portfolio created for you before you even sign up for the service.
Based on what you see, you can choose whether to apply and fund the account.
What Does It Cost?
Cost is a top priority for any investor. The higher the fees, the more money you miss out on over the years and decades that you’re investing.
Automated Investor charges an annual advisory fee of 0.50% for all of its clients, regardless of how much you have invested with the service.
The fee is assessed quarterly at 0.125% every three months.
If you were to create an account with the minimum opening investment of $10,000, for example, that would mean a $12.50 fee every three months or $50 per year.
Beyond that one fee, you won’t have to worry about any other ongoing costs with the service, such as when it buys and sells ETFs for you, or when you withdraw cash.
As of October 2018, the service offers a free 90-day trial, during which it won’t assess the quarterly fee.
Tax Advantages and Experience
In addition to fees, taxes are another major threat to your effective rate of return. Tax-loss harvesting is a feature that many brokerages reserve for their clients with high net worths.
If you don’t meet their minimum requirements, you’re on your own to put together a tax strategy.
But with Automated Investor, everyone gets access.
If you’re not sure how tax-loss harvesting works, here’s a quick summary: U.S. Bank monitors your account each day.
If the timing is right, the service will sell certain investments at a loss to offset gains from other investments.
This can reduce your overall tax liability and make your life easier when you file your tax return.
The service replaces the sold assets with similar investment options, so it doesn’t throw your portfolio off target.
Keep in mind that tax-loss harvesting is only relevant for taxable accounts. If you have a tax-advantaged retirement account, the strategy is unnecessary.
Another big advantage for Automated Investor is that it’s backed by a team of experienced financial advisors and investment research professionals.
U.S. Bank has been in wealth management for a long time, which could potentially give it a leg up on some startup robo-advisors.
Online and Mobile Experience
U.S. Bank allows you to sign up and manage your Automated Investor account through the bank’s mobile app.
This includes e-signing the necessary documents and setting up a connection to your bank account, so you can easily transfer money to and from your investment account.
You can also do this process through the bank’s website.
U.S. Bank doesn’t highlight any resources for investors on its website. But since Automated Investor manages your portfolio automatically, you don’t need tools our resources to make any decisions.
If you do want to adjust your portfolio, you can update your risk tolerance and other answers to the questions covered in the application process.
Automated Investor will then suggest a different mix of ETFs.
Alternatively, you can reach out to one of the bank’s wealth management professionals.
With them, you can discuss your investment goals and needs, as well as get answers to your questions.
Should You Invest With U.S. Bank Automated Investor?
Robo-advisors are great for new investors and people who don’t want to deal with managing their portfolio. But U.S. Bank’s $10,000 minimum opening investment is prohibitive for many.
Many other top robo-advisors have opening deposits as low as $0 to $500, making it easier to get started.
On an ongoing basis, Automated Investor’s advisory fee could also pose a problem to some investors.
While it’s much lower than what you might pay a human advisor, it’s relatively high compared with other robo-advisors.
That said, the platform has a good selection of ETFs with a broad range of assets to make your portfolio more diversified.
if you have enough to meet the platform’s minimum opening investment requirement and are willing to pay a higher fee for better diversification and the service’s other benefits, it might be worth it.
Also, Automated Investor could be worth it if you already have an investment or bank account and would prefer to have all of your accounts with one bank.
As you consider whether the platform is right for you, compare it with other robo-advisors to see whether another one might be a better fit.
Also, consider whether it might be worth working with an advisor in person rather than relying on a computer program.
There’s no right answer for everyone.
So, it’s important to consider your investment goals and preferences before you decide on where you want to invest your money.
Because while you can always switch in the future if you don’t like your experience, the process can be complicated and drawn out.
So it’ll be better, in the long run, to be sure about your first choice.