FutureAdvisor is an online robo-advisor that uses an algorithm based on modern portfolio theory to manage your investing account, 529 college savings account or retirement plan. Users can set up free accounts on FutureAdvisor to automatically manage third-party accounts held at major brokerages.
- Live advice from professional advisors
- Tax-loss harvesting for all accounts
- Free 401(k) account management for qualified customers
- Fees based on portfolio size
- No new clients over age 68
- $10,000 account minimum balance
Who Uses FutureAdvisor?
FutureAdvisor is one of a handful of top robo-advising services that have popped up in recent years. If you don’t have the time, knowledge or desire to actively manage your investment, retirement or college savings portfolio, FutureAdvisor will do it for you using its trading algorithm.
FutureAdvisor offers useful portfolio analysis tools absolutely free, as well as a premium portfolio management service for users willing to pay for it. If you want to manage your own investment account but don’t want the responsibility of tracking performance, choosing trades, rebalancing your holdings and optimizing tax harvesting, FutureAdvisor is worth a closer look.
FutureAdvisor is also great for retirees looking for a way to maximize returns on a 401(k) or another retirement account. FutureAdvisor offers free retirement planning, free 401(k) advice and even free 401(k) account management for qualified customers.
One of the ways FutureAdvisor premium users can benefit from the service is by its tax-loss harvesting feature, which automatically identifies any opportunities to offset at least $1,000 in taxable gains.
Users who don’t want 100 percent responsibility for managing retirement portfolios but would prefer not to blindly rely on a financial advisor may find FutureAdvisor a good fit. The service provides recommendations and analysis but also has plenty of resources available to explain exactly how its algorithm works and where its recommendations come from. The service is personalized based on each individual user’s financial situation and goals, and recommendations are optimized based on the Nobel Prize-winning modern portfolio theory of investing.
“I’d happily recommend. You can put minute details into getting the results you want. I can put my salary and outgoing bills to help determine expenses,” one FutureAdvisor user wrote in a recent review.
For investors who are willing to pay a fee to leverage all the investing advantages that modern technology offers, FutureAdvisor is one of the leading robo-advisors in the market.
FutureAdvisor Commissions and Fees
Management fees are one of the major downsides to FutureAdvisor’s premium service. The larger your account balance, the more you will be paying. FutureAdvisor Premium charges a relatively high annual fee of 0.5 percent per year in addition to any trading fees and fees charged by individual funds.
Here’s a full overview of the fees FutureAdvisor clients should expect to pay:
- 0.5% of assets under management
- $10,000 account balance minimum for FutureAdvisor Premium
- Transaction fees
- 0.15% average expense ratio on funds
FutureAdvisor Tools
FutureAdvisor offers a number of services for its free and premium tiers. Free users get portfolio analysis, trade recommendations and rebalancing alerts for accounts held on all third-party platforms. Free users also get access to FutureAdvisor’s extensive retirement-planning tools and advice. However, to get access to FutureAdvisor Premium features, including tax-loss harvesting and active account management based on algorithm recommendations, users must have a third-party account through either Fidelity or TD Ameritrade.
Switching to TD Ameritrade or Fidelity could be an expensive and inconvenient undertaking for investors already using another brokerage. However, adding FutureAdvisor’s services is a painless transition for those already using TD Ameritrade or Fidelity. In addition, since FutureAdvisor only manages your accounts and doesn’t actually hold assets, users can sleep easy knowing their holdings are safely held at reputable, established vendors TD Ameritrade and Fidelity.
FutureAdvisor also offers personalized investment planning rather than generic general investment strategies. Regardless of whether you use the premium or free services, your advice will be catered specifically to you and will incorporate your personal financial information and investing goals.
For premium users, portfolio rebalancing, automated deposits and investing advice are all automated, making it as easy as possible for users to take advantage of the power of FutureAdvisor’s algorithm.
For users leery of turning over full control of their portfolios to an algorithm, FutureAdvisor also provides plenty of customer feedback from actual human advisors. The company claims every trade the algorithm makes in its premium clients’ portfolios is monitored and verified by a human advisor.
Finally, FutureAdvisor can open and actively manage 529 college savings accounts for you or a loved one. Management of 529 accounts and 401(k) advice is provided absolutely free.
Research Tools from FutureAdvisor
In terms of market research, FutureAdvisor doesn’t provide too much material for its users. The key part of its service is its algorithm, and it provides plenty of education about how the algorithm is designed and how it works in its Inside the Algorithm educational posts.
FutureAdvisor also offers a library of free articles and other educational materials for all users. In addition, the website has a limited Money Blog with sporadic postings that discuss general investing advice.
FutureAdvisor Customer Support
FutureAdvisor offers phone support for clients from 11:30 a.m. to 8:00 p.m. EST Monday-Friday. The company also provides email support and an online chat feature featuring real financial advisors. As previously mentioned, all trades made by the algorithm are monitored by a human advisor. Each premium user is assigned a personal account advisor, but some online user reviews suggest that email inquiries are not necessarily answered by your personal human advisor.
FutureAdvisor & Its Ease of Use
FutureAdvisor’s platform is extremely easy to use, which makes sense considering their target client isn’t necessarily someone who is an expert in managing his or her own portfolio. Of course, FutureAdvisor Premium is much easier to use for people who already have accounts with TD Ameritrade or Fidelity. Those users don’t have to deal with the extra hassle of opening a new account and/or transferring assets.
New FutureAdvisor Premium clients must have a minimum balance of at least $10,000 and they must be younger than 68 years old. The company says it has its age restriction in place because retirement-age clients are typically focused on income rather than return.
Asset Classes Available FutureAdvisor
FutureAdvisor’s algorithm recommends investments that fall into 12 different asset classes. However, according to the company’s website, the main asset classes it invests in are stocks, bonds, real estate and inflation-protected securities.
Final Thoughts on FutureAdvisor
FutureAdvisor is one of a number of options out there for investors who want to leverage the power of modern financial technology and have a robo-advisor actively manage their investment portfolio. For customers of TD Ameritrade or Fidelity, enabling FutureAdvisor’s features and account management offerings are a breeze.
For users of any third-party broker, FutureAdvisor has a wide range of free offerings that are at least worth a look. However, for users considering the FutureAdvisor Premium robo-advising service, the $10,000 account minimum and the under-68 age restrictions could be deal-breakers. Finally, FutureAdvisor’s 0.5 percent account management fees are relatively high among leading robo-advisor services.
Frequently Asked Questions
What is a robo-advising service?
A robo-advising service is an automated investment service. Usually these services target ordinary investors.
How does FutureAdvisor make thier money?
FutureAdvisor makes their money off of management fees. They charge a flat management fee of 0.5%.
Who are FutureAdvisor's biggest competitors?
FutureAdvisors biggest competitors include Betterment, Raisin, and Personal Capital.