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Updated on Wednesday, October 30, 2019
Ally Invest Managed Portfolios is a robo-advisor that allows you to begin investing with a small amount and take a hands-off approach to building wealth over time. Existing Ally Bank customers will appreciate this platform, as it integrates with your other Ally accounts, making it easy to review all your finances in one place.
Ally Invest Managed Portfolios guides your choice of investing strategy, and automates the management of your investments. It’s a good choice if you’re looking to build wealth without doing a lot of the heavy lifting yourself.
Who should consider Ally Invest Managed Portfolios?
Ally Invest Managed Portfolios is ideal for someone who prefers a hands-off approach to managing investments and would like guidance for long-term investing options. The app asks you questions about your risk tolerance, timeline for investing and other details to help you choose the right investment portfolio. You can tweak the portfolio, but you cannot make active trades.
With Ally Invest Managed Portfolios, you don’t have to worry about rebalancing — the app handles this task automatically. If you prefer to maintain a large cash buffer, the cash-enhanced option places 30% of your portfolio in cash. This is a good option for those who are more risk-averse.
You should also be comfortable with an all-online experience. With Ally Invest Managed Portfolios, there are no branch offices where you can consult with an advisor face-to-face, although the company does offer 24/7 support via online chat, phone or email.
Those who like a hands-on experience or want to choose individual stocks should choose a different product. You won’t have direction over what happens with your portfolio, other than tweaks to asset allocation.
Ally Invest Managed Portfolios fees and features
|Amount minimum to open account|
|Account fees (annual, transfer, inactivity)|
|Mobile app||iOS, Android, Windows Phone|
|Customer support||Phone, 24/7 live support, Chat, Email|
Ally Invest Managed Portfolios management fees
Ally Invest Managed Portfolios charges a flat annual advisory fee of 0.30% on portfolios that don’t use the cash-enhanced option. If you’re willing to keep 30% of your portfolio in cash, you don’t have to be worried about being charged a fee at all. The return you receive on the cash portion of your portfolio depends on market rates.
However, expense ratios will still be charged on the exchange traded funds (ETFs) that comprise your portfolio. In general, though, expense ratios are low with Ally Invest Managed Portfolios. They are taken automatically from the ETFs, so it likely won’t be noticed in your portfolio.
Portfolio options and portfolio management
Ally uses ETFs to create its portfolios. ETFs are allocated based on your investment goals and risk tolerance. Investors receive recommended portfolios that they can tweak as needed to better reflect their individual circumstances.
It’s possible to construct a portfolio based on your own preferences when you use Ally Invest Managed Portfolios. Some of the options Ally offers for portfolios include:
- Core: This basic portfolio allows you to choose your risk tolerance level and then uses that information to construct a portfolio that includes highly diversified assets.
- Income: If you are approaching retirement, this portfolio can be a good choice. It focuses on investments that offer higher dividend yields.
- Tax optimized: Even though Ally Invest Managed Portfolios doesn’t offer tax-loss harvesting, it is possible to get a tax-optimized portfolio. This type of portfolio is designed for those making after-tax contributions. Assets include municipal bonds, whose tax treatment is designed to help you maximize tax efficiency.
- Socially responsible: Investors interested in doing the right thing can choose to invest in companies that meet certain social responsibility standards related to energy efficiency, sustainability and environmental friendliness.
All of these portfolios come with the ability to include a cash buffer. This cash-enhanced option is designed to keep at least 30% of the portfolio in cash at all times. While you might see changes to your other investments through rebalancing, the cash portion will remain mostly steady.
It’s important to note that if you use a cash buffer in your portfolio, you won’t be able to access the money the same way you would a traditional bank account. Instead, the money is a permanent part of the portfolio. Choosing the cash-enhanced option will help you avoid the 0.30% management fee.
Ally manages and monitors these portfolios daily and rebalances the portfolio based on your investment goals.
Integration with other Ally products
Not only does Ally Invest Managed Portfolios make it easy for you to move forward with investing with as little as $100, but it also integrates with the rest of your Ally account. You can log into your account and see everything in one place.
In fact, it’s easy to transfer money from your Ally Bank account into your Ally Invest Managed Portfolios account from a single Ally login. You can even set up automatic transfers so that each month you can move money from your Ally Bank account into your investment account.
It’s also possible to transfer between Ally Invest accounts, and pretty much anything else you need to do, from your Ally login, making it simple to integrate your investments with the rest of your finances.
Strengths of Ally Invest Managed Portfolios
- Investing in a diversified portfolio is easy. You’ll answer basic questions about investment goals and Ally Invest will suggest a portfolio with an appropriate mix of U.S. and foreign bonds, international and U.S. stocks and cash. You can also tweak the suggestions Ally Invest Managed Portfolios makes to take on more or less risk based on your comfort level.
- Low minimum deposit requirement. A mere $100 is required to open an Ally Invest Managed Portfolios account. While some competitors—such as Betterment—don’t have a minimum deposit requirement at all, $100 still falls on the very low side of the scale. Wealthfront, for instance, has a $500 minimum requirement.
- Ally account dashboard. Ally offers a full-featured website where you can view all your Ally accounts under one login. The app’s online goal tracker makes it easy to monitor progress so you can see how successful you are at hitting investment goals.
- 30% cash portfolio eliminates the annual management fee. If you’re willing to keep 30% of your portfolio in cash, there is no annual management fee for Ally Invest Managed Portfolios.
Drawbacks of Ally Invest Managed Portfolios
- Fees are slightly higher than some competitors. You’ll pay a 0.30% annual management fee for this robo-advisor service unless you agree to the cash-enhanced option. That is more than Betterment’s 0.25% digital account fee and Wealthfront’s 0.25% annual advisory fee.
- No tax-loss harvesting. Other robo-advisors offer this feature, which involves selling investments at a loss to offset taxable gains. Note that there is a tax-advantaged portfolio, which adds municipal bonds to the investment mix. We spoke to representatives of the company who indicated this feature is expected to be rolled out later in 2019.
- Mobile app isn’t very advanced. While Ally Invest Managed Portfolios allows you to use mobile apps on iPhone and Android phones to access basic account information, the app isn’t as feature-rich as ones from competitors.
Is Ally Invest Managed Portfolios safe?
Whenever you invest your money, there’s a risk you may lose some or all of it. This is no different with Ally Invest Managed Portfolios. The assets your robo-advisor invests in on your behalf could decline in value and your portfolio could lose money.
But Ally Invest is as safe as any trusted online brokerage, and there’s little risk of losing assets if the investment firm goes bankrupt. Ally Invest is in compliance with regulatory requirements according to FINRA’s BrokerCheck tool.
Ally Invest is also a member of the Federal Deposit Insurance Corporation (FDIC) and the Securities Investor Protection Corporation (SIPC), both of which ensure cash in bank and brokerage accounts, respectively. In addition to SIPC protection, Ally Invest has a policy underwritten by London Underwriters through its clearinghouse, Apex Clearing. It’s important to note that SIPC insurance only protects you against losses in the event the broker fails. It won’t protect you against market losses.
The final word on Ally Invest Managed Portfolios
Ally Invest Managed Portfolios is a viable choice for investors looking for an easy, hands-off way to invest—especially with its low $100 minimum deposit requirement. Ally also offers a socially responsible portfolio, which should interest investors who want to consider more than just financial returns. For those with other interests, the ability to tweak a portfolio with a specific purpose can be attractive.
Additionally, this can be a good account for those who already have an Ally account and want to keep their money in one place.
But the lack of a promotional offer, higher management fees and the fact that tax-loss harvesting isn’t currently offered makes Ally a less-than-ideal option for investors looking for the most affordable way to build a diversified portfolio. If you want a lower-cost option that does offer tax-loss harvesting, consider robo-advisors such as Betterment or Wealthfront.
The “Find a Financial Advisor” links contained in this article will direct you to webpages devoted to MagnifyMoney Advisor (“MMA”). After completing a brief questionnaire, you will be matched with certain financial advisers who participate in MMA’s referral program, which may or may not include the investment advisers discussed.