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Updated on Monday, March 25, 2019
Founded in 2010, FutureAdvisor was one of the earliest players in the hybrid robo-advisor space. Five years later, massive asset manager BlackRock swooped in and picked up the company, hoping to expand its reach. This robo-advisor works a bit differently than most and doesn’t actually hold your account directly. Instead, FutureAdvisor manages money held in either TD Ameritrade or Fidelity accounts, investing directly on your behalf as a fiduciary.
FutureAdvisor is also known for its free investment advice. It offers a free assessment of your portfolio and suggestions on how to improve it after you sign up.
Who should consider FutureAdvisor
FutureAdvisor might be especially useful for clients who already have an account at TD Ameritrade or Fidelity Investments since the robo-advisor requires you to have an account at one of those two brokers. Because of the relatively high account minimum, FutureAdvisor is best for investors who have some savings built up (rather than those just getting started) or investors who aren’t especially cost-conscious and need access to a financial advisor.
FutureAdvisor fees and features
|Amount minimum to open account|
|Account fees (annual, transfer, inactivity)|
|Customer support||Phone, Email|
Strengths of FutureAdvisor
- Free portfolio assessment: FutureAdvisor provides a free portfolio assessment, allowing you to see weaknesses in your portfolio. You can link all your accounts (even those that FutureAdvisor can’t manage), such as a 401(k) retirement plan, and receive sound advice on different funds and investments. Of course, there’s no obligation to follow the advice, but it’s based on the same concepts and methodology used by the broker for its managed portfolios.
- Access to financial advisors: As part of the account management fee, clients have access to licensed advisors for any questions related to their portfolio and assets. They also have access to customer service representatives for any day-to-day questions about their account. That provides a lot of peace of mind for many investors, as they know they can call on an expert when they need to.Of course, many of the transactions in the account are still made automatically, including moves such as tax loss harvesting and portfolio rebalancing. Tax loss harvesting allows the portfolio to reap any tax benefits from a decline in the portfolio’s value, while rebalancing periodically ensures the positions in your portfolio are on the right path to reach or maintain your target allocation. Nevertheless, a human advisor will always oversee your account.
- Management of multiple accounts: FutureAdvisor allows you to manage multiple accounts under one FutureAdvisor profile with one investment goal, a process it calls “householding.” By aggregating these accounts, you’ll be able to see all your accounts as one portfolio on the investment dashboard. This approach also allows the robo-advisor to place assets in the best-suited accounts in order to minimize taxes. However, all accounts aggregated like this must share the same risk tolerance and time to retirement, a process that might prove difficult for a married couple with different preference and timelines.
Drawbacks of FutureAdvisor
- Account management fee: The account management fee at FutureAdvisor is on the higher end compared to those charged by other robo-advisors (even those offering access to financial advisors). It charges 0.50% of the account value, which doesn’t include the ETF expenses or any trading expenses incurred at the brokerage, the latter of which is not an issue at typical robo-advisors.Trading expenses can be incurred during any portfolio rebalance; however, according to the company, after your first rebalance, any additional rebalances typically won’t incur additional fees because the advisor uses mostly commission-free ETFs.
- Account minimum: At $5,000, FutureAdvisor’s account minimum is higher than many competitor offerings. That’s a tough level for beginning investors to achieve when they’re just opening an account. However, investors who already have an account with TD Ameritrade or Fidelity Investments may have some assets tucked away and may be able to make the transition easier than true newcomers.
- Mobile version not available: Unlike its competitors, FutureAdvisor does not currently offer a mobile app for iPhone, Android or any other phone operating system. It’s available for use only on its website.
Is FutureAdvisor safe?
FutureAdvisor is owned by BlackRock, the world’s largest asset manager, with more than $6 trillion in assets under management. Of course, FutureAdvisor only manages your assets, so they’re actually held by either TD Ameritrade or Fidelity Investments — both highly regarded companies in their own right. Both brokers are members of the Securities Investor Protection Corporation, which guarantees assets up to $500,000 (including a $250,000 limit for cash only), so the account is protected up to that amount. Of course, that doesn’t protect assets from loss due to market fluctuations.
With a free assessment of your current portfolio, FutureAdvisor provides a useful service for clients without obligation. However, its account management fee is on the higher end, even if you do get to speak with an advisor. Unlike many other robo-advisors that have no account minimum, its minimum is a steep $5,000. Finally, some may feel it’s a solid service that’s too expensive given alternative options.
If you’re looking for something that’s cheaper and requires a low minimum deposit, you could turn to Wealthfront or Betterment, two leaders in the industry. If planning and a goal-based investment strategy are key concerns, Ellevest also could be an excellent alternative.
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.