Like most robo-advisors, Ally Invest Managed Portfolios starts the process by asking prospective clients to fill out a questionnaire. (Note: You don’t need to commit to opening an account to fill out the questionnaire and see your investment recommendations.)
You’ll answer a series of questions about your investment objectives, time horizon, your assets, risk tolerance, and more. From there, you’ll pick the type of portfolio (core, income, tax-optimized, socially responsible) that best fits your objectives, and Ally will suggest an ideal asset allocation strategy for you.
Note that the default option is the cash-enhanced portfolio, which permanently keeps 30% of your portfolio in cash. This has no management fees, which is a big differentiator, but it does create a far more conservative investment strategy than many investors want or need — especially younger investors with long time horizons to ride out the ups and downs of the stock market.
In addition to creating customizable investment portfolios for clients, Ally Invest Managed Portfolios offers some unique services. Automatic rebalancing whenever an account needs it is one example. And the concept of a 30% cash buffer (which is also included in portfolio rebalancing) is an Ally differentiator, intended to help investors better absorb the ups and downs of the stock market.
Pricing and fees
The two main types of fees you might pay when investing through a robo-advisor are management fees and fund expense ratios.
When it comes to management fees, Ally Invest has two options:
- Cash-enhanced account: This option keeps 30% of a client’s money in cash (which earns interest), but charges no management fee.
- Market-focused portfolio: This option invests nearly all of a client’s money but charges a 0.30% management fee.
In addition, Ally invests client funds in exchange-traded funds, or ETFs. These funds are not managed by Ally, and all have their own fees (known as expense ratios). Ally doesn’t publish the underlying expense ratios of its funds, but annualized fees in the 0.05%-0.20% range are typical of the funds used by most robo-advisors.
View more information: https://www.fool.com/the-ascent/buying-stocks/best-robo-advisors/ally-invest-managed-portfolios-review/