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Beginner and hands-off investors will find an excellent partner in Ally Invest Managed Portfolios. The broker’s managed portfolios and robo-advisory service make it simple to invest.
Ally Invest Managed Portfolios is Ally Financial Inc’s fully automated passive investment service. The broker’s robo-advisor is a Godsend for beginner investors who want to put money into a mix of low-cost and diversified exchange-traded funds (ETFs) on autopilot.
The automated portfolios are goal-based and hand-selected by the firm’s team of human investment specialists. In addition, Ally Invest automatically rebalances and monitors your professionally designed portfolio to ensure you stay on track.
Ally Invest Managed Portfolio makes it possible to start investing in one of four portfolios so that every investor will find a suitable option. To get started, all you need is $100 to fund your Ally Invest account.
In this review, we will take a closer look at Ally Invest Managed Portfolios and its robo-advisor features, including investment models, available portfolio types, and integration into Ally’s other services. From there, we will outline its cost structure, pros & cons, and describe which types of investors should join the platform.
on Ally’s website
Quick Summary: Ally Invest Managed Portfolios is part of Ally Invest, a subsidiary of the well-known American bank holding company Ally Financial. There are no advisory fees, annual charges, or rebalancing fees for their flagship cash-enhanced portfolio.
What Is Ally Invest Managed Portfolios?
Ally Invest Managed Portfolios is part of Ally Invest, a subsidiary of the well-known American bank holding company Ally Financial, headquartered in Detroit.
In June 2016, Ally acquired the popular stock brokerage TradeKing and its associated robo-advisor. With the acquisition, Ally formed Ally Invest, which serves as Ally Financial’s investment arm.
The acquired robo-advisory service was restructured entirely and became Ally Invest Managed Portfolios. Unlike Ally Invest’s hands-on trading branch, the robo-advisor service targets hands-off investors who want to have their portfolio managed professionally and spend as little time as possible with it.
How Does Ally Invest Managed Portfolios Work?
Choose an account type from the list below, open an account, and start investing.
Investing Account Types
Ally Invest Managed Portfolios offers a range of accounts to its investors. The broker provides the most common account types:
- Individual taxable brokerage account
- Joint taxable brokerage account
- Traditional IRA
- Roth IRA
- Rollover IRA
- Custodial account
Opening an Account
To open an account with Ally Invest Managed Portfolios, click on the blue “Create Your Plan” button on the company’s website. The three-step process will take you about 10 minutes.
First, you will have to complete a questionnaire, as part of which you outline your financial goal (retirement, major purchase, generate income, build wealth) by answering a series of questions regarding your investment time horizon, financial contributions, and risk tolerance.
From there, you will pick the portfolio type that suits you best and Ally Invest will provide a customized ETF portfolio for you. You can go with their recommendation or make changes according to your preferences. However, keep in mind that the base portfolio recommended by Ally is a cash-enhanced portfolio with 30% cash in it.
Once you are satisfied with the choices you’ve made, click on open your account. You will be prompted to set up your account, enter basic information, and submit your application. After Ally has established your account, you can fund it with $100 and start investing.
Ally Invest Managed Portfolios Features
In addition to its customizable portfolios, Ally Invest Managed Portfolios offers a selection of unique features. These features include a free robo-advisor service with a cash buffer, low-cost investment vehicles, automated rebalancing, different portfolio types, and integration with other Ally products.
|Fees||0% Annual Fee —Cash-Enhanced Managed Portfolio; and 0.30% Annual Fee —Managed Portfolio without 30% cash allocation requirement|
|Investment Types||Portfolios created from ETFs covering 17 different asset classes|
|Account Types||Individual Taxable, Joint Taxable, Traditional IRA, Roth IRA, Rollover IRA and Custodial|
|Assets Under Management||Unknown|
|Socially Responsible Investing|
|Support||Live Chat, Phone and Email|
Cash-Enhanced With No Advisory Fee
Clients can invest for free using Ally Invest’s cash-enhanced managed portfolios. You don’t have to pay any advisory fees, annual charges, or rebalancing fees for the cash-enhanced portfolio if you diversify your portfolio allocation with a 30% cash position.
Ally Invest will set your 30% cash position aside and use it as a buffer against potential risks and market volatility. This cushion is part of every cash-enhanced portfolio offered by Ally Invest Managed Portfolios. Besides, your cash holdings earn interest at a competitive rate. If your cash position outgrows 30%, it will be added to your investment portfolio.
If you want to change your portfolio type or switch to a portfolio with fewer cash holdings, simply call Ally Invest’s customer support.
It is important to know that the cash position is an inherent part of your portfolio, can’t be accessed like money in a savings account, and isn’t FDIC insured.
Lower Cash Allocation With Advisory Fee
If you prefer holding less than 30% cash in your portfolio, Ally Invest Managed Portfolios enables you to cut this number to 2% with their market-focused option.
However, lowering your cash position comes at a price. By investing more money into your portfolio and holding less cash, you will have to pay a moderate 0.30% annual advisory fee (charged monthly) for your assets under management. This affordable management advisory fee is based on the daily total equity account balance.
Low Investment Minimums
Investors with small amounts will love Ally Invest because Ally Invest Managed Portfolios has a very low minimum investment barrier of $100.
Ally believes that everyone should have access to investing and therefore only requires a low minimum investment, whereas its competitors sometimes require up to $500. Ally’s competitive offer is perfect for beginner investors that want to start their investment journey slowly.
With Ally Invest Managed Portfolios, you can choose from one of four portfolio types and pick the one that aligns best with what’s important to you:
- Tax optimized
- Socially responsible
The core portfolio is perfect for investors that are looking for a diversified hands-off investing portfolio. Diversification occurs across national and international stocks and bonds and the investor’s risk tolerance can range from conservative to aggressive.
If you are looking for a portfolio type with a higher dividend yield, a more conservative risk profile, and a focus on cash flow overgrowth, the Income portfolio is for you.
For after-tax investing, Ally Invest Managed Portfolios offers a tax-optimized portfolio, which can help maximize your returns by investing in a mix of low-cost ETFs. This is especially great for investors in higher tax brackets.
Lastly, investors who only want to invest in ethical companies that actively practice energy efficiency, sustainability, or are part of environmental initiatives, should consider the socially responsible portfolio.
Create Your Portfolio
If you don’t like Ally Invest’s proposed investment portfolio and strategy, you can modify the portfolio to your liking. To adjust the investment strategy, click to explore other options below the pie chart.
In the new window, you can change the portfolio’s risk level and see how your changes impact your portfolio’s asset allocation and performance. Depending on your stated risk tolerance and time horizon, you can choose different options. The five basic portfolio options are:
- Moderate growth
- Aggressive growth
Ally Invest’s fund offering is similar to other robo-advisor services. Ally Invest Managed Portfolio uses only exchange-traded funds (ETFs) to create personalized and diversified investment portfolios. The service uses tax-efficient ETFs from Vanguard and BlackRock (iShares) because they are ideal investment vehicles to keep costs low for investors.
When Ally Invest customizes the portfolio’s asset allocation, it always utilizes multiple funds on stocks and bonds next to the compulsory cash position.
The stock selection consists of US stocks (large-cap, mid-cap, small-cap) and International stocks (developed markets, emerging markets). The bonds that are used include US municipal, treasury, credit, mortgage-backed, and international bonds to diversify the investor’s portfolio.
Other asset classes, such as mutual funds and options, are not part of their portfolios and can’t be added.
See Also: 7 Best Micro-Investing Apps
A key feature for robo-advisors is automatic rebalancing. Ally’s rebalancing takes place when your investment portfolio deviates too much from your initial asset allocation. To get back to your initial asset allocation, the robo-advisor will automatically execute buys and sells of the right mix of stocks, bonds, mutual funds, ETFs, etc., at specific intervals to get the portfolio mix to its intended percentages.
Update Your Portfolio Goals Any Time
Updating your portfolio goals or your asset location is easy. Go to the web-based platform or the mobile app and change them in your investor profile at any time.
To update your asset allocation, simply adjust the risk versus return slider until you are comfortable with your asset allocation. Keep in mind that it is not possible to trade assets, as is the case with most robo-advisors.
Integration With Ally’s Services
Investors using Ally Invest Managed Portfolios’ products can integrate their investment account into the firm’s diversified financial platform under the same login and view it on the same dashboard as the other services.
Ally’s other popular financial services include its banking services (Ally Bank), loans and mortgages (Ally Home), and active trading service (Ally Invest).
24/7 Customer Support
Ally Invest Managed Portfolios offers accessible customer support and clients can choose from different contact options.
In contrast to other robo-advisor providers, a real person is available via phone, chat, and email 24 hours a day and seven days per week to help with questions regarding Ally Invest Managed Portfolios.
Customers can also get quick help through Twitter and Facebook Messenger.
Ally Invest Managed Portfolios Pricing and Fees
Investors using the services of Ally Invest Managed Portfolios utilize exchange-traded funds with the help of the firm’s robo-advisory service.
Traditionally, investors had to pay hefty management fees when employing financial advisors to manage their portfolios. Luckily, modern technology, digital investing options, and widely available robo-advisors made low management advisory fees attainable.
In Ally Invest’s case, investors have two low-cost fee options. The first is the cash-enhanced investment option (holding 30% cash) with zero fees for assets under management: no advisory fees, annual charges, or rebalancing fees.
The second option is the market-focused option, which has a lower amount of cash holdings and carries a 0.30% annual advisory fee that is calculated for the daily equity in the account balance and charged monthly. Still, a 0.30% management fee is very competitive.
Ally Invest Managed Portfolios Security
You can rest assured that your investments are safe with Ally Invest Managed Portfolios.
Ally Invest Managed Portfolios is a member of the Securities Investor Protection Corporation (SIPC). Investors’ funds are covered up to $500,000, including $250,000 in cash claims in case Ally Invest Managed Portfolios fails in any way. Keep in mind that SIPC protection doesn’t cover investment losses.
Besides, Ally’s clearing agency, Apex Clearing, which clears and settles trades, maintains additional insurance through a group of London insurers. The insurance protects securities and cash up to an aggregate of $150 million.
Ally Invest Managed Portfolios’ is provided by Ally Invest Securities, which is also a member of the Financial Industry Regulatory Authority (FINRA).
Ally Invest Managed Portfolios Pros
- Ally Invest utilizes various low-cost ETFs on stocks and bonds to diversify portfolios
- Socially responsible investing is available to environmentally-conscious investors
- Varied portfolio orientations, from conservative to aggressive
- No minimum account deposit required
- No management fee for the cash-enhanced portfolios
- A competitive management fee of 0.30% for the market-focused portfolio
- A low minimum investment barrier of just $100 to get started investing
- Ally Invest offers a 24/7 customer support service with a real person
- The most common account types are supported
- Automatic rebalancing is done consistently
- Seamless integration with Ally’s other financial services
Ally Invest Managed Portfolios Cons
- Investors have to expect lower returns when using the free investment management service because of the 30% cash allocation in their portfolio
- The 0.30% management fee is still slightly higher than what other brokers such as Betterment and Wealthfront charge for similar services
- The platform currently doesn’t support account types such as SIMPLE IRAs, SEP IRAs, solo 401(k)s, 529 savings plans, and trusts
- Ally Invest doesn’t give access to human financial planners as other competitors do
- Tax-loss harvesting isn’t offered
- There is no specific app available for Ally Invest Managed Portfolios, only one general app that covers all Ally accounts
Ally Invest Managed Portfolios Alternatives
If you prefer a hands-off investing approach, the Ally Invest Managed Portfolios’ robo-advisor does all the work for you. You pay low or no management fees and can be sure that your money is invested according to your goals, risk tolerance, and time horizon. However, there are alternatives you might want to consider.
Betterment and Ally Invest Managed Portfolios are very similar in their approach to investing and their services but do differ.
Betterment offers two investment plans (digital and premium) that both carry management fees. The digital service requires no minimum investment but a fee of 0.25% for assets under management. The premium service is available from a $100,000 account balance and carries a fee of 0.40%. However, this service includes access to certified financial planners.
In addition, Betterment also offers SEP IRAs and trust accounts to their clients.
Ally Invest Managed Portfolios shines through its integration with Ally’s other financial services which are one of the best platforms in their respective fields. Ally also offers a free cash-enhanced portfolio, whereas Betterment only offers a no-fee checking account.
Read our full Betterment review to learn more.
SoFi Automated Investing
Investors that want to cut the management fee should have a look at SoFi Automated Investing. The company has no management fees, no minimum investments, and no account costs. SoFi Automated Investing customers also get unlimited access to registered financial advisors.
Although both platforms use low-cost ETFs and exercise automatic rebalancing, Ally Invest Managed Portfolios practices tax-optimization in taxable accounts, which SoFi does not offer in their accounts.
Read our full SoFi Automated Investing review to learn more.
|Fees||0% Annual Fee —Cash-Enhanced Managed Portfolio; and 0.30% Annual Fee —Managed Portfolio without 30% cash allocation requirement||Digital — 0.25%/yr and Premium — 0.40%/yr||0.00%|
|Promotion||None||Up to 1 year free (*for qualified deposits)||Free advice and loan discounts (*for qualified deposits)|
|Highlight||SRI portfolio options||Solid goal-based tools||Access to certified financial planners|
|Best For||Existing Ally banking or brokerage users||Strategies involving tax loss harvesting||Cost-conscious passive investors|
Who is Ally Invest Managed Portfolios Best For?
Ally Invest Managed Portfolios is perfect for investors that are already clients of Ally’s financial services or investors who are actively looking for a provider that is a one-stop-shop for financial products.
Ally Invest Managed Portfolios is also an excellent choice for inexperienced investors with small accounts. Investors who want a professional management service to take care of their investment (at no cost or a fraction of what a traditional investment manager costs) or create wealth for them on autopilot will also find a reliable partner in Ally Invest Managed Portfolios.
Investors that value customer support outside regular trading hours will also get their money’s worth with Ally’s 24/7 customer service.
Ultimately, older retirees looking for a conservative, bond-heavy income portfolio and investors who prefer cash holdings overgrowth will like Ally Invest Managed Portfolios a lot.
Ally Invest Managed Portfolios FAQ
Investors often have further questions regarding specific services and offerings. Therefore, we answered two of the most common questions for Ally Invest Managed Portfolios.
What Is the 30% Cash Buffer?
The 30% interest-earning cash buffer is part of every cash-enhanced investment portfolio. Ally Invest Managed Portfolios will set aside the cash position at a competitive variable rate and use the cash to balance out potential risks, market volatility, and changes in market conditions.
Your investment portfolio will always have a cash proportion of around 30%. However, Ally also rebalances and adds money above that threshold to your other investments as your cash grows.
Is Ally Invest Managed Portfolios Good for Beginners?
Ally Invest Managed Portfolios is a great match for beginner investors because the robo-advisor takes care of all your investments and decides which asset allocation is right for you. Investing passively enables you to learn more about investing if you are just starting out.
Once you are more experienced, you can switch to Ally Invest and its active trading division, where you can start trading stocks, bonds, options, ETFs, and mutual funds at low costs.
In A Nutshell
- Account Minimum: $100
- Fees: 0% Annual Fee —Cash-Enhanced Managed Portfolio; and 0.30% Annual Fee —Managed Portfolio without 30% cash allocation requirement
- Promotion: None at the moment
Ally Invest Managed Portfolios is relatively new in the market of robo-advisors. Nonetheless, its offering is very competitive and takes into consideration valuable features such as its automated portfolio rebalancing and SRI-investing. The service is perfect for new and advanced investors alike who want to interact with their portfolio as little as possible.
Opening an account with Ally Invest Managed Portfolios is easy and takes only a few minutes. Investing is possible with only $100, which is perfect for beginner investors and those with tight budgets.
Ally Invest Managed Portfolios’ customers can invest in a broad basket of low-cost and tax-efficient ETFs, choose from multiple portfolio types, adjust the asset allocation to their liking, and update their goals whenever they change.
Besides, Ally Invest makes it possible for investors to integrate their managed portfolios account with other Ally services and provides 24/7 customer support with a real person.
The only downside is that investors have to hold 30% cash to access the free management service. This requirement can significantly lower returns over longer investment time horizons and could hinder long-term passive investors in reaching their financial goals.
- What are Short Term Investments: Grow your Money Now
- What is Micro Investing? Is It the Best Way to Start Investing?
- What is a Mutual Fund: Does it Belong in Your Investment Portfolio?
- What Are Stocks & Why They Should Be Part of Your Financial Plan
- What is a Bond: Everything You Need to Know
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Carsten is a Freelance Copywriter with a personal interest in money management and investing. Besides taking care of his investments, he loves traveling, reading books, and working out (calisthenics & yoga).