Ally Invest Review 2023: An Online Broker & Robo-Advisor All-In-One

Ally Invest is a service offered by Detroit-based bank, Ally Financial, a publicly traded company that has around $180B in assets and over 8,700 employees in the United States. 

Although Ally Financial offers a wide range of banking, investment, and other financial solutions for its customers, we will focus solely on Ally Invest — the firm’s investment management unit — in this article.

By the end of 2019, Ally Invest had over 350,000 active accounts registered for its trading platform, offering a dual approach to investment management that includes a self-directed trading solution and managed portfolios designed by a robo-advisor but overseen by investment specialists from the firm.

What is Ally Invest?

Ally Invest is Ally’s investment management unit, which offers a wide range of solutions for customers, including trading services, portfolio management, and retirement planning advice. 

Ally has joined many other brokers in the United States and overseas in the race to offer the most competitive rates for traders, starting with zero-commission stock and ETF trades.

Moreover, Ally Invest also offers a zero-fee managed portfolio solution that functions as a robo-advisory service.

Ally Invest’s competitive edge is primarily its low-fee structure, along with its banking background, which gives the firm a credibility boost in relation to its rivals.

See Also: SoFi Invest Review: A Robo-Advisor & Broker for Millennials

How Does Ally Invest Work?

When it comes to investing, Ally Invest offers its clients a managed portfolio service which is basically a robo-advisor service, or they provide a self-directed trading service for DIY investors. 

Account Types

Ally Invest offers its clients the possibility of opening one of the following accounts for its managed portfolio solution:

• Individual
• Joint
• Traditional
• Roth
• Rollover.

For Ally’s Self-Directed Trading solutions, these are the types of accounts that clients can open: 

• Individual, joint, or custodial taxable accounts
• Traditional, Roth, or Rollover IRAs
• Coverdell accounts.

Opening an Account

The process of opening an account with Ally starts after clicking the blue button in the upper right corner of the screen.

For the managed portfolio solution, the button should say “Create Your Plan”;  for the Self-Directed Trading solution, the button should say “Start Trading.”

For the managed portfolio option, the process of opening an account will start with asking the client about his/her financial goals. After that, the robo-advisor will build a customized portfolio based on those goals.

Finally, investors will be prompted to make a deposit, with a minimum of $100 required to open the account.

For the Self-Directed Trading service, the process is much shorter because no questionnaire has to be completed. 

After choosing the account type, the user will be prompted to disclose his/her Social Security number, personal phone number, and then answer some security questions.

Additionally, employment and financial information needs to be provided, and some basic profiling and trading questions need to be answered.

The ID verification process can take up to 3 business days, which is a bit slower than the industry average.

Ally Invest Features

As discussed earlier, Ally Invest caters to active and passive investors alike. So the service offers many features that may fit your specific needs. 

Ally Invest Managed Portfolios

Ally Invest’s managed portfolios function as a robo-advisor, which is an algorithm that follows the firm’s investment philosophy to allocate the client’s funds based on his/her financial goals in a wide range of asset classes to construct broadly diversified investment portfolios that should deliver steady returns over the long term.

That said, the portfolios built by the robo-advisor have been pre-approved by human advisors, although the algorithm will take charge of the portfolio once it has been constructed to perform periodic maintenance, including automatic rebalancing.

The firm currently offers four different portfolio choices for customers, depending on their financial goals:

Core Portfolio

This is a highly diversified investment portfolio that aims to generate wealth over time by taking advantage of the effect of compounding and periodic contributions.

Income

An alternative designed for individuals seeking to live off their holdings or supplement their income through the use of  their portfolio. It is mostly focused on generating attractive yields and a steady income stream.

Tax Optimized

Primarily designed for retirement planning purposes, Ally’s tax-optimized portfolio aims to maximize the returns generated by an individual retirement account (IRA).

Socially Responsible

The socially responsible portfolio only invests in companies that follow a certain ethical standard or that have a positive impact on the environment or in the social sphere. Eco-friendly and socially conscious investors often find these portfolios appealing. 

Investors can sign up for Ally’s managed portfolios by depositing as little as $100, and they can use the firm’s desktop app or mobile app to track the evolution of their investment account over time.

Ally’s managed portfolios offer a cash-enhanced alternative that sets aside 30% of the client’s balance in cash at all times. Those funds generate an annual interest rate of 1% (as of this writing) and this option seeks to reduce the impact of market volatility in the client’s portfolio.

The firm charges a 0.30% advisory fee for its managed portfolios unless the client signs up for the cash-secured alternative (in which case no advisory fees are charged).

Ally Invest Self-Directed Trading

Ally Invest offers a brokerage service known as the Self-Directed Trading solution, which allows the client to take control of his holdings to invest in different types of securities, including stocks, ETFs, options, bonds, mutual funds, and even penny stocks. 

There’s a $2,000 minimum required to open a Self-Directed Trading account with Ally Invest. and the firm currently offers zero-commission stock and ETF trades, along with competitive fees for options trading ($0 commission and a $0.5 per contract fee), while bond trading costs start at $1 per bond with a minimum of $10 per trade.

Ally Invest’s web-based trading platform is a proprietary system that includes a charting tool that features 117 different chart studies along with 36 drawing tools that can be applied to all the different instruments offered by Ally.

Additionally, the platform also includes a watchlist, profit/loss graphs for options trading, probability calculators, research tools, an ETF screener, and a mobile trading app supported by both Android and iOS.

A downside of Ally’s Self-Directed Trading is that it does not offer a desktop version, which advanced traders often prefer over web-based platforms.

Forex Account

Ally Invest offers the possibility of trading forex pairs as a separate feature, allowing its clients to trade a selection of 50 different currency pairs.

To open a Forex account, Ally requires a $250 minimum deposit, although the firm recommends a $2,500 minimum to enjoy all the features that the platform has to offer.

Retirement Planning

For retirement planning, Ally currently offers Individual Retirement Accounts (IRAs) and Roth IRAs for its clients, while 401(k)s are not currently supported or offered by this provider.

The firm does not charge annual or monthly maintenance fees for these accounts and they also offer the possibility of rolling over existing IRAs from other providers.

However, Ally does charge a 0.30% annual advisory fee for the portfolios it manages for IRA account holders unless they sign up for the firm’s cash-enhanced portfolio alternative.

Commission Free Trading

Following an industry-wide trend, Ally Invest now offers zero-commission stock and ETF trading for US-listed instruments, although some commissions and fees may still apply to foreign stocks and ETFs.

Investors can also buy bonds by using Ally’s brokerage services. Bonds start at $1 per bond with a minimum of $10 per order. 

No-load mutual funds can also be bought through Ally Invest at a cost of $9.95 per trade, while securities priced at less than $2 generate a flat fee of $4.95 per trade along with an additional commission of $0.01 per share.

No Account Minimums

No account minimum is required to maintain an active account with Ally Invest, but a minimum deposit of $250 is required to open an account. Additionally, a $2,000 minimum is required to be eligible for a margin account.

Market Research & Trading Tools

Ally’s proprietary trading platform features a user-friendly interface that can be accessed through any web browser, although no desktop solution has been launched yet.

The platform includes a decent search function and an advanced charting tool that incorporates more than 100 different technical indicators along with 30+ drawing tools. 

On the downside, Ally’s platform does not provide the alternative of setting a two-step security login.

Trade orders supported by Ally’s trading platform include:

• Market order
• Limit order
• Stop-loss order
• Stop limit order
• Trailing stop
• Market on close.

Additionally, these orders can be set as same-day orders or as good until canceled. Ally’s platform also allows users to set price alerts.

Options Trading

Ally Invest’s clients can also trade options by using the firm’s platform, and one of the advantages of trading with this provider is that it does not charge a commission per trade (although they do charge a $0.50 fee per contract).

Ally’s platform has been designed with options traders in mind, as the system features a profit/loss chart, a profitability calculator, and a well-displayed options chain.

These derivatives can be used to generate income via strategies such as covered calls, or they can also be used to speculate on the fluctuation of the price of their underlying securities. 

See Also: Ellevest Review: A Robo-Advisor Designed by Women for Women

Margin Accounts

A minimum balance of $2,000 is required to be eligible for a margin account with Ally Invest.

Ally allows for a maximum leverage of 50% per trade, although the actual percentage varies for each individual security. 

On the other hand, at the time of writing, Ally charges a minimum of 7.75% per year for margin balances from $0 to $9,999, and a maximum of 3.25% per year for margin balances higher than $1,000,000.

Mobile App

Ally Invest’s proprietary mobile app is supported by both Android and iOS operating systems and it offers most of the features included in the web-based version, although a few things are missing.

The app is user-friendly, the search function is decent, and the interface is very modern. However, the app does not allow the user to set push alerts and notifications (and these features are useful for those who trade by using their phones).

The app does incorporate two additional types of orders (pre-market and post-market orders) both of which are not available in the web-based version.

Ally Invest Pricing & Fees

The prices and fees will vary depending on the type of investment you are looking to make through the service.

Managed Portfolios

Ally Invest does not charge a fee for its robo-advisory service as long as the customer signs up for the cash-secured feature, which is set to maintain 30% of the account balance in cash at all times.

Meanwhile, if customers prefer to stay fully invested, Ally Invest charges a 0.30% advisory fee for its managed portfolios.

A managed portfolio account can be opened with as little as $100.

Self-Directed Trading

Ally offers zero-commission stock and ETF trades for US-listed securities, although a commission may apply for foreign instruments.

For options trading, Ally Invest only charges $0.50 per contract, while bonds can be traded for a $1 fee per bond with a minimum of $10 per order.

Finally, mutual funds can be traded at $9.95 per trade, while penny stocks can be traded for $4.95 per order, plus a $0.01 commission per share.

Other fees may apply (including interest charges on margin balances).

Retirement Accounts

Ally Invest’s Individual Retirement Accounts (IRAs) don’t charge annual or monthly maintenance fees, but a $25 fee applies for closing an account, while transfer fees vary from $50 to $75.

Forex Accounts

Ally does not charge a commission for Forex trades, as they are compensated through the bid/ask spread of each currency pair.

Ally Invest Pros

• Ally Invest is backed by a strong financial institution with a long-standing reputation in the financial industry.
• The firm is regulated by the Securities and Exchange Commission (SEC) of the United States.
• Ally Invest offers its clients the possibility of running their portfolios on their own by using the firm’s Self-Directed Trading solution.
• Ally does not charge an advisory fee for its managed portfolios.
• The firm offers competitive rates for trading different securities, including zero-commission stock and ETF trades for selected securities.
• Ally’s proprietary trading platform is easy to use, and the firm has developed a mobile trading app to place trades on-the-go.
• The firm offers four different types of portfolios that support four different financial goals (including wealth creation and retirement).
• Ally’s customer service department can be contacted via phone, email, and live chat.
• The firm only requires a minimum deposit of $100 to open a managed portfolio, and no minimum balance is required to maintain a Self-Directed Trading account.

Ally Invest Cons

• Ally’s proprietary trading platform lacks a desktop version.
• The firm requires that users sign up for a cash-secured feature that sets aside 30% of the balance of the account in cash at all times — which reduces the return of the portfolio significantly over time, as Ally only pays 1% per year on those cash reserves.

Ally Invest Alternatives

It’s always wise to check out the competition and see what they have to offer in comparison to the features offered by Ally Invest. 

Betterment

Betterment services are fairly similar to those provided by Ally Invest, although Betterment does not offer the possibility of waiving their advisory fees. 

If the client chooses not to enroll in the cash-secured feature Ally offers, their advisory fee is 0.05% higher than the 0.25% that Betterment charges.

Moreover, Ally does not offer advanced features such as tax-loss harvesting or smart-beta, although the firm does offer a tax-optimized portfolio (but as a specific portfolio selection rather than as a strategy embedded within the portfolio). 

Betterment also offers a more comprehensive set of advisory services for retirement, college, and other areas of financial planning through one-on-one consultations with qualified professionals. (A feature that Ally does not offer.) 

That said, Ally has an edge over Betterment as the firm does offer the possibility of conducting self-directed trades within its platform (a feature that Betterment does not offer as of this writing). 

Check out our full Betterment review to learn more.

M1 Finance

Similar to Ally Invest, M1 Finance does not charge an advisory fee for its managed portfolios, although there are no strings attached for the user to enjoy that pricing. 

Instead, Ally requires that its users enroll in their cash-secured feature, which sets aside 30% of the balance in cash at all times, limiting the portfolio’s performance as a result.

On the other hand, M1 Finance offers the possibility of building a customized portfolio with any securities the user chooses to incorporate, which is similar to the Self-Directed Trading solution offered by Ally Invest. 

Read our full M1 Finance review to learn more.

See Also: Blooom Review: A Robo-Advisor for Your 401(k) and IRA Accounts

Who Should Get/Avoid Ally Invest?

Ally Invest is possibly the best choice for individuals who are looking to have the best of both worlds: managed portfolios and self-directed trading.

Some investors may prefer to allocate a portion of their net worth on long-term, broadly diversified portfolios, while placing trades on their own with the remaining portion of their capital as a way to take advantage of market opportunities in a way that their managed portfolios can’t.

For those investors, Ally is potentially one of the best alternatives out there. 

However, for hands-off investors who have no time — or willingness — to place trades on their own, other robo-advisors such as Betterment or M1 Finance could be a better alternative as they charge a lower advisory fee, while offering more advanced features such as tax-loss harvesting, which is very beneficial in the long run.

Additionally, Ally Invest requires that users set aside 30% of their balance in cash to enjoy their zero advisory fee offering. Doing this could be disadvantageous, as this is a big percentage of the portfolio that will remain uninvested. Therefore, people may find themselves missing out on the returns that the market will provide in exchange for a small 1% annual interest rate. 

Ally Invest FAQ

Following are some of the most frequently asked questions with regards to Ally Invest, and our answers.

Is Ally Invest Good for Beginners?

Yes. Ally’s services and its trading platform are designed to be very user-friendly and simple to use for investors who are just getting started.

Additionally, the fact that Ally offers zero-commission stock and ETF trades along with zero-fee managed portfolios is also a plus for people who are starting to build their portfolios from scratch.

Is Ally Invest Safe?

Yes. Ally Invest is backed by Ally Financial, a publicly traded bank holding company headquartered in Michigan that is regulated by the Securities and Exchange Commission (SEC) of the United States.

Additionally, Ally Invest is a member of the Securities Investor Protection Corporation (SIPC), which covers up to $500,000 in customer claims including a total of $250,000 in cash claims. 

Ally Invest also provides an additional $37.5M in coverage to its accounts, including a maximum of $900,000 in cash claims.

None of these protections cover market downturns.

Final Thoughts

Ally Invest is the investment management arm of Ally Financial, a well-reputed bank holding company in the United States that offers a wide range of financial products including managed portfolios and self-directed trading solutions for US residents.

The firm’s investment management solutions are very competitive and so is their pricing structure, although their managed portfolios lack certain advanced features offered by their competitors and the retirement solutions are very limited, as 401(k)s and other similar products are currently not supported.

That said, Ally Invest’s services should provide the best of both worlds to investors who want to commit a portion of their net worth to a long-term investment approach, while also taking advantage of occasional opportunities that emerge in the financial markets using the self-directed trading feature that Ally currently offers.