SummaryFutureAdvisor has some features that are free or low cost, such as the college savings plan and 401(k) management. Its a convenient robo-advisor for investors with accounts at Fidelity or TD Ameritrade, since FutureAdvisor lets you manage accounts at these institutions without moving them. However, alternatives like Betterment and Wealthfront may offer more features for less.
Assets Under Management$232 Million
Number of Users1700
|Account Value||Annual Fee|
|Single Stock Diversification|
|Tax Loss Harvesting|
Supported Account Types
|Roth IRA Accounts|
|SEP IRA Accounts|
|529 Plan Accounts|
FutureAdvisor is an online platform that monitors and manages your investments.
It is one of a growing breed called “robo advisors” because they harness technology to automate investing, minimize risk, reduce costs, minimize taxes and improve returns.
San Francisco-based FutureAdvisor distinguishes itself from the rest of the pack, including bigger competitors Betterment and Wealthfront in a number of ways which we'll examine in this review of Future Advisor's various value-adding features.
Many of its basic services are free, which is great for DIY-ers because it allows you to try it out and get a feel for the interface. The platform enables you to bring together all of your accounts such as retirement and college savings.
FutureAdvisor, founded by former Microsoft engineers, also has a premium advisory service that offers paid portfolio management including rebalancing, tax-loss harvesting and financial advisors.
You have access to advisors for questions or advice, but your account is not managed by a dedicated representative. So FutureAdvisor straddles the divide between purely automated services and those offering personal financial advisors.
Investment giant BlackRock announced in August 2015 that it was acquiring FutureAdvisor for an undisclosed sum as part of a push to woo the “mass affluent” – investors with under $1 million in investable assets – and millennials.
Both sides said no changes were planned for FutureAdvisor, and the entry of BlackRock was a sign FutureAdvisor commands serious credibility in the industry.
To get access to premium investment management, you can get started for free by clicking here.
What to expect
When you hop on the FutureAdvisor website, the interface is clean and intuitive. Navigating and finding information is straightforward.
Setting up a profile is quick and easy.
When you create an account, the site gathers some information about you including age, how many children you have, when you want to retire and what your risk tolerance is. Then you are asked to connect all your bank and investment accounts. There are quick tabs for major providers like Vanguard and E-Trade, but you can search for any institution or manually add your investments.
It then analyzes your holdings against nine “best practices.” In my case it said I was only doing four of the nine and that at retirement my portfolio would fall about 20% short of what I could expect if I followed their recommended path.
But at closer look, I found some of those finding to be dubious. For example, I already own IRAs and a SEP, and one of FutureAdvisor’s criticisms was that I wasn’t using tax-advantaged accounts efficiently. It also said I failed at tax-loss harvesting, and this is an area that I’ve diligently managed. It made me wonder if the responses were canned.
The site then gives specific recommendations that you can choose to implement through your own broker or trading account, or it will manage them for you if you opt for its premium service.
The asset allocation among foreign, domestic, stocks, bonds and other assets varies according to age and risk tolerance. For example, when I moved the slider from conservative to aggressive risk tolerance, my recommended allocation of stocks went from 60% to 87%.
How it works
If you sign up for the premium service, you have to consolidate your assets at Fidelity and TD Ameritrade. If your investments are already there, you don’t have to shift them. FutureAdvisor will monitor, rebalance and tax-manage your existing investments, so you give the service power to trade in your accounts.
Its buy and sell moves are driven by its software and the guidance of an advisory committee. FutureAdvisor applies “modern portfolio theories” about diversification and uses low-cost index funds or ETFs to augment your portfolio. Automated trades are checked by human beings.
FutureAdvisor says that you can expect your portfolio to be rebalanced on average four to six times a year. Aside from your first rebalancing, you are only notified when the rebalance has been completed. You don’t have the option to override their investment decisions, although you are allowed to “lock” individual stock holdings as long as they are a small part of your portfolio.
You can contact financial advisors via email, online chat or phone Monday to Friday from 8:30 a.m. to 5:30 p.m. Pacific time. You can also schedule a consultation.
Tax loss harvesting
The service puts a lot of emphasis on managing your investments with an eye to taxes. It says that research shows that automated tax loss harvesting like it performs would save an estimated $6,057 per year over 20 years for a $200,000 initial investment.
FutureAdvisor says it continually scours your holdings looking for positions with at least $600 and 2.5% in harvestable losses in current market conditions. It then swaps your holding with a similar index fund so the tax losses are banked and the portfolio remains the same. At the end of the year, the losses are used to offset gains or ordinary income.
FutureAdvisor has some great free services including free college savings management as well as the free portfolio analysis and investment recommendations that I described above. You can get started today by signing up here.
The premium service charges a fee of 0.50% a year, which is billed quarterly. That’s significantly higher than other services such as SigFig at 0.25%, Betterment at 0.15% to 0.35% and Wealthfront at zero to 0.25%. FutureAdvisor is currently offering three months of the premium service for free.
At FutureAdvisor, you may also incur some trading commissions, but these are kept to a minimum because of FutureAdvisor's reliance on commission-free vehicles.
FutureAdvisor offers many free services including college savings management, portfolio analysis and recommendations. Its also useful for investors at TD Ameritrade or Fidelity who don't want to move their accounts.
FutureAdvisor’s account minimum of $10,000 for its premium service is much higher than rivals such as Betterment which has no minimum.
Its 0.50% annual fee is also steeper than its counterparts’.
Overall, FutureAdvisor has a lot going for it. The website is easy to use, and the company offers some great free services. It will also appeal to those who like the idea of a robo-adviser but want to have some personal contact. The service’s focus on tax-loss harvesting is another selling point.
FutureAdvisor excels in its free offerings: the college savings plan and 401(k) management, free account analysis and trade recommendations. It’s a great service for college savers, DIY investors who want a checkup from the pros, and investors who have accounts at Fidelity or TD Ameritrade and don’t want to move them. Outside of that, other robo-advisors may provide the same level of account management for less.
Use FutureAdvisor to monitor your retirement portfolio, see if you're on track, help make changes and even manage other personal goals like college savings. Most of these features are free or low cost.
There’s probably no single investment platform available that will work for everyone. But FutureAdvisor has definite advantages for certain investors.
Investors who are interested in automated financial advisory services may consider FutureAdvisor for retirement portfolio management. Self-directed investors may want to investigate the firm’s portfolio analysis capabilities but should realize that the tools are useful but not perfect.
Future Advisor is a registered investment advisory firm. With a team of Chartered Investment Advisors and math PhDs, they use software to manage clients’ IRA, Roth and taxable investment accounts.